On February 1, 2022 at 9:15am, the New Hampshire Senate Commerce Committee will consider Senate Bill 324-FN. On its face, the bill would create a dispute resolution board to consider owner complaints against condo boards. However, a second portion of the bill pertains solely to New Hampshire homeowners associations (HOAs) and would be an unmitigated disaster.
The Community Associations Institute New Hampshire (CAI-NH) Legislative Action Committee (LAC) opposes the dispute resolution board, and will oppose the bill. The LAC vehemently opposes the portion of the bill pertaining to HOAs and calls upon board members, unit owners and members of our industry to unite in an effort to defeat the bill. Please note that the portion of the bill discussed below does not pertain to NH condos formed under RSA 356-B but would apply to all New Hampshire HOAs.
Why is 324-FN So Bad for HOAs?
The bill states that when a board has a dispute with a unit owner, “Resolution of the issue shall favor the property owner and the association shall not have sole discretion over any issue.” The proposed bill explicitly states that owners get the benefit of the doubt, and that boards no longer have discretion over disputed issues. Of course boards are given authority and discretion over innumerable decisions by the governing documents of HOAs, and this bill seeks to upend normal practices. How can a condo possibly function if boards no longer have sole discretion over issues? The legislature leaves this important question unanswered.
If that were not bad enough, the bill prohibits fines extending beyond a 30-day period. Under this bill, if an owner in your community flagrantly violates community rules, you cannot fine that owner after the 30th day - even if the behavior has not stopped. Additionally, once the offending tenant rectifies the issue he or she was fined over, that owner is to be issued a credit for the fines accrued. In other words, if an owner has a deck in disrepair, fails to fix it, and is fined $500, that fine is to be credited back to the owner once the deck is fixed, so as to offset the owner’s repair costs. The owner therefore receives no financial penalty for having violated the rules.
It Gets Worse…
The bill also seeks to set 2-year term limits for all directors, regardless of what is stated in an HOA’s governing docs. To make matters worse, a director cannot serve two consecutive terms until 100% of all owners have served on the board. With owners selling units all the time, this 100% threshold will simply never be met. This nonsensical legislation would force volunteers off the board - even though many associations have to beg for volunteers to run for the board. All the historical knowledge developed by long-serving board members is simply cast aside in the hope that board seats will be filled by apathetic owners.
In yet another offensive provision, the bill would prevent a board from prohibiting an owner from installing alternative energy solutions such as solar panels. Again, the legislature is destroying the covenants contained in your governing documents and hamstrings a board’s ability to conduct business. Additional issues exist with this legislation and the CAI-NH LAC urges you to read the full version here.
What Can You Do?
Show up for the hearing on February 1, 2022 at 9:15 in Room 101 of the Legislative Office Building directly behind the New Hampshire State House. Anyone attending can speak against the bill or at the very least, fill out a form opposing the bill. If you cannot appear at the hearing, please contact members of the Commerce Committee and your state senator.
Gary Daddario and Dean Lennon are attorneys with Boston- and Merrimack-based law firm MEEB, and are the Chair and Vice-Chair, respectively, of the CAI-NH LAC. Please contact Gary (firstname.lastname@example.org) or Dean (email@example.com) for further details or questions.