NH HOA Governance Requirements Could Receive an Overhaul

Summertime is annual meeting season for many homeowner associations. That makes it a perfect time to revisit association governance documents and policies to ensure they are up to speed with the latest changes in New Hampshire law affecting condominiums and subdivisions.

Recent bills have sought to amend Chapters 356-A (Land Sales Full Disclosure Act) and 356-B (Condominium Act) of the New Hampshire Revised Statutes Annotated, which provide the legal framework for governance documents and association administration. While many associations are governed by a volunteer board of directors, directors have a duty to ensure that their policies and practices keep pace with changes in the law.

New Laws Affecting Homeowners Associations

Several new laws aim to enhance the rights of association members.  Managing agents of condominium associations are now required upon request of the association, its board of directors or attorney, to produce any records held by the manager, irrespective of language to the contrary that may be incorporated under the manager’s contract with the association (HB 158 codified under RSA 356-B:40(b) ). A new fee-shifting law entitles condominium unit owners to be awarded their costs, including attorney fees, in lawsuits in which they prevail against their boards of directors or declarant, where previously only the association could be awarded its fees (HB 1606 codified under 356-B:15(II)). 

Bills That Did Not Pass

Less favorably received by legislators and deemed “inexpedient to legislate” were bills that would require state licensure of condominium or subdivision association managers by a newly formed Property Manager Board (HB 220). Also killed by the house was a proposal to authorize associations to terminate a management contract upon 90 days’ notice, irrespective to contrary terms in the contract (HB 161). Another bill that would have limited eligibility to serve as an officer or director of a condominium board to unit owners only did not advance beyond House Committee consideration (HB 160). A proposed statutory right of associations to foreclose their so-called “super-priority” lien for unpaid assessments through judicial action was studied in sub-committee but ultimately deemed “inexpedient to legislate,” i.e., the bill was killed (HB 157). 

After extensive study of a bill that would have established a board to adjudicate complaints by condominium owners against their boards of directors (HB 570), the House Commerce and Consumer Affairs Committee ultimately voted it down, but legislators could seek to reintroduce it in the future.

Additional HOA Governance Changes Ahead

Still under consideration is a bill (HB 353) to significantly expand condominium association governance requirements. Modeled on the Uniform Common Ownership Interest Act, bylaws would be required to provide for the election and removal of directors and officers, among many other new content requirements. Unit owners representing 20 percent of the voting interest in a condominium would be entitled to call a special meeting. Board meetings would be required to be open to members in most circumstances, and minutes would have to be distributed to members. New ballot and proxy requirements would be implemented, and members would be required to ratify annual budgets. Encompassing a comprehensive set of reforms, the bill passed the House but was retained by the Senate Commerce Committee for further study.

The language of HB 353 was also added to Senate Bill 57, a bill that would prohibit felons from serving as directors and impose a requirement for associations to maintain fidelity bonds for persons who handle association funds.  However, SB 57 died in a Committee of Conference. If HB 353 were to be approved by the Senate in its current form, it would give condominium associations 2 years to bring their governance documents into compliance. HB 353 is likely to emerge from the Senate Committee’s consideration in some form, meaning significant association governance reforms may be coming.   

Be sure to enjoy the association barbeques this summer, thank your officers and board members for volunteering, and make sure they are up to speed on these developments in the law.  

* Erik Newman is admitted in New Hampshire.