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Ohio Planned Community Bill Introduced in Ohio Legislature

On October 15, 2009, Senate Bill 187 was introduced into the Ohio Senate. The Bill is sponsored by Senator Bill Seitz (R- Cincinnati area) and co-sponsored by Tom Sawyer (D- serving areas of Summit and Portage counties).

The new proposed legislation would be Chapter 5312 of the Ohio Revised Code, and would govern all planned community associations in Ohio. For purposes of this new Chapter, a planned community excludes condominium associations because they have their own Chapter in 5311.

The adoption of this bill by Ohio’s legislature would bring necessary reform to homeowners associations. Provisions of the new Planned Community Bill include specifics on the size and nature of the board of directors, the method for amending an association’s declaration and by-laws, rights and responsibilities of the declarant (usually the developer), and specifies the requirements for requesting association books, records and meeting minutes.

More importantly, Section 5312.11 of the Bill sets out the necessity and recourse framework for associations to collect fees. Mainly, this section provides for the collections of fees with regard to enforcement assessments, the cost of collection (including attorneys’ fees, court costs and paralegal fees), late fees and utilities paid by the association. The Bill also introduces a structure for application of payments when made on delinquent accounts. All late fees, interest, collection costs, and attorney’s fees are credited prior to any application of payment to principal amounts due. Then, when payments are applied to principal, the oldest amounts due are paid first.

In addition, the Bill provides the board with the ability to suspend an owner’s voting rights and rights to use the recreational facilities of the association if the owner in not in good standing with the association.

Another important aspect of the new Bill provides the planned communities with a statutory lien for unpaid assessments that is secured as soon as the lien is recorded. This also includes a requirement that the association be named in any foreclosure action filed on a property within the association, giving the association the ability to assert its interests on the properties more effectively. The new statute, if passed, will provide that it is not a defense for non-payment in a foreclosure action that the owner believes that the association has failed in some duty or that the owner has a grievance against the association.

The Bill sets the procedure for enforcement, including the requirements for written notices and the opportunity for hearings. Some of these issues have been difficult to deal with, as some homeowners associations have governing Declarations and By-Laws that are either silent or lack the proper authority to do, things such as charge owners attorney’s fees associated with pursuing an enforcement action.

All planned communities will be subject to the statute; however, the provisions will not be retroactive, meaning that associations will not have to alter their documents to comply. Any conflict will defer to the provisions of the documents filed prior to the enactment of the statute. However, if the documents are silent on an issue, the statutory provisions will apply.

For the full text of the bill, please visit http://www.legislature.state.oh.us/bills.cfm?ID=128_SB_187

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