Minnesota Senate passes bill reining in HOAs

The Minnesota Senate approved legislation Tuesday that would cap homeowners’ association fines, require board members disclose conflicts of interest and establish new rules to settle contentious HOA disputes.

The bill (SF1750) now heads to the House.

More than 1.5 million Minnesotans belong to an HOA, and the majority of newly-constructed homes are in HOAs. The Reformer has reported on the stories of homeowners who were surprised with huge bills for repairs they didn’t think were necessary. At least one property management company also owns a construction firm, raising questions about conflicts of interest. 

Last year, the Legislature put together a working group of lawmakers, homeowners, property management companies and other stakeholders to come up with recommendations for HOA reforms. 

Many of those suggestions were incorporated into the bill. 

The legislation would require HOA boards or property managers to solicit at least three written bids for all repair jobs valued at more than $50,000. 

It would also block cities from requiring HOAs as a condition for approving a housing development. 

Some of the provisions are aimed at increasing transparency: HOAs must create and distribute a schedule of fines and fees, and they must adopt a dispute resolution process so homeowners have an opportunity to contest fines.

It would also provide a path for dissolving HOAs, particularly in communities of single-family detached homes with no shared property, like a community center or pool.

Some senators — Republicans and Democrats — expressed concerns over the burden of the new regulations on HOA boards, which are usually staffed by volunteers. For HOAs that hire property management companies to run their daily operations, homeowners may see increased fees as the property managers bring the community documents into compliance with the new laws.

“HOAs wield enormous power — setting rules, levying fines, and even initiating foreclosures — yet they operate with little oversight and often without the basic transparency we expect from any governing body,” said Sen. Susan Pha, DFL-Brooklyn Park, one of the authors of the bill.