SB710 (2020) Detail

Establishing a homeowners' association act.


SB 710-FN - AS INTRODUCED

 

 

2020 SESSION

20-3052

10/04

 

SENATE BILL 710-FN

 

AN ACT establishing a homeowners' association act.

 

SPONSORS: Sen. Fuller Clark, Dist 21

 

COMMITTEE: Commerce

 

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ANALYSIS

 

This bill establishes the regulation of homeowners' associations.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

20-3052

10/04

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty

 

AN ACT establishing a homeowners' association act.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  New Chapter; Homeowners' Association Act.  Amend RSA by inserting after chapter 356-C the following new chapter:

CHAPTER 356-D

HOMEOWNERS' ASSOCIATION ACT

General Principles

356-D:1  Short Title.  This chapter shall be known and may be cited as the "homeowners' association act."

356-D:2  Application.  This chapter shall apply to homeowners’ associations in the state of New Hampshire where there are 12 or more lots within the jurisdiction of the association.  

356-D:3  Definitions.  In this chapter:

I.  “Annual budget report” means the report described in RSA 356-D:27, II.

II.  “Annual policy statement” means the statement described in RSA 356-D:27, V.

III.  “Association” means a nonprofit corporation or unincorporated association created for the purpose of managing a planned community.

IV.  "Board of directors" or "board" means an executive and administrative entity, by whatever name denominated, designated in the governing documents as the governing body of the homeowners’ association.

V.  “Board meeting” means either of the following:

(a)  A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board.

(b)  A teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both.  A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this chapter.

VI.  "Common area" or "common areas" means all portions of the association other than the lots.

VII.  "Common expenses" means all expenditures lawfully made or incurred by or on behalf of the homeowners' association, together with all funds lawfully assessed for the creation and/or maintenance of reserves pursuant to the provisions of the governing documents.  The term "future common expenses" shall mean common expenses for which assessments are not yet due and payable.

VIII.  "Days" mean calendar days, unless modified by the word "business", in which case said term shall include all days except Saturdays, Sundays and legal holidays in the state of New Hampshire.

IX.  "Declarant" means all persons who execute or propose to execute the declaration or on whose behalf the declaration is executed or proposed to be executed.  From the time of the recordation of any amendment to the declaration expanding an expandable association, all persons who execute that amendment or on whose behalf that amendment is executed shall also come within this definition.

(a)  Any successors of the persons referred to in this paragraph who come to stand in the same relation to the association as their predecessors did shall also come within this definition; provided, however, this definition shall not include any homeowners association which is not controlled by a declarant or any mortgage holder that forecloses on a declarant's interest in the association, provided that the foreclosing mortgagee refrains from exercising any of the rights reserved to the declarant by this chapter.

(b)  A foreclosing mortgagee may transfer all such rights to a successor builder or developer without registration or exemption, provided that prior to such intended transfer, the mortgagee files an affidavit or with the attorney general identifying the intended transferee by name, address, and telephone number, and listing the number of lots or interests remaining in the association, and the number of lots or interests so transferred.

X.  “Declaration” means the document, however denominated, that contains the information required by RSA 356-D:8.

XI.  “Director” means a natural person who serves on the board.

XII.  "Dispose" or "disposition" refers to any sale, contract, assignment, or any other voluntary transfer of a legal or equitable interest in a lot, except as security for a debt.

XIII.  "Identifying number" means one or more letters and/or numbers that identify only one lot in the planned community.

XIV.  “General notice” means the delivery of a document pursuant to RSA 356-D:18.

XV.  "Governing documents" is a collective term referring to the declaration and, bylaws, recorded pursuant to the provisions of this chapter.  Any exhibit, schedule, or certification accompanying an association instrument and recorded simultaneously therewith shall be deemed an integral part of that association instrument.  Any amendment or certification of any association instrument shall, from the time of the recordation of such amendment or certification, be deemed an integral part of the affected association instrument, so long as such amendment or certification was made in accordance with the provisions of this chapter.

XVI.  “Homeowner” means an owner of a lot.

XVII.  "Improvement" means any addition to association land, facilities, or amenities other than lots.

XVIII.  “Individual notice” means the delivery of a document pursuant to RSA 356-D:18.

XIX.  “Item of business” means any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a quorum of the board.

XX.  "Institutional lender" means one or more commercial or savings banks, savings and loan associations, trust companies, credit unions, industrial loan associations, insurance companies, pension funds, or business trusts including but not limited to real estate investment trusts, any other lender regularly engaged in financing the purchase, construction, or improvement of real estate, or any assignee of loans made by such a lender, or any combination of any of the foregoing entities.

XXI.  "Limited common area" means a portion of the common area reserved for the exclusive use of those entitled to the use of one or more, but less than all, of the lots.

XXII.  "Lot" means a separately owned lot, parcel, area, or space.

XXIII.  "Lot owner" means one or more persons who owns one or more lots in a homeowners' association.

XXIV.  “Member” means an owner of a lot.

XXV. "Officer" means any officer of the homeowners' association.

XXVI.  "Person" means a natural person, corporation, partnership, association, trust, or other entity capable of holding title to real property, or any combination thereof.

XXVII.  “Planned community” means a real property development other than a community apartment project, a condominium project, or a stock cooperative, having either or both of the following features:

(a)  Common area that is owned either by an association or in common by the owners of the lots who possess appurtenant rights to the beneficial use and enjoyment of the common area.

(b)  Common area and an association that maintains the common area with the power to levy assessments in accordance with RSA 356-D:32.

XXVIII.  “Quorum” means the minimum number of lots of an association that must be present at regular or special meetings to make the proceedings of that meeting valid.

XXIX.  “Reserve accounts” means both of the following:

(a)  Moneys that the board has identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.

(b)  The funds received, and not yet expended or disposed of, from either a compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising from any construction or design defects.  These funds shall be separately itemized from funds described in subparagraph (a).

XXX.  “Reserve account requirements” means the estimated funds that the board has determined are required to be available at a specified point in time to repair, replace, or restore those major components that the association is obligated to maintain.

XXXI.  "Value" means a number of dollars or points assigned to each lot by the declaration.  Substantially identical units shall be assigned the same value, but units located at substantially different heights above the ground, or having substantially different views, or having substantially different amenities or other characteristics that might result in differences in market value, may, but need not, be considered substantially identical within the meaning of this paragraph.  If value is stated in terms of dollars, that statement shall not be deemed to reflect or control the sales price or fair market value of any lot, and no opinion, appraisal, or fair market transaction at a different figure shall affect the value of any lot, or any undivided interest in the common area, voting rights in the homeowners' association, liability for common expenses, or rights to common profits, assigned on the basis thereof.

XXXII.  “Written consent” means a notarized signature and date on a document that the signer has been presented with for approval or disapproval.

Governing Documents

356-D:4  Recordation of Governing Documents.  All amendments and certifications of governing documents shall set forth the name of the association, the name of the town or city and county in which the planned community is located, and the deed book and page number where the first page of the declaration is recorded.  All governing documents, and all amendments and certifications thereof, shall be recorded in the registry of deeds of every county wherein any portion of the association is located, and shall set forth the name and address of the association.

356-D:5  Governing Documents; Conflicts.

I.  The governing documents shall be construed together and shall be deemed to incorporate one another to the extent that any requirement of this chapter as to the content of one shall be deemed satisfied if the deficiency can be cured by reference to any of the others.

II.  To the extent of any conflict between the governing documents and the statute, the statute shall prevail.  To the extent of any conflict between the sections of incorporation and the declaration, the declaration shall prevail.  To the extent of any conflict between the bylaws and the sections of incorporation or declaration, the sections of incorporation or declaration shall prevail.  To the extent of any conflict between the operating rules and the bylaws, sections of incorporation, or declaration, the bylaws, sections of incorporation, or declaration shall prevail.

III.  The declaration, bylaws, or plans of any homeowners' association created before the effective date of this chapter shall be amended to achieve any result required by this title, regardless of what applicable law provided before this title was enacted.  The requirements for amending the declaration in RSA 356-D:8, VII(a) and (b) and for amending the bylaws in RSA 356-D:10, VIII(a) and (b) do not apply to amendments required by this paragraph.  The board of directors may execute the amendments without the approval of the membership to meet the requirements of this paragraph only.

356-D:6  Validity of Governing Documents.

I.  All provisions of the governing documents shall be deemed severable, and any unlawful provision thereof shall be voided.

II.  No provision of the governing documents shall be deemed void by reason of the rule against perpetuities.

356-D:7  Compliance with Governing Documents.

I.  The declarant, the board of directors, every lot owner, and all those entitled to occupy a lot shall comply with all lawful provisions of this chapter and all provisions of the governing documents.  Any lack of such compliance shall be grounds for an action or suit to recover sums due, for damages or injunctive relief, or for any other remedy available at law or in equity, maintainable by the homeowners' association, or by its board of directors or any managing agent on behalf of such association, or, in any proper case, by one or more aggrieved lot owners on their own behalf or as a class action.

II.  The prevailing party shall be entitled to all costs and attorneys' fees incurred in any proceeding under this section.

356-D:8  Contents of Declaration.

I.  The declaration for every association shall contain the following:

(a)  The name of the association, which name shall include the word "association" or be followed by the words "an association";

(b)  The name of the town or city and county in which the planned community is located;

(c)  A legal description by metes and bounds of the land submitted to this chapter;

(d)  A description or delineation of the boundaries of the lots, including the horizontal boundaries, if any, as well as the vertical boundaries;

(e)  A description or delineation of the limited common areas, if any, showing or designating the lot or lots to which each is assigned;

(f)  The allocation to each lot of an undivided interest in the common areas;

(g)  A statement of the purposes for which the association and each of the lots are intended and restricted as to use;

(h)  Such other matters as the declarant deems appropriate.

