SB 935 Creates a regulatory scheme for homeowners' associations
Sponsor: Wieland
LR Number: 5549S.02I Fiscal Notes
Committee: Commerce, Consumer Protection, Energy and the Environment
Last Action: 1/21/2016 - Second Read and Referred S Commerce, Consumer Protection, Energy and the Environment Committee Journal Page: S160
Title: Calendar Position:
Effective Date: August 28, 2016

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Current Bill Summary


SB 935 - This act creates the "Missouri Homeowners' Bill of Rights" which shall be a regulatory scheme for homeowners' associations ("associations"). The act defines which associations are subject to the terms of the act and provides that there can be no variation by agreement to the homeowners' bill of rights. The act regulates the management of the associations including the organizational structure and required offices of the associations, the powers of the associations, and transfer of control process from a developer to a board of homeowners as lots are sold in new developments. The act also lists terms which must be included in the by-laws of a homeowners association, including the number of members of the executive board ("board") required and titles for those members, the election process for members of the board, powers and qualifications of the board and powers which may be delegated to other persons or a managing agent, and provisions relating to meetings, voting, quorums, and other activities of the association.

This act requires that an association keep financial records which shall be reasonably available for examination and copying, for a reasonable fee, by any property owner in the association or an authorized agent of the property owner. Certain records maintained by an association may be withheld from inspection and copying, including personnel, salary, and medical records relating to specific individuals, contracts currently being negotiated, communications with the associations attorney which are otherwise protected by attorney-client privilege or attorney work-product doctrine, and existing or potential litigation, mediation, arbitration, or administrative proceedings or matters subject to administrative or other formal proceedings before a governmental tribunal.

This act requires minimum standards that must be met for calling meetings of the association and the board, the substance of meetings, minimum numbers of members of the association or the board that must be present for a quorum and by what method, and minimum percentages of voting members to pass changes to the by-laws or declarations of an association. This act also requires the association to maintain, to the extent reasonably available and subject to reasonable deductibles, property insurance for common elements, commercial general liability insurance for damage or injury arising out of the use of common elements, fidelity insurance covering any person with access to association funds, and directors and officers liability insurance including any managing agent as an insured. This act regulates the application of assessments and the allowable divisions of assessments in special circumstances. This act further declares void as contrary to public policy any provision of a declaration or by-laws that purports to specify a maximum rate of assessments, or a limitation on the amount an assessment may be increased.

This act provides for placing liens on property for unpaid assessments. A lien for unpaid assessments is superior to all other liens except for real estate taxes or other governmental assessments or charges against a property and any deed of trust or encumbrance recorded before the declaration, and in amounts exceeding six months of delinquent common expenses an association lien is junior to a deed of trust securing a property after recording of a declaration. Association liens may be foreclosed through judicial or nonjudicial proceedings. The act specifies the procedure for recording and perfecting a lien and notice requirements. This act also requires the board to prepare a budget annually for approval by the association, the minimum standards required for approval of the budget, and procedures required upon failure of a budget to be approved. The act also provides for the adoption of special assessments not included in the annual budget.

This act also provides for the necessary disclosures upon resale of a property subject to control of an association. This act further limits the liability of any purchaser for any unpaid assessments not disclosed by the association prior to purchase. This act also provides for a claim for appropriate relief for failure to comply with the act and requires the remedies to be liberally administered. This act allows a court to award reasonable attorneys fees to the prevailing party in any action filed pursuant to the act.

This act is substantially similar to HB 2361 (2016).

JESSI BAKER