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Cliff Hockley, CPM
President, Bluestone & Hockley Real Estate Services
As we enter 2004, last year’s changes to the above named acts will improve operations of planned communities, homeowner associations and condominium associations throughout Oregon.
Most of the changes were shepherded though the legislature via House Bill 3385. An accounting review component was “gut and stuffed” into HB 2318 after it had been defeated earlier in the session. Some of the salient changes are summarized below.
Financial Statements:(HB 2318) ORS 94.609
The new amendment to the Oregon Planned Community Act requires all associations who have annual operating assessments of $75,000 or more to have their financial statements (consisting of a balance sheet and income and expense statements) reviewed by a public accountant within 180 days after the end of the fiscal year. This review should be in accordance with the statements on standards for accounting and review services as issued by the American Institute of Certified Public Accountants.
For associations that have annual assessments of less than $75,000 per year, this review is unnecessary unless the association receives a petition requesting a review of the financial statements by the majority of the owners.
The associations may also waive this requirement on an annual basis by an affirmative vote of a least 60% of the owners (not including the votes of the declarant with respect to lots owned by the declarant).
The initial implications to this change are few, except that now the associations need to budget for an annual CPA review of their documents. Estimates of the cost run $2000- $4000 annually depending on the CPA and the scope of the work required. A similar review is already required in Washington State.
Highlights of HB 3385:
Bylaw Amendments - (ORS 94.625 and ORS 100.410)
The changes in these sections enable boards of directors to update their bylaws and permit the president/chairperson and secretary to certify that the amendments to bylaws were adopted by a vote of the owners (Not withstanding bylaws that state that each owner must execute an amendment).
Operation of Associations – (ORS 94.640, ORS 100.417)
Provides that the standards of conduct expected of a board of directors comply with the provisions of ORS Chapter 65, the Oregon Nonprofit Corporation Act.
Meetings of the Boards of Directors - (ORS 94.640, ORS 100.417)
To help protect confidentiality of Association owners that may be having trouble paying their assessments, the board of directors is now allowed to meet in executive session to discuss the collection of unpaid assessments.
Stipulates that actions taken in executive sessions shall not be effective until the board reconvenes in open session and votes on the action. These actions/votes need to be included in the minutes of the board meetings.
Expands how telephonic or electronic communication (conference call, e-mail or Internet meetings) can be used by a board of directors for emergency meetings. A member of a board of directors that participates in this kind of a meeting is deemed present in person at the meeting.
Association Liens – (ORS 94-709, ORS 100.450)
Confirms that the lien for non payment of assessments can include, interest, late charges, attorney fees, costs or other amounts imposed under the declaration or bylaws or other recorded governing document.
Eliminates the requirement that a notice of lien be recorded to perfect an association lien and provides that the recording of the declaration. The association though, does needs to record a notice of claim of lien for assessments in the deed records a of the county in which the property is located before any suit to foreclose my proceed.
Meetings by written ballot in lieu of a meeting –(ORS 94.657, ORS 100.425)
Annual Meetings and Turnover meetings may not use a written ballot to make decisions
This applies specifically to associations where a majority of the lots/homes are the principal residence of the occupants.
This encourages more participation by a majority of the homeowners at the annual meetings.
Borrowing from Reserves – (ORS 94.595, ORS 100.174)
Clarifies that a board must adopt a resolution before borrowing from reserves to balance the budget, and that borrowed funds must be repaid pursuant to the adopted resolution.
Fine Notices – ORS 94.630(1)(n) and Section 28:ORS 100.405 affecting condominiums only
Requires notice to owners of imposition of fine for violation of governing documents be in writing
Special Meetings – ORS 94.590 and Section 26: ORS 100.407
If bylaws do not specify a percentage of owners that may call a special meeting, the law now provides that 30 percent or more of the owners may call a meeting if notice is provided according to ORS 100.407.
As you can see most of the changes to the laws were minor tweaks. This newsletter only summarizes some of the highlights of the new laws.
All board presidents, board members, property managers and attorneys must have the three relevant Acts (Oregon Condominium Act, ORS chapter 100, Oregon Planned Community Act, ORS 94.550 – 94.783 and the Oregon Nonprofit Corporation Ac, ORS chapter 65) at their fingertips before they make any major decisions. In addition the laws, associations need to also refer to their; Declarations, the Conditions, Covenants and Restrictions, the Association Bylaws and Rules and Regulations before they make any decisions.
A good reference tool to have, in addition to your Roberts Rules of Order, is “ The Official HOA Handbook,” published by The Northwest HOA Law Center, which is part of the law firm Vial Fotheringham LLP, (503)684-4111. Time to break out the bifocals.
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