II.  All lands within the declaration of the association which are within the original bounds of the association shall be identified therein as individual lots, common areas, limited common areas, convertible spaces, or convertible lands.  All lands proposed for possible future expansion shall be identified as expandable lands.

III.  Wherever this section requires a legal description by metes and bounds of land that is submitted to this chapter or that may be added to or withdrawn from the planned community, an added requirement shall be a separate legally sufficient description of all lands in which the lot owners shall or may be tenants in common or joint tenants with any other persons, and a separate legally sufficient description of all lands in which the lot owners shall or may be life tenants.  No lots shall be situated on any such lands, however, and the declaration shall describe the nature of the lot owner’s estate therein.  No such lands shall be shown on the same site plans showing other portions of the planned community, but shall be shown instead on separate site plans.

IV.  A declaration shall contain a legal description of the homeowners' association.  The declaration shall additionally set forth the name of the association and the restrictions on the use or enjoyment of any portion of the planned community that are intended to be enforceable equitable servitudes.

V.  Except to the extent that a declaration provides by its express terms that it is not amendable, in whole or in part, a declaration that fails to include provisions permitting its amendment at all times during its existence may be amended at any time.

VI.  The declaration may contain any other matters the declarant or the members consider appropriate.

VII.  A declaration may be amended pursuant to the declaration and this chapter.  An amendment is effective if all of the following requirements have been met:

(a)  The amendment has been approved by at least 75 percent of the total number of lots in the homeowners' association, by a vote at a meeting or by written consent.

(b)  In cases of approval by written consent, the board of directors shall announce a start and end date which defines the time period within which written consent is permitted, said time period not to exceed 30 days.  The board of directors shall make this announcement by individual delivery pursuant to RSA 356-D:18 at least 10 days in advance of the start date.

(c)  That fact has been certified in a writing executed and acknowledged by the officer designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association.

(d)  The amendment has been recorded in each county in which a portion of the planned community is located.

356-D:9  Termination of Homeowners’ Association.  If there is any lot owner other than the declarant, then the association shall be terminated only by the agreement of a minimum of 80 percent of the lot owners by vote at a meeting or written consent.

356-D:10  Contents of the Bylaws.

I.  There shall be recorded simultaneously with the declaration a set of bylaws providing for the self-government of the planned community by an association of all the lot owners.  The homeowners' association may be incorporated.

II.  The bylaws shall provide the means by which the association shall elect a board of directors.  The bylaws shall specify the powers and responsibilities of the same and the number and terms of its members.  The bylaws may delegate to such board, among other things, any of the powers and responsibilities assigned by this chapter to the homeowners' association.  The bylaws shall also specify which, if any, of its powers and responsibilities the homeowners' association or its board may delegate to a managing agent.  The board of directors shall have a fiduciary relationship to members of the homeowners' association.

III.  The bylaws shall provide for election by the board of directors or, if the declaration requires, by the association members, of a president, treasurer, secretary, and any other officers of the association the bylaws specify.

IV.  The bylaws shall specify the qualifications, powers and duties, terms of office, and manner of electing and removing board members and officers and filling vacancies.

V.  The bylaws may require an employee of a managing agent or homeowners' association to complete a background check prior to employment.  The cost of the background check shall be borne by the managing agent or the association.

VI.  The bylaws shall specify the officers who may prepare, execute, certify, and record amendments to the declaration on behalf of the association.

VII.  The bylaws shall specify a method for the association members to amend the bylaws.

VIII.  The bylaws may be amended pursuant to the bylaws and this chapter.  An amendment is effective after all of the following requirements have been met:

(a)  The amendment has been approved by at least 75 percent of the total number of lots in the homeowners' association, by a vote at a meeting or by written consent.

(b)  In cases of approval by written consent, the board of directors shall announce a start and end date which defines the time period within which written consent is permitted, said time period not to exceed 30 days.  The board of directors shall make this announcement by individual delivery pursuant to RSA 356-D:18 at least 10 days in advance of the start date.

(c)  That fact has been certified in a writing executed and acknowledged by the officer designated in the bylaws or by the association for that purpose, or if no one is designated, by the president of the association.

(d)  The amendment has been recorded in each county in which a portion of the planned community is located.

IX.  The bylaws shall provide that the homeowners' association shall act on behalf of each lot owner in condemnation proceedings against the common areas of the association.

X.  The bylaws shall contain any provision necessary to satisfy requirements of this chapter or the declaration concerning meetings, voting, quorums, and other activities of the association.

XI.  The bylaws shall provide for any matter required by laws of this state other than this chapter to appear in the bylaws of organizations of the same type as the association.

XII.  Subject to the declaration and this chapter, the bylaws may provide for any other necessary or appropriate matters, including matters that may be adopted as rules.

356-D:11  Control by the Declarant.

I.  The governing documents may authorize the declarant, or a managing agent or some other person or persons selected or to be selected by the declarant, to appoint and remove some or all of the officers of the homeowners' association or its board of directors, or both, or to exercise powers and responsibilities otherwise assigned by the governing documents and by this chapter to the homeowners' association, the officers, or the board of directors.  But no amendment to the governing documents shall increase the scope of such authorization if there is any lot owner other than the declarant, and no such authorization shall be valid after the time limit set by the governing documents or after lots to which 3/4 of the undivided interests in the common areas appertain have been conveyed, whichever occurs first.  The time limit initially set by the governing documents shall not exceed 5 years in the case of an expandable planned community, 3 years in the case of a planned community containing any convertible land, or 2 years in the case of any other planned community.

II.  If entered into during the period of control contemplated by paragraph I, no management contract, lease of recreational areas or facilities, or any other contract or lease executed by or on behalf of the homeowners' association, its board of directors, or the lot owners as a group, shall be binding after such period of control unless then renewed or ratified with the consent of lot owners to which a majority of the votes in the homeowners' association appertain.

III.  If the homeowners' association is not in existence or does not have officers at the time of the creation of the planned community, the declarant shall, until there is such an association with such officers, have the power and the responsibility to act in all instances where this chapter requires action by the homeowners' association, its board of directors, or any officer or officers.

IV.  This section shall be strictly construed to protect the rights of the lot owners.

356-D:12  Operating Rules.

I.  For the purposes of this section:

(a)  “Operating rule” means a regulation adopted by the board that applies generally to the management and operation of the planned community or the conduct of the business and affairs of the association.

(b)  “Rule change” means the adoption, amendment, or repeal of an operating rule by the board.

II.  An operating rule is valid and enforceable only if all of the following requirements are satisfied:

(a)  The rule is in writing.

(b)  The rule is within the authority of the board conferred by law or by the declaration, sections of incorporation or association, or bylaws of the association.

(c)  The rule is not in conflict with governing law and the declaration, sections of incorporation or association, or bylaws of the association.

(d)  The rule is adopted, amended, or repealed in good faith and in substantial compliance with the requirements of this section.

(e)  The rule is reasonable.

III.  Operating rules shall relate to one or more of the following subjects:

(a)  Use of the common area or of an exclusive use common area.

(b)  Use of a lot, including any aesthetic or architectural standards that govern alteration of a lot.

(c)  Member discipline, including any schedule of monetary penalties for violation of the governing documents and any procedure for the imposition of penalties.

(d)  Any standards for delinquent assessment payment plans.

(e)  Any procedures adopted by the association for resolution of disputes.

(f)  Any procedures for reviewing and approving or disapproving a proposed physical change to a member’s lot or to the common area.

(g)  Procedures for elections.

IV.  The board shall provide general notice of a proposed operating rule change at least 28 days before making the rule change.  The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change.  Notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association.

V.  A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members.

VI.  As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general notice under RSA 356-D:18 of the rule change.

VII.(a)  Members of an association owning 5 percent or more of the lots may call a special vote of the members to reverse a rule change.  If the governing documents have a lower percentage, the governing documents shall prevail.

(b)  A special vote of the members may be called by delivering a written request to the association.  Not less than 35 days nor more than 90 days after receipt of a proper request, the association shall hold a vote of the members on whether to reverse the rule change.  The written request shall not be delivered more than 30 days after the association gives general notice of the rule change.

(c)  The rule change may be reversed by the affirmative vote of a majority of a quorum of the members.

(d)  Unless otherwise provided in the declaration or bylaws, for the purposes of this section, a member may cast one vote per lot owned.

(e)  A rule change reversed under this section shall not be readopted for 3 years after the date of the vote reversing the rule change.

(f)  As soon as possible after the close of voting, but not more than 15 days after the close of voting, the board shall provide general notice pursuant to section 356-D:18, II of the results of the member vote.

VIII.  For the purposes of this section, a rule change is commenced when the board takes its first official action leading to adoption of the rule change.

Ownership and Transfer of Interests

356-D:13  Ownership Rights and Interest.

I.  Unless the declaration otherwise provides, for a planned community in which the common area is owned by the owners of the lots, the common area is owned as tenants in common, in equal shares, one for each lot.

II.  In a planned community with common area owned in common by the owners of the lots, there are appurtenant to each lot nonexclusive rights of ingress, egress, and support, if necessary, through the common area.  The common area is subject to these rights.

III.  In a planned community with common area owned by the association, there is an easement for ingress, egress, and support, if necessary, appurtenant to each lot.  The common area is subject to these easements.

IV.  Except as otherwise provided in law, an order of the court, or an order pursuant to a final and binding arbitration decision, an association may not deny a member or occupant physical access to the member’s lot, either by restricting access through the common area to the lot, or by restricting access solely to the lot.

V.  The governing documents, including bylaws and operating rules, shall not prohibit a member or resident of a planned community from doing any of the following:

(a)  Peacefully assembling or meeting with members, residents, and their invitees or guests during reasonable hours and in a reasonable manner for purposes relating to planned community living, association elections, legislation, election to public office, or the initiative, referendum, or recall processes.

(b)  Inviting public officials, candidates for public office, or representatives of homeowner organizations to meet with members, residents, and their invitees or guests and speak on matters of public interest.

(c)  Using the common area, including the community or recreation hall or clubhouse, or, with the consent of the member, the area of a lot, for an assembly or meeting described in subparagraph (a) or (b) when that facility is not otherwise in use.

(d)  Canvassing and petitioning the members, the association board, and residents for the activities described in subparagraphs (a) and (b) at reasonable hours and in a reasonable manner.

(e)  Distributing or circulating, without prior permission, information about planned community living, association elections, legislation, election to public office, or the initiative, referendum, or recall processes, or other issues of concern to members and residents at reasonable hours and in a reasonable manner.

VI.  A member or resident of a homeowners' association shall not be required to pay a fee, make a deposit, obtain liability insurance, or pay the premium or deductible on the association’s insurance policy, in order to use a common area for the activities described in paragraph V.

VII.  A member or resident of a homeowners' association who is prevented by the association or its agents from engaging in any of the activities described in this section may bring a civil or small claims court action to enjoin the enforcement of a governing document, including a bylaw and operating rule, that violates this section.  The court may assess a civil penalty of not more than $500 for each violation.

356-D:14  Resale by Purchaser; Transfer Fees.

I.  In the event of any resale of a lot or any interest therein by any person other than the declarant, the prospective lot owner shall have the right to obtain from the homeowners' association, prior to the contract date of the disposition, the following:

(a)  Appropriate statements pursuant to RSA 356-D:33, V.

(b)  A statement of any capital expenditures and major maintenance expenditures anticipated by the homeowners' association within the current or succeeding 2 fiscal years.

(c)  A statement of the status and amount of any reserve for the major maintenance or replacement fund and any portion of such fund earmarked for any specified project by the board of directors.

(d)  A copy of the income statement and balance sheet of the homeowners' association for the last fiscal year for which such statement is available.

(e)  A statement of the status of any pending suits or judgments in which the homeowners' association is a party defendant.

(f)  A statement setting forth what insurance coverage is to the homeowners' association, its officers and directors.

(g)  A statement that any improvements or alterations made to the lot by the prior owner are not known to be in violation of the governing documents.

(h)  A copy of the association declaration, by-laws, and any formal rules of the association.

(i)  A statement of the amount of quarterly, semi-annual and annual fees, and any special assessments made within the last 3 years.

(j)  A copy or a summary of any notice previously sent to the owner pursuant to RSA 356-D:36, VII that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request.  The notice shall not be deemed a waiver of the association’s right to enforce the governing documents against the owner or the prospective purchaser of the lot with respect to any violation.  This paragraph shall not be construed to require an association to inspect an owner’s lot.

(k)  A copy of the most recent documents distributed pursuant to RSA 356-D:27.

(l)  A copy of the list of defects in the planned community, under the condition that these defects have been disclosed to the declarant.

(m)  If there is a provision in the governing documents that prohibits the rental or leasing of any of the lots in the planned community to a renter, lessee, or tenant, a statement describing the prohibition.

(n)  If requested by the prospective purchaser, a copy of the minutes of board meetings, excluding non-public meetings, conducted over the previous 12 months, that were approved by the board.

(o)  The association may collect a reasonable fee from the seller based upon the association’s actual cost for the procurement, preparation, reproduction, and delivery of the documents requested pursuant to this section.  An additional fee shall not be charged for the electronic delivery in lieu of a hard copy delivery of the documents requested.

(p)  Upon receipt of a written request, the association shall provide a written or electronic estimate of the fees that will be assessed for providing the requested documents prior to processing the request in subparagraph (o).

II.  The principal officer of the homeowners' association, or such other officer or officers as the governing documents may specify, shall furnish the statements prescribed by paragraph upon the written request of any prospective owner within 10 days of the receipt of such request.

III.  An association shall not impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for the amount authorized by subparagraph I(o) and an amount not to exceed the association’s actual costs to change its records.

Property Use and Maintenance

356-D:15  Protected Uses.

I.  Except as required for the protection of the public health or safety, no governing document shall limit or prohibit, or be construed to limit or prohibit, the display of the flag of the United States by a member on or in the member’s lot.

II.  For purposes of this section, “display of the flag of the United States” means a flag of the United States made of fabric, cloth, or paper displayed from a staff or pole or in a window, and does not mean a depiction or emblem of the flag of the United States made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component.

III.  In any action to enforce this section, the prevailing party shall be awarded reasonable attorney’s fees and costs.

IV.  The governing documents shall not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in a member’s lot, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.

V.  For purposes of this section, a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of a home on the lot, but shall not be made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or include the painting of architectural surfaces.

VI.  An association may prohibit noncommercial signs and posters that are more than 9 square feet in size and noncommercial flags or banners that are more than 15 square feet in size.

VII.  Any covenant, condition, or restriction contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of, or any interest in, a planned community that effectively prohibits or restricts the installation or use of a video or television antenna, including a satellite dish, or that effectively prohibits or restricts the attachment of that antenna to a structure within that community where the antenna is not visible from any street or common area, except as otherwise prohibited or restricted by law, is void and unenforceable as to its application to the installation or use of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less.

VIII.  This section shall not apply to any covenant, condition, or restriction, as described in paragraph VII, that imposes reasonable restrictions on the installation or use of a video or television antenna, including a satellite dish, that has a diameter or diagonal measurement of 36 inches or less.  For purposes of this section, “reasonable restrictions” means those restrictions that do not significantly increase the cost of the video or television antenna system, including all related equipment.

IX.  In any action to enforce compliance with this section, the prevailing party shall be awarded reasonable attorney’s fees.

X.  Any provision of a governing document that arbitrarily or unreasonably restricts an owner’s ability to market the owner’s interest in a planned community is void.

XI.  An owner of a lot in a planned community shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the lots in that planned community to a renter, lessee, or tenant.

XII.  Any provision of a governing document shall be void and unenforceable if it effectively prohibits or unreasonably restricts the use of a homeowner’s backyard for personal agriculture.

XIII.  Any provision of a governing document shall be void and unenforceable if it effectively prohibits or unreasonably restricts an owner’s ability to use a clothesline or drying rack in the owner’s backyard.

356-D:16  Modification of Lots.

I.  This section applies if the governing documents require association approval before a member may make a physical change to the member’s lot or to the common area. In reviewing and approving or disapproving a proposed change, the association shall satisfy the following requirements:

(a)  The association shall provide a fair, reasonable, and expeditious procedure for making its decision.  The procedure shall be included in the association’s governing documents.  The procedure shall provide for prompt deadlines.  The procedure shall state the maximum time for response to an application or a request for reconsideration by the board.

(b)  A decision on a proposed change shall be made in good faith and may not be unreasonable, arbitrary, or capricious.

(c)  Notwithstanding a contrary provision of the governing documents, a decision on a proposed change shall not violate any governing provision of law, or a building code or other applicable law governing land use or public safety.

(d)  A decision on a proposed change shall be in writing. If a proposed change is disapproved, the written decision shall include both an explanation of why the proposed change is disapproved and a description of the procedure for reconsideration of the decision by the board.

(e)  If a proposed change is disapproved, the applicant is entitled to internal dispute resolution pursuant to RSA 356-D:37.

II.  Nothing in this section authorizes a physical change to the common area in a manner that is inconsistent with an association’s governing documents, unless the change is required by law.

III.  An association shall annually provide its members with notice of any requirements for association approval of physical changes to property.  The notice shall describe the types of changes that require association approval and shall include a copy of the procedure used to review and approve or disapprove a proposed change.

Association Governance

356-D:17  Meetings.

I.  Meetings of the homeowners' association shall be held in accordance with the provisions of the governing documents at least once each year after the formation of the association.  The bylaws shall specify an officer who shall, at least 21 days in advance of any annual or regularly scheduled meeting, and at least 7 days in advance of any other meeting, provide to each lot owner notice of the time, place, and purpose or purposes of such meeting in conformity with RSA 356-D:18.

II.  The minimum time to give notice may be reduced or waived for a meeting called to deal with an emergency.  Purposes of the meeting shall include any budget changes or proposal to remove an officer or member of the board of directors.  The secretary or other duly authorized officer of the association, shall prepare an affidavit which shall be accompanied by current membership list and shall attest that notice of the association meeting was provided to all lot owners on that list in a manner conforming to RSA 356-D:18.

III.  A copy of the affidavit and membership list shall be available at the noticed meeting for inspection by all owners then in attendance and shall be retained with the minutes of that meeting.  The affidavit required in this section shall be available for inspection by owners for at least 3 years after the date of the subject meeting.

IV.  An association shall hold a special meeting of lot owners to address any matter affecting the owners or the association if its president, a majority of the board of directors, or owners having at least 5 percent, or any lower percentage specified in the bylaws, of the votes in the association request that the secretary call the meeting.  If the association does not notify owners of a special meeting within 10 days after the requisite number or percentage of owners request the secretary to do so, the requesting members may directly notify all the lot owners of the special meeting, the purpose of which shall be to present the issue to fellow residents and owners and to vote on any proposal set forth in the meeting notice.  Only matters described in the meeting notice required by RSA 356-D:18 may be considered at a special meeting.

V.  If the governing documents require regular meetings of the members, the president or the board of directors shall call regular meetings at least twice per year after the formation of the association, in the same manner as in paragraph II.  If the president or board does not call regular meetings, members may directly notify all lot owners of a regular meeting and its purpose.  Only matters described in the meeting notice required by RSA 356-D:18 may be considered at a regular meeting.

VI.  Meetings of the association shall be conducted in accordance with the most recent edition of Roberts' Rules of Order Newly Revised.

VII.  Owners shall be given a reasonable opportunity at any meeting to comment regarding any matter affecting the association.

VIII.  The declaration or bylaws may allow for meetings of owners to be conducted by telephonic, video, or other conferencing process, as provided in RSA 356-D:19.

IX.  The secretary or other designee duly authorized by the board of directors shall take minutes of all meetings held in accordance with this section and RSA 356-D:20.  The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any board meeting, other than an non-public meetings, shall be available to members within 30 days of the meeting.  The minutes, proposed minutes, or summary minutes shall be distributed to any member upon request.  The association may opt to provide the minutes electronically or publish them on the association website, in which case the owners shall be informed of the web address.  The board shall respond to a lot owner's written request for the minutes within 15 days of receipt of the request.

X.  A member of an association may bring a civil action for declaratory or equitable relief for a violation of this section by the association, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues.

XI.  A member who prevails in a civil action to enforce the member’s rights pursuant to this section shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to $500 for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member equally.  A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

356-D:18  Notice to Lot Owners.

I.  If a provision of this act requires that an association deliver a document by “individual delivery” or “individual notice,” the document shall be delivered by one of the following methods:

(a)  First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier.  The document shall be addressed to the recipient at the address last shown on the books of the association.

(b) Email, facsimile, or other electronic means, if the recipient has consented, in writing or by email, to that method of delivery. The consent may be revoked, in writing or by email, by the recipient.

(c)  If a document is delivered by mail, delivery is deemed to be complete on deposit into the United States mail.

(d)  If a document is delivered by electronic means, delivery is complete at the time of transmission.

II.  If a provision of this chapter requires “general delivery” or “general notice,” the document shall be provided by one or more of the following methods:

(a)  Any method provided for delivery of an individual notice pursuant to paragraph III.

(b)  Inclusion in a billing statement, newsletter, or other document that is delivered by one of the methods provided in this section.

(c)  Posting the printed document in a prominent location that is accessible to all members, if the location has been designated for the posting of general notices by the association in the annual policy statement, prepared pursuant to RSA 356-D:27, V.

III.  Notwithstanding paragraph I, if a member requests to receive general notices by individual delivery, all general notices to that member, given under this section, shall be delivered pursuant to paragraph II.  The option provided in this subdivision shall be described in the annual policy statement, prepared pursuant to RSA 356-D:27, V.

356-D:19  Meetings by Telephonic, Video, or Other Conferencing Process.  When the declaration or bylaws provides, the association, committees thereof, and the board of directors may meet by telephonic, video, or other conferencing process, provided that the requirements of RSA 356-D:20 are also met.

356-D:20  Meetings of the Board of Directors and Committees of the Association.  The following requirements apply to regular and special meetings of the board of directors and committees of the association authorized to act for the association:

I.  For purposes of this section, a gathering of board members at which the board members do not conduct association business is not a meeting of the board of directors.  The board of directors and its members shall not use incidental or social gatherings of board members or any other method to evade the open meeting requirements of this section.

II.  Not less than once each quarter, and at such additional times as may be specified in the association bylaws, the board of directors shall, subject to the provisions of RSA 356-D:21, hold an open regular meeting during which members shall be afforded a reasonable opportunity to comment on any matter affecting the association.

III.  Unless the regular meeting is included in a schedule given to the members or the meeting is called to deal with an emergency, the secretary or other officer specified in the bylaws shall give notice of each meeting of the board of directors to each board member and to the lot owners.  The notice shall be given at least 10 business days before the meeting and shall state the time, date, place, and agenda of the meeting.  If any materials are distributed to the board of directors before the meeting, the board of directors at the same time shall make copies of those materials reasonably available to members, except that the board of directors need not make available copies of unapproved minutes or matters that are to be considered in nonpublic meetings.

IV.  Except for a nonpublic meeting, the notice of a teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director or a person designated by the board shall be present at that location.  Participation by directors in a teleconference meeting constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board.

V.  The board shall not take action on any item of business outside of a board meeting.

VI.  The board shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail.

356-D:21  Nonpublic Meetings.

I.  The board of directors and association committees may hold a nonpublic meeting session only during a regular or special meeting of the board or a committee.  No final vote or action may be taken during a nonpublic meeting.  A nonpublic meeting may be held only to:

(a)  Consult with the association's attorney.

(b)  Discuss existing or potential litigation or mediation, arbitration, or administrative proceedings.

(c)  Discuss labor or personnel matters.

(d)  Discuss contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage or prevent public knowledge of the matter to be discussed if the board of directors or a committee determines that public knowledge would violate the privacy of any person.

II.  Any matter discussed in nonpublic meetings shall be generally noted in the minutes of the next meeting of the board that is open to the entire membership.

356-D:22  Quorums.

I.  Unless the governing documents otherwise provide, a quorum shall be deemed to be present throughout any meeting of the homeowners' association until adjourned if persons representing more than 33-1/3 percent of all lots in the homeowners' association are present when votes are taken during the meeting.

II.  Unless the governing documents specify a larger majority, a quorum shall be deemed to be present throughout any meeting of the board of directors if persons entitled to cast more than 1/2 of the votes in that body are present at the time that votes are taken.

III.  If a quorum is not met for an annual, regular, or special meeting of the members, the board shall reschedule the meeting within 60 days and provide proper notice and proxies.

356-D:23  Voting.

I.  The bylaws shall allocate to each lot depicted on site plans, a number of votes in the homeowners' association proportionate to the undivided interest in the common areas pertaining to each such lot.

II.  Otherwise, the bylaws shall allocate to each such lot an equal number of votes in the homeowners' association, subject to the following exception: each convertible space so depicted shall be allocated a number of votes in the association proportionate to the size of each such space, vis-a-vis the aggregate size of all lots so depicted, while the remaining votes in the association shall be allocated equally to the other lots so depicted.

III.  Since a lot owner may be more than one person, if only one of such persons is present at a meeting of the association, that person shall be entitled to cast the votes pertaining to that lot.  But if more than one of such persons is present, the vote pertaining to that lot shall be cast only in accordance with agreement of a majority in interest of the owners unless the governing documents expressly provide otherwise, and such consent shall be conclusively presumed if any one of them purports to cast the votes pertaining to that lot without protest being made forthwith by any of the others to the person presiding over the meeting. Since a person need not be a natural person, the word "person" shall be deemed for the purposes of this paragraph to include, without limitation, any natural person having authority to execute deeds on behalf of any person, excluding natural persons, which is, either alone or in conjunction with another person or persons, a lot owner.

IV.(a)  The votes pertaining to any may be cast pursuant to a proxy or proxies duly executed by or on behalf of the lot owner, or, in cases where the owner is more than one person, by or on behalf of all such persons.  A person may not cast undirected proxies representing more than 15 percent of the votes in the association.  The proxy or proxies shall list the name of the person who is to vote. No such proxy shall be revocable except by actual notice to the person presiding over the meeting, by the lot owner or by any of such persons, that it be revoked.  Any proxy shall be void if it is not dated or if it purports to be revocable without the required notice.

(b)  The proxy of any person shall be void if not signed by a person having authority, at the time of the execution thereof, to execute deeds on behalf of that person.  Any proxy shall terminate automatically upon the adjournment of the first meeting held on or after the date of that proxy.  The board of directors shall deliver to the members, together with their notice of meeting and agenda, proxy forms bearing a control number which the board of directors shall correlate to the list of all members then entitled to vote.  At the noticed meeting, the board of directors shall recover all proxies and compare them to the control list maintained for that purpose. Any proxies which are on a form other than that provided by the board of directors or which do not correlate with the control list maintained by the board of directors shall be disregarded for purposes of determining whether a quorum was present at the meeting and for purposes of casting any vote at that meeting.

(c)  The board of directors shall retain all proxies delivered to the board of directors and all independent written confirmation of any such proxies for inspection by the members for a period of not less than 3 years from the date of the association meeting.

V.  If 50 percent or more of the votes in the association appertain to 25 percent or less of the lots, then in any case where a majority vote is required by the governing documents or by this chapter, the requirement for such a majority shall be deemed to include, in addition to the specified majority of the votes, assent by the lot owners of a like majority of the lots.

VI.  If more than 50 percent of the votes are acquired by a single person after developer control is terminated, an 80 percent majority shall be required to change bylaws, budgets, and any contracted property management.

VII.  Notwithstanding any contrary provisions in the governing documents, voting by mail and email is not permitted.

356-D:24  Members of the Board of Directors and Officers.

I.  Except as provided in the declaration, the bylaws, paragraph II, or other provisions of this chapter, the board of directors’ acts on behalf of the association. In the performance of their duties, officers and members of the board of directors appointed by the declarant shall exercise the degree of care and loyalty to the association required of a trustee.  Officers and members of the board of directors not appointed by the declarant shall exercise the degree of care and loyalty to the association required of an officer or director of a corporation organized under RSA 292, and are subject to the conflict of interest rules governing directors and officers under RSA 292.  The standards of care and loyalty described in this paragraph apply regardless of the form in which the association is organized.

II.  The board of directors shall not:

(a)  Amend the declaration except as otherwise provided in this chapter.

(b)  Amend the bylaws.

(c)  Terminate the homeowners' association.

(d)  Elect members of the board of directors but may fill vacancies in its membership for the unexpired portion of any term or, if earlier, until the next regularly scheduled election of board members.

III.  An officer shall not directly receive any salary or compensation from the association for the performance of duties as an officer or board member and shall not in any other way benefit financially from service to the association.

IV.  Subject to the provisions of paragraph VI, the declaration may provide for a period of declarant control of the association, during which a declarant, or persons designated by the declarant, may appoint and remove the officers and members of the board of directors.  A declarant may voluntarily surrender the right to appoint and remove officers and members of the board of directors before the period ends.  In that event, the declarant may require during the remainder of the period that specified actions of the association or board of directors, as described in a recorded instrument executed by the declarant, be approved by the declarant before they become effective.  Regardless of the period provided in the declaration, and except as provided in RSA 356-D:11, a period of declarant control terminates no later than the earliest of:

(a)  Sixty days after conveyance of 60 percent of the lots that may be created to lot owners other than a declarant;

(b)  Two years after all declarants have ceased to offer lots for sale in the ordinary course of business;

(c)  Two years after any right to add new lots was last exercised; or

(d)  The date the declarant, after giving notice in a record to lot owners, records an instrument voluntarily surrendering all rights to control activities of the association.

V.  Not later than 60 days after conveyance of 1/4 of the lots that may be created to lot owners other than a declarant, at least one member and not less than 25 percent of the members of the board of directors shall be elected by lot owners other than the declarant.  Not later than 60 days after conveyance of 1/2 of the lots that may be created to lot owners other than a declarant, not less than 1/2 of the members of the board of directors shall be elected by lot owners other than the declarant.

VI.  Not later than the termination of any period of declarant control, the lot owners shall elect a board of directors with at least 3 members. Regardless of the number of directors, all members shall be lot owners within the planned community.  Unless the declaration provides for the election of officers by the lot owners, the board of directors shall elect the officers, who shall also be lot owners in the planned community.  The members of the board of directors and officers shall take office upon election or appointment.

VII.  Any officer is a suitable person to receive service of process in any proceeding against the association.

VIII.  For the purpose of receipt of notification by a municipality of a local land use board hearing, the officers shall be responsible for serving as agents of the homeowners' association.

356-D:25  Removal of Officers and Directors.

I.  Notwithstanding any provision of the declaration or bylaws to the contrary, lot owners present in person or by proxy at any meeting of the association at which a quorum is present, may remove any member of the board of directors and any officer elected by the lot owners, with or without cause, if the number of votes cast in favor of removal exceeds the number of votes cast in opposition to removal, provided that:

(a)  A board member or officer appointed by the declarant shall not be removed by a lot owner vote during the period of declarant control.

(b)  The lot owners shall not consider whether to remove a member of the board of directors or an officer elected by the lot owners at a meeting of the association unless that subject was listed in the notice of the meeting.

II.  At any meeting at which a vote to remove a member of the board of directors or an officer is to be taken, the member or officer being considered for removal shall have a reasonable opportunity to speak before the vote.

356-D:26  Record Inspection.

I.  In this section, the following definitions shall apply:

(a)  “Association records” means all of the following:

(1)  Any financial document required to be provided to a member in RSA 356-D:27.

(2)  Any financial document or statement required to be provided in RSA 356-D:14.

(3)  Interim financial statements, periodic or as compiled, containing any of the following, prepared in accordance with an accrual or modified accrual basis of accounting:

(A)  Balance sheet.

(B)  Income and expense statement.

(C)  Budget comparison.

(D)  General ledger.  A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.

(4)  Executed contracts not otherwise privileged under law.

(5)  Written board approval of vendor or contractor proposals or invoices.

(6)  State and federal tax returns.

(7)  Reserve account balances and records of payments made from reserve accounts.

(8)  Agendas and minutes of meetings of the members, the board, and any committees appointed by the board; excluding, however, minutes and other information from nonpublic meetings of the board as described in RSA 356-D:21.

(9)  Membership lists, including name, property address, and mailing address.

(10)  Check registers.

(11)  The governing documents.

(12)  An accounting prepared pursuant to RSA 356-D:30, IX.

(13)  An enhanced association record.

(b)  “Enhanced association records” means invoices, receipts, and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.

III.  The association shall make available association records for the time periods and within the timeframes provided in this section for inspection and copying by a member of the association, or the member’s designated representative.

IV.  A member of the association may designate another person to inspect and copy the specified association records on the member’s behalf. The member shall make this designation in writing.

V.  The association shall make the specified association records available for inspection and copying in the association’s business office within the planned community, at no cost to members of the association.  If the member makes use of copying equipment owned by the association, the association may charge the member only for the actual cost of the copies.

VI.  If the association does not have a business office within the community, the association shall make the specified association records available for inspection and copying at a place agreed to by the requesting member and the association located within 5 miles of the planned community, at no cost to the members of the association.

VII.  If a member makes a request for physical records, the association may bill the requesting member for the direct and actual cost of copying and mailing requested documents.  The association shall inform the member of the amount of the copying and mailing costs, and the member shall agree to pay those costs, before copying and sending the requested documents.

VIII.  Requesting parties shall have the option of receiving specifically identified records by electronic transmission or machine-readable storage media as long as those records can be transmitted in a redacted format that does not allow the records to be altered.  The cost of duplication shall be limited to the direct cost of producing the copy of a record in that electronic format.  The association may deliver specifically identified records by electronic transmission or machine-readable storage media as long as those records can be transmitted in a redacted format that prevents the records from being altered.

IX.  Association records are subject to member inspection for the following time periods:

(a)  For the current fiscal year and for each of the previous 2 fiscal years.

(b)  Notwithstanding subparagraph (a), minutes of member and board meetings are subject to inspection permanently.

X.  If a committee has decision making authority, minutes of the meetings of that committee shall be permanently subject to inspection.

XI.  When a member properly requests access to association records, access to the requested records shall be granted within the following time periods:

(a)  Association records prepared during the current fiscal year, within 10 business days following the association’s receipt of the request.

(b)  Association records prepared during the previous 2 fiscal years, within 30 calendar days following the association’s receipt of the request.

(c)  Any record or statement available pursuant to RSA 356-D:14 or RSA 356-D:27, within the timeframe specified therein.

(d)  Minutes of member and board meetings, within the timeframe specified in RSA 356-D:37, VI.

(e)  Minutes of meetings of committees with decision making authority within 15 calendar days following approval.

(f)  Membership list, within 5 business days prior written demand upon the association.

XII.  There shall be no liability pursuant to this section for an association that fails to retain records that were created prior to January 1, 2021.

XIII.  Except as provided by the attorney-client privilege, the association shall not withhold or redact information concerning the compensation paid to employees, vendors, or contractors.  Compensation information for individual employees shall be set forth by job classification or title, not by the employee’s name, social security number, or other personal information.

XIV.  If requested by the requesting member, an association that denies or redacts records shall provide a written explanation specifying the legal basis for withholding or redacting the requested records.

XV.  The association records, and any information from them, shall not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’s interest as a member.  An association may bring an action against any person who violates this section for injunctive relief and for actual damages to the association caused by the violation.

XVI.  This section shall not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this section or to limit the right of an association to injunctive relief to stop the misuse of this information.

XVII.  An association shall be entitled to recover reasonable costs and expenses, including reasonable attorney’s fees, in a successful action to enforce its rights under this section.

XVIII.  A member may bring an action to enforce that member’s right to inspect and copy the association records.  If a court finds that the association unreasonably withheld access to the association records, the court shall award the member reasonable costs and expenses, including reasonable attorney’s fees, and may assess a civil penalty of up to $500 for the denial of each separate written request.

XIX.  A cause of action under this section may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.

XX.  A prevailing association may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation.

356-D:27  Annual Reports.

I.  Notwithstanding a contrary provision in the governing documents, an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year.

II.  Unless the governing documents impose more stringent standards, the annual budget report shall include all of the following information:

(a)  A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis.

(b) A summary of the association’s reserves.

(c)  A statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less, including a justification for the deferral or decision not to undertake the repairs or replacement.

(d)  A statement as to whether the board has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefor.  If so, the statement shall also set out the estimated amount, commencement date, and duration of the assessment.

(e)  A statement as to whether the association has any outstanding loans with an original term of more than one year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.

(f)  A summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies.  For each policy, the summary shall include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any.  To the extent that any of the required information is specified in the insurance policy declaration page, the association may meet its obligation to disclose that information by making copies of that page and distributing it with the annual budget report.

(g)  A schedule of fees for providing print copies of documents, which shall identify each document and the fee for a copy of each document.

III.  The annual budget report shall be made available to the members.

IV.  Unless the governing documents impose more stringent standards, a review of the financial statement of the association shall be prepared in accordance with generally accepted accounting principles by a licensee of the New Hampshire board of accountancy for any fiscal year in which the gross income to the association exceeds $75,000.  A copy of the review of the financial statement shall be distributed to the members within 120 days after the close of each fiscal year, by individual delivery pursuant to RSA 356-D:18, I.

V.  Within 30 to 90 days before the end of its fiscal year, the board shall distribute an annual policy statement that provides the members with information about association policies.  The annual policy statement shall include all of the following information:

(a)  The statement of assessment collection policies.

(b)  A statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments.

(c)  A statement describing the association’s discipline policy, if any, including any schedule of penalties for violations of the governing documents pursuant to RSA 356-D:36, I.

(d)  A summary of dispute resolution procedures, pursuant to RSA 356-D:37, VI and RSA 356-D:38, XVIII.

(e)  A summary of any requirements for association approval of a physical change to property, pursuant to RSA 356-D:16.

(f)  The mailing address for overnight payment of assessments, pursuant to RSA 356-D:33, III.

(g)  Any other information that is required by law or the governing documents or that the board determines to be appropriate for inclusion.

VI.  When a report is prepared pursuant to this section, the association shall deliver one of the following documents to all members, by individual delivery pursuant to RSA 356-D:18, I:

(a)  The full report.

(b)  A summary of the report.  The summary shall include a general description of the content of the report.  Instructions on how to request a complete copy of the report at no cost to the member shall be printed in at least 10-point boldface type on the first page of the summary.

356-D:28  Conflict of Interest.

I.  A director or member of a committee shall not vote on any of the following matters:

(a)  Discipline of the director or committee member.

(b)  An assessment against the director or committee member for damage to the common area or facilities.

(c)  A request, by the director or committee member, for a payment plan for overdue assessments.

(d)  A decision whether to foreclose on a lien on the lot of the director or committee member.

(e)  Review of a proposed physical change to the lot of the director or committee member.

(e)  A grant of exclusive use common area to the director or committee member.

II.  Nothing in this section limits any other provision of law or the governing documents that govern a decision in which a director may have an interest.

Finances

356-D:29  Accounting.  Notwithstanding any other law, transfers of greater than $10,000 or 5 percent of an association’s total combined reserve and operating account deposits, whichever is lower, shall not be authorized from the association’s reserve or operating accounts without prior written board approval.

356-D:30  Use of Reserve Funds.

I.  The signatures of at least 2 persons, who shall be directors, or one officer who is not a director and one who is a director, shall be required for the withdrawal of moneys from the association’s reserve accounts.

II.  The board shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established.

III.  Notwithstanding paragraphs I and II, the board may authorize the temporary transfer of moneys from a reserve fund to the association’s general operating fund to meet short-term cash flow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a board meeting notice provided pursuant to RSA 356-D:20, I.

IV.  The notice shall include the reasons the transfer is needed, options for repayment, and whether a special assessment may be considered.

V.  If the board authorizes the transfer, the board shall issue a written finding, recorded in the board’s minutes, explaining the reasons that the transfer is needed, and describing when and how the moneys will be repaid to the reserve fund.

VI.  The transferred funds shall be restored to the reserve fund within 5 years of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a longer period would be in the best interests of the planned community.

VII.  The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account, and shall, if necessary, levy a special assessment to recover the full amount of the expended funds within the time limits required by this section.  This special assessment is subject to the limitation imposed by RSA 356-D:32, III.  The board may, at its discretion, extend the date the payment on the special assessment is due.  Any extension shall not prevent the board from pursuing any legal remedy to enforce the collection of an unpaid special assessment.

VIII.  When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation pursuant to paragraph II, the association shall provide general notice pursuant to RSA 356-D:18, II of that decision, and of the availability of an accounting of those expenses.

IX.  Unless the governing documents impose more stringent standards, the association shall make an accounting of expenses related to the litigation on at least a quarterly basis.  The accounting shall be made available for inspection by members of the association at the association’s office or at the office of an agent of the association.

356-D:31  Surplus Funds.  Unless otherwise provided in the declaration, any surplus funds of the association remaining after payment of or provision for common expenses and any prepayment of reserves shall be paid annually to the lot owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments.

Assessments and Assessment Collection

356-D:32  Establishment and Imposition of Assessments.

I.  Except as provided in this section, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this chapter.

II.  An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.

III.  Annual increases in regular assessments for any fiscal year shall not be imposed unless the board has complied with RSA 356-D:27, II with respect to that fiscal year.

IV.  Notwithstanding more restrictive limitations placed on the board by the governing documents, the board shall not impose a regular assessment that is more than 15 percent greater than the regular assessment for the association’s preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members at a member meeting or election.

V.  For the purposes of this section, “quorum” means more than 50 percent of the members.

VI.  Paragraphs III, IV, and V shall not limit assessment increases necessary for emergency situations.

VII.  The association shall provide individual notice pursuant to RSA 356-D:18, I to the members of any increase in the regular or special assessments of the association, not less than 30 nor more than 60 days prior to the increased assessment becoming due.

VIII.  An association shall not levy assessments on lots within the planned community based on the taxable value of the lots.

356-D:33  Assessment Payment and Delinquency.

I.  Regular and special assessments levied pursuant to the governing documents are delinquent 30 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent, the association may recover all of the following:

(a)  Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees.

(b)  A late charge not exceeding 10 percent of the delinquent assessment or $10, whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.

(c)  Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 10 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

II.  Any payments made by the owner of a lot toward a debt described in paragraph I shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.

III.  The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement.

IV.  If a dispute exists between the owner of a lot and the association regarding any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and the amount in dispute does not exceed the jurisdictional limits of the small claims court stated in RSA 503:1, the owner of the lot may, in addition to pursuing dispute resolution pursuant to RSA 356-D:37, pay under protest the disputed amount and all other amounts levied, including any fees and reasonable costs of collection, reasonable attorney’s fees, late charges, and interest, if any, and commence an action in small claims court pursuant to RSA 503.

V.  At least 30 days prior to recording a lien upon the lot of the owner of record pursuant to RSA 356-D:34 and the requirements of RSA 356-D:33 to collect a debt that is past due under paragraph I, the association shall notify the owner of record in writing by certified mail of the following:

(a)  A general description of the collection and lien enforcement procedures of the association and the method of calculation of the amount, and a statement that the owner of the lot has the right to inspect the association records pursuant to RSA 356-D:26, III.

(b)  An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney’s fees, any late charges, and interest, if any.

(c)  A statement that the owner shall not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time to the association.

(d)  The right to request a meeting with the board as provided in paragraph VI.

(e)  The right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association’s “meet and confer” program required in RSA 356-D:37.

(f)  The right to request alternative dispute resolution with a neutral third party pursuant to RSA 356-D:38.

VI.  An owner may submit a written request to meet with the board to discuss a payment plan for the debt noticed pursuant to paragraph VII. The association shall provide the owners the standards for payment plans, if any exists.

VII.  The board shall meet with the owner in a non-public meeting within 45 days of the postmark of the request, if the request is mailed within 15 days of the date of the postmark of the notice, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more directors to meet with the owner.

VIII.  Payment plans may incorporate any assessments that accrue during the payment plan period. Additional late fees shall not accrue during the payment plan period if the owner is in compliance with the terms of the payment plan.

IX.  Payment plans shall not impede an association’s ability to record a lien on the owner’s lot to secure payment of delinquent assessments.

X.  In the event of a default on any payment plan, the association may resume its efforts to collect the delinquent assessments from the time prior to entering into the payment plan.

XI.  Prior to recording a lien for delinquent assessments, an association shall offer the owner and, if so requested by the owner, participate in dispute resolution pursuant to RSA 356-D:37.

XII.  An association that fails to comply with the procedures set forth in this section shall, prior to recording a lien, recommence the required notice process.  Any costs associated with recommencing the notice process shall be borne by the association and not by the owner of a lot.

356-D:34  Lien for Assessments.

I.(a)  The homeowners' association shall have a lien on every lot for unpaid assessments levied against that lot in accordance with the provisions of this chapter, including restrictions and requirements in RSA 356-D:33 and all lawful provisions of the governing documents, if perfected as hereinafter provided.  The said lien, once perfected, shall be prior to all other liens and encumbrances except (1) real estate tax liens on that lot, (2) liens and encumbrances recorded prior to the recordation of the declaration, and (3) sums unpaid on any first mortgages or first deeds of trust encumbering that lot and securing institutional lenders.

(b)  The provisions of this paragraph shall not affect the priority of mechanics' and materialmen's liens.

(c)  Notwithstanding subparagraph (a), the lien for regular monthly common assessments unpaid with respect to a lot during the 6-month period immediately preceding the filing of the memorandum specified in paragraph III, together with all costs of collection, including reasonable attorney's fees, shall be prior to the first mortgage; provided that the homeowners' association sends, within 70 days of the occurrence of any delinquency, the lot owner and the institutional lender holding the first mortgage written notice of the delinquency by certified mail and first class mail that the account is at least 60 days delinquent; and additionally, sends such lender notice by certified mail and first class mail, at least 30 days prior, of its intent to file said memorandum of lien.  The lien shall not include any amounts attributable to special assessments, late charges, fines, penalties, or interest assessed by the homeowners' association, nor shall the lien apply to regular assessments or costs of collection coming due prior to the effective date of this section.  In giving the foregoing notices, the homeowners' association may rely on the records of the applicable registry of deeds as to the address of the first institutional lender unless such lender has notified the homeowners' association by certified mail of a different address.

(d)  The priority lien rights established under subparagraph (c) shall not entitle or permit the homeowners' association to assert more than one priority lien unless and until the existing priority lien is first discharged by the homeowners' association.  The priority lien rights established under subparagraph (c) also shall not apply to any mortgage executed prior to the effective date of this section.

(e)  After notification to the first mortgage institutional lender of a delinquency, in addition to any previously agreed to or required escrow amounts, the institutional lender may also require a lot owner to place an amount equal to not more than 6 months of current regular assessments in escrow to cover the cost of any delinquency.

II.  Notwithstanding any other provision of this section, or any other provision of law, all memoranda of liens arising under this section shall be recorded in the registry of deeds in each county in which any part of the planned community development is located.  Such memorandum shall be indexed in the general index to deeds, and such general index shall identify the lien as a lien for lot assessments.

III.(a)  The homeowners' association, in order to perfect the lien given by this section, shall file, before the expiration of 6 months from the time such assessment became due and payable in the registry of deeds in the county in which such planned community is situated, a memorandum, verified by the oath of the principal officer of the homeowners' association, or such other officer or officers as the governing documents may specify, which contains the following:

(1)  A description of the lot by name of the association, lot number of the lot, name of the town or city and county wherein the lot is located, and the deed book and page number where the first page of the declaration is recorded.

(2)  The name or names of the persons constituting the owners of that lot;

(3)  The amount of unpaid assessments currently due or past due together with the date when each fell due; and

(4)  The date of issuance of the memorandum.

(b)  It shall be the duty of the register in whose office such memorandum shall be filed as provided in this section to record and index the same as provided in paragraph II, in the names of the persons identified therein as well as in the name of the homeowners' association.  The cost of recording such memorandum shall be taxed against the person found liable in any judgment or decree enforcing such lien.

IV.  No suit to enforce any lien perfected under paragraph III shall be brought after 6 years from the time when the memorandum of lien was recorded; provided, however, that the filing of a petition to enforce any such lien in any suit wherein such petition may be properly filed shall be regarded as the institution of a suit under this section; and provided further that nothing herein shall extend the time within which any such lien may be perfected.

V.  When payment or satisfaction is made of a debt secured by the lien perfected by paragraph III, said lien shall be released in the same manner as required by RSA 479:7 for mortgages.  For the purposes of this section, the principal officer of the homeowners' association, or such other officer or officers as the governing documents may specify, shall be deemed the duly authorized agent of the lien creditor and shall discharge said lien.

VI.  Nothing in this section shall be construed to prohibit actions at law to recover sums for which paragraph I creates a lien, maintainable pursuant to RSA 356-D:7.

VII.  Notwithstanding any law, rule, or provision of the declaration, bylaws, or rules to the contrary, the homeowners' association may authorize its board of directors to, after 30 days' prior written notice to the lot owner and the owner's first mortgagee of nonpayment of common assessments, terminate the delinquent lot’s common privileges and cease supplying a delinquent lot with any and all services normally supplied or paid for by the homeowners' association, except the association may not:

(a)  Deny a lot owner access to their lot;

(b)  Suspend a lot owner’s right to vote;

(c)  Prevent a lot owner from seeking election as a director or officer of the association; or

(d)  Withhold services provided to a lot owner by the association if the effect of withholding the service would be to endanger the health, safety, or property of any person.  Any terminated services and privileges shall be restored upon payment of all assessments.

VIII.  The decision to record a lien for delinquent assessments shall be made only by the board and shall not be delegated to an agent of the association.  The board shall approve the decision by a majority vote of the directors in an open meeting.  The board shall record the vote in the minutes of that meeting.

IX.  A copy of the recorded notice of delinquent assessment shall be mailed by certified mail to every person whose name is shown as an owner of the lot in the association’s records, and the notice shall be mailed no later than 10 calendar days after recordation.

X.  If it is determined that an association has recorded a lien for a delinquent assessment in error, the association shall promptly reverse all late charges, fees, interest, attorney’s fees, costs of collection, costs imposed for the notice prescribed in paragraph VII, and costs of recordation and release of the lien, and pay all costs related to any related dispute resolution or alternative dispute resolution.

XI.  For delinquent regular or special assessments of an amount less than $1,500, not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, the recording of a lien shall not be allowed.

356-D:35  Assessment Collection.

I.  Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2021.

II.  An association that seeks to collect delinquent regular or special assessments of an amount less than $1,500, not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, may attempt to collect or secure that debt in any of the following ways:

(a)  By a civil action in small claims court, pursuant to RSA 503. An association that chooses to proceed by an action in small claims court, and prevails, may enforce the judgment as permitted RSA 503:7.  The amount that may be recovered in small claims court to collect upon a debt for delinquent assessments shall not exceed the jurisdictional limits of the small claims court and shall be the sum of the following:

(1)  The amount owed as of the date of filing the complaint in the small claims court proceeding.

(2)  In the discretion of the court, an additional amount to that described in subparagraph (1) equal to the amount owed for the period from the date the complaint is filed until satisfaction of the judgment, which total amount may include accruing unpaid assessments and any reasonable late charges, fees and costs of collection, attorney’s fees, and interest, up to the jurisdictional limits of the small claims court.

(b)  Any other manner provided by law, except the recording of a lien shall not be allowed.

III.  A monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant may become a lien against the member’s lot provided the authority to impose a lien is set forth in the governing documents.

IV.  A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for late payments, shall not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s lot.

V.  An association shall not voluntarily assign or pledge the association’s right to collect payments or assessments, or to enforce a lien to a third party, except when the assignment or pledge is made to a financial institution or lender chartered or licensed under federal or state law, when acting within the scope of that charter or license, as security for a loan obtained by the association.

VI.  Nothing in paragraph V restricts the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection.

Dispute Resolution and Enforcement

356-D:36  Discipline and Cost Reimbursement.

I.  If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents, including any monetary penalty relating to the activities of a guest or tenant of the member, the board shall adopt and distribute to each member, in the annual policy statement prepared pursuant to RSA 356-D:27, V a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents.

II.  Any new or revised monetary penalty that is adopted after complying with paragraph I may be included in a supplement that is delivered to the members individually, pursuant to RSA 356-D:18, I.

III.  A monetary penalty for a violation of the governing documents shall not exceed the monetary penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation.

IV.  An association shall provide a copy of the most recently distributed schedule of monetary penalties, along with any applicable supplements to that schedule, to any member upon request.

V.  When the board is to meet to consider or impose discipline upon a member, or to impose a monetary charge as a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant, the board shall notify the member in writing, by either personal delivery or individual delivery pursuant to RSA 356-D:18, I, at least 10 days prior to the meeting.

VI.  The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined or the nature of the damage to the common area and facilities for which a monetary charge may be imposed, and a statement that the member has a right to attend and may address the board at the meeting.  The board shall schedule a non-public meeting if requested by the member.

VII.  If the board imposes discipline on a member or imposes a monetary charge on the member for damage to the common area and facilities, the board shall provide the member a written notification of the decision, by either personal delivery or individual delivery pursuant to RSA 356-D:18, I within 15 days following the action.

VIII.  A disciplinary action or the imposition of a monetary charge for damage to the common area shall not be effective against a member unless the board fulfills the requirements of this section.

356-D:37  Internal Dispute Resolution.

I.  Nothing in this section shall be construed to create, expand, or reduce the authority of the board to impose monetary penalties on a member for a violation of the governing documents.

II.  An association shall provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this section.

III.  In developing a procedure pursuant to this section, an association shall make maximum, reasonable use of available local dispute resolution programs involving a neutral third party, including low-cost mediation programs.

IV.  If an association does not provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this section, the procedure provided in paragraph V applies.

V.  A fair, reasonable, and expeditious dispute resolution procedure shall, at a minimum, satisfy all of the following requirements:

(a)  The procedure may be invoked by either party to the dispute. A request invoking the procedure shall be in writing.

(b)  The procedure shall provide for prompt deadlines.  The procedure shall state the maximum time for the association to act on a request invoking the procedure.

(c)  If the procedure is invoked by a member, the association shall participate in the procedure. The members of the board of directors shall not participate in the procedure.

(d)  A written resolution, signed by both parties, of a dispute pursuant to the procedure that is not in conflict with the law or the governing documents binds the association and is judicially enforceable.  A written agreement, signed by both parties, reached pursuant to the procedure that is not in conflict with the law or the governing documents binds the parties and is judicially enforceable.

(e)  The procedure shall provide a means by which the member and the association may explain their positions.  The member and association may be assisted by an attorney or another person in explaining their positions at their own cost.

(f)  A member of the association shall not be charged a fee to participate in the process.

VI.  The annual policy statement prepared pursuant to RSA 356-D:27, V shall include a description of the internal dispute resolution process provided pursuant to this section.

356-D:38  Alternative Dispute Resolution Prerequisite to Civil Action.

I.  In this section:

(a)  “Alternative dispute resolution” means mediation, arbitration, conciliation, or other nonjudicial procedure that involves a neutral party in the decision making process.  The form of alternative dispute resolution chosen pursuant to this section may be binding or nonbinding, with the voluntary consent of the parties.

(b)  “Enforcement action” means a civil action or proceeding, other than a cross-complaint, for any of the following purposes:

(1)  Enforcement of this chapter.

(2)  Enforcement of RSA 292.

(3)  Enforcement of the governing documents.

II.  An association or a member shall not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this section.

III.  This paragraph applies only to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in RSA 503:1.

IV.  This paragraph shall not apply to a small claims action.

V.  Except as otherwise provided by law, this paragraph shall not apply to an assessment dispute.

VI.  Any party to a dispute may initiate the process required by this section by serving on all other parties to the dispute a request for resolution.  The request for resolution shall include all of the following:

(a)  A brief description of the dispute between the parties.

(b)  A request for alternative dispute resolution.

(c)  A notice that the party receiving the request for resolution is required to respond within 30 days of receipt or the request will be deemed rejected.

(d)  If the party on whom the request is served is the member, a copy of this section.

VII.  Service of the request for resolution shall be by personal delivery, first-class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the party on whom the request is served actual notice of the request.

VIII.  A party on whom a request for resolution is served has 30 days following service to accept or reject the request. If a party does not accept the request within that period, the request is deemed rejected by the party.

IX.  If the party on whom a request for resolution is served accepts the request, the parties shall complete the alternative dispute resolution within 90 days after the party initiating the request receives the acceptance, unless this period is extended by written stipulation signed by both parties.

X.  The costs of the alternative dispute resolution shall be borne by the parties.

XI.  If a request for resolution is served before the end of the applicable time limitation for commencing an enforcement action, the time limitation is tolled during the following periods:

(a)  The period provided in paragraph VIII for response to a request for resolution.

(b)  If the request for resolution is accepted, the period provided by paragraph IX for completion of alternative dispute resolution, including any extension of time stipulated to by the parties pursuant to paragraph IX.

XII.  At the time of commencement of an enforcement action, the party commencing the action shall file with the initial pleading a certificate stating that one or more of the following conditions are satisfied:

(a)  Alternative dispute resolution has been completed in compliance with this section.

(b)  One of the other parties to the dispute did not accept the terms offered for alternative dispute resolution.

(c)  Preliminary or temporary injunctive relief is necessary.

XIII.  Failure to file a certificate pursuant to paragraph XII is grounds for a demurrer or a motion to strike unless the court finds that dismissal of the action for failure to comply with this section would result in substantial prejudice to one of the parties.

XIV.  After an enforcement action is commenced, on written stipulation of the parties, the matter may be referred to alternative dispute resolution.  The referred action is stayed.

XV.  The costs of the alternative dispute resolution shall be borne by the parties.

XVI.  In an enforcement action in which attorney’s fees and costs may be awarded, the court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.

XVII.  An association shall annually provide its members a summary of the provisions of this section that specifically references this section.  The summary shall include the following language:

“Failure of a member of the association to comply with the alternative dispute resolution requirements of RSA 356-D:38, the homeowners' association act, may result in the loss of the member’s right to sue the association or another member of the association regarding enforcement of the governing documents or the applicable law.”

XVIII.  The summary shall be included in the annual policy statement prepared pursuant to RSA 356-D:27, V.

Managing Agent

356-D:39  Managing Agent and Contractors; Disclosure of Fees; Qualifications.

I.  If the homeowners' association or the board of directors has delegated certain powers and duties to a managing agent, the managing agent shall disclose any referral fees received from contract work performed on behalf of the association to the board of directors prior to the next regularly scheduled board meeting, unless the terms of any referral fees are disclosed in the managing agent's contract with the homeowners' association, in which case disclosure of fees actually received shall not be required.

II.  The managing agent also shall disclose to the board of directors the amount and purpose of any fees, other than maintenance fees, received from a lot owner, unless the terms of any such fees are disclosed in the managing agent's contract with the homeowners' association, in which case disclosure of fees actually received shall not be required.

III.  Any contractor who performs work for a lot owner shall disclose on the bill any referral fee paid by the contractor.

Administration and Enforcement

356-D:40  Administration; Enforcement.  The provisions of this chapter shall be administered and enforced by the consumer protection and antitrust bureau, department of justice, established in RSA 21-M:9.

356-D:41  General Powers and Duties of the Attorney General.

I.  If it appears that any person has engaged or is about to engage in any false, deceptive or misleading advertising to offer or dispose of any interest in a planned community, the attorney general may require by written notice the filing of advertising material relating to such interests prior to its distribution.

II.  If it appears that a person has engaged or is about to engage in an act or practice constituting a violation of a provision of this chapter, or a rule or order hereunder, the attorney general, with or without prior administrative proceedings, may bring an action in the superior court to enjoin the acts or practices and to enforce compliance with this chapter or any rule or order hereunder.  Upon proper showing, injunctive relief or temporary restraining orders shall be granted, and a receiver may be appointed pursuant to paragraph III.  The attorney general is not required to post a bond in any court proceedings or prove that any other adequate remedy at law exists.

III.  In connection with any action brought under paragraph II, the attorney general may also petition the court to appoint a receiver to take charge of the business of any person during the course of litigation when the attorney general has reason to believe that such an appointment is necessary to prevent such person from continuing to engage in any act or practice declared unlawful by this chapter and to preserve the assets of said person to restore to any other person any money or property acquired by any unlawful act or practice.  The receiver shall have the authority to sue for, collect, receive and take into his possession all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, records, documents, papers, choses in action, bills, notes and property of every description, including property with which such property has been mingled if it cannot be identified in kind because of such commingling, derived by means of any unlawful act or practice, and to sell, convey and assign the same and hold, dispose and distribute the proceeds thereof under the direction of the court.  Any person who has suffered damages as a result of the use of any unlawful act or practice, and submits proof to the satisfaction of the court that he has in fact been damaged, may participate with general creditors in the distribution of the assets to the extent that she or he has sustained out-of-pocket losses.

IV.  The attorney general may intervene in any suit involving the declarant. In any suit by or against a declarant involving an association, the declarant shall promptly furnish the attorney general notice of the suit and copies of all pleadings.

356-D:42  Investigations and Proceedings.

I.  The attorney general may make necessary public or private investigations in accordance with law within or outside of this state to determine whether any person has violated or is about to violate this chapter or any rule or order hereunder, or to aid in the enforcement of this chapter or in the prescribing of rules and forms hereunder.  In aid of such investigations, the attorney general may require or permit any person to file a statement in writing, under oath and subject to penalties of perjury or otherwise as the attorney general determines, as to all the circumstances concerning matters under investigation.

II.  For the purpose of any investigation or proceeding under this chapter, the attorney general or any officer designated by rule may administer oaths or affirmations and, upon his own motion or upon request of any party, shall subpoena witnesses, compel their attendance, take evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition and location of any books, documents, or other tangible things and the identity and location of persons having knowledge or relevant facts or any other matter reasonably calculated to lead to the discovery of material evidence.

III.  Upon failure to obey a subpoena or to answer questions propounded by the investigating officer and upon reasonable notice to all persons affected thereby, the attorney general may apply to the superior court for an order compelling compliance.

356-D:43  Cease and Desist Orders.

I.  If the attorney general determines after notice and hearing that a person has:

(a)  Violated any provision of this chapter;

(b)  Directly or through an agent or employee knowingly engaged in any false, deceptive, or misleading advertising, promotional, or sales methods to offer or dispose of any interest in a planned community;

(c)  Made any material change in the plan of disposition and development of the association subsequent to the order of registration without notifying the attorney general, obtaining his or her approval and making appropriate amendment of the public offering statement;

(d)  Violated any lawful order or rule of the attorney general;

he or she may issue an order requiring the person to cease and desist from the unlawful practice and to take such affirmative action as in the judgment of the attorney general will carry out the purpose of this chapter.

II.  If the attorney general determines that the public interest will be irreparably harmed by delay in issuing an order, the attorney general may, without hearing, issue a temporary cease and desist order.  Prior to issuing the temporary cease and desist order, the attorney general shall attempt to give telephonic or other notice of the proposal to issue a temporary cease and desist order to the person.  Every temporary cease and desist order shall include findings of fact in support of the attorney general's determination that the public interest will be irreparably harmed by delay in issuing the order and a provision that, upon request, a hearing will be held within 10 business days of the deposit in the United States mails or delivery in hand of said order, to determine whether or not it becomes permanent.

356-D:44  Judicial Review.

I.  Any person aggrieved by a decision or action of the attorney general may, by petition, appeal from said decision or action to the superior court for review.  The superior court may affirm, reverse, or modify the decision or action of the attorney general as justice may require.

II.  The filing of the petition does not itself stay enforcement of the attorney general's decision.  The attorney general may grant, or the superior court may order, a stay upon appropriate terms.

III.  Within 30 days after the service of the petition, or within further time allowed by the court, the attorney general shall transmit to the superior court the original or a certified copy of the entire record of the proceeding under review.  By stipulation of all parties to the review proceedings, the record may be shortened. A party unreasonably refusing to stipulate to limit the record may be taxed by the court for the additional costs.  The court may require or permit subsequent corrections or additions to the record.

IV.  If, before the date set for a court hearing, application is made to the court for leave to present additional evidence, and it is shown to the satisfaction of the court that the additional evidence is material and that there were good reasons for failure to present it in the proceeding before the attorney general, the court may order that the additional evidence be taken before the attorney general, upon conditions determined by the court.  The attorney general may modify his or her findings and decision by reason of the additional evidence and shall file that evidence and any modifications, new findings, or decisions with the superior court.

356-D:45  Service of Process.

I.  Service may be made by delivering a copy of the process to the attorney general, but it is not effective unless the plaintiff, which may be the attorney general:

(a)  Sends a copy of the process and of the pleading by certified or registered mail to the defendant or respondent at the last known address, and

(b)  The plaintiff's affidavit of compliance with this section is filed in the case on or before the date specified by the court on the summons, or within such further time as the court allows.

II.  If any person, including any nonresident of this state, engages in conduct prohibited by this chapter or any rule or order hereunder, and has not filed a consent to service of process and personal jurisdiction cannot otherwise be obtained in this state, that conduct authorizes the attorney general to receive service of process in any noncriminal proceeding against such person successor which grows out of that conduct and which is brought under this chapter or any rule or order hereunder, with the same force and validity as if served on such person personally.  Notice shall be given as provided in paragraph I.

2  Effective Date.  This act shall take effect January 1, 2021.

 

LBAO

20-3052

1/7/20

 

SB 710-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT establishing a homeowners' association act.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

$0

Indeterminable

Indeterminable

Indeterminable

   Expenditures

$0

Indeterminable

Indeterminable

Indeterminable

Funding Source:

  [ X ] General            [    ] Education            [    ] Highway           [ X ] Other - Criminal Records Check Fund (RSA 106-B:7, II)

 

METHODOLOGY:

This bill establishes regulations governing homeowner's associations in New Hampshire where there are 12 or more lots within the jurisdiction of the association.  Managing officers of such associations and homeowners would be subject to new legal rights and responsibilities.  The administration and enforcement of these provisions is conferred upon the Consumer Protection and Antitrust Bureau of the Department of Justice.  

 

The Department of Justice indicates the Bureau is granted broad investigative and prosecutorial powers to file for injunctive relief to ensure compliance with the governing statutes.  The Bureau may