House Bill 534 Introduced; Impacting All Ohio Community Associations
Recently, House Bill 534 was introduced in the Ohio House of Representatives that directly impacts all community associations in Ohio.
As you may recall, Rep. Cheryl Grossman and Rep. Rick Perales introduced a bill in late 2013 that would have had a significant detrimental impact on condominium associations in Ohio. For the last 2+ years, with the help of the other members of the CAI Legislative Action Committee, Kaman & Cusimano partner Darcy Mehling Good has been working with Reps. Grossman, Perales, and their staffs to propose legislation that, in the alternative, would actually benefit Ohio’s condominium and homeowner associations. The good news is that, through a series of face-to-face meetings with both legislators and personal telephone conferences with them and their staffs, the new bill reflects a number of significant changes.
First, and foremost, there are NO references to criminal penalties for board members and property managers. Second, the bill no longer requires associations to hire property managers with real estate licenses. Although an alternative form of licensing, specific to community association management, is under consideration, the proposed bill does not include any licensing requirements at this time. Third, in recognition of the fact that many problems are directly attributable to new owners not understanding what it means to buy into a community association, this bill requires additional information to be included in the Residential Property Disclosure Form when selling a condominium unit or a home within a community association. Fourth, in response to the repeated stories of misappropriation of association funds, the bill requires all condominium associations to carry fidelity insurance so to better protect associations’ monies, particularly as more associations are fully funding their reserves. Last, but certainly not least, the bill now includes “Super Lien” language for condominium associations. While it would have been better if it also applied to homeowner associations, the importance of this development cannot be overstated as this is the first time that Republicans have supported Super Lien legislation in Ohio.
While these changes are certainly positive, several provisions remain that Kaman & Cusimano will still strongly oppose. Unfortunately, the most significant one is the requirement for all condominium associations to register and pay an annual fee (not to exceed $3/unit) so to fund a system for resolving complaints by owners against their associations. The original proposal created a board, filled with governor-appointees, but the current proposal empowers the Superintendent of the Ohio Department of Commerce Division of Real Estate with this responsibility.
The bill was assigned to the House Committee on Financial Institutions, Housing and Urban Development. We will continue to work with our elected representatives in the House and on the Committee to try and make positive changes to the legislation. At this time, therefore, we do not suggest contacting your legislator now to voice your opinion on this bill (good or bad) as doing so prematurely may only hurt our chances of getting positive changes made.
If and when the Committee schedules any hearings, we will advise our client accordingly, and, if need be, send you a “CALL TO ACTION” to ask that you contact the legislators and share your thoughts. This has been a long process and we are hoping that, if the bill actually gains any traction, we can rely on the legislators to help by proposing amendments to the bill to remove the last of the objectionable language, while preserving the positive changes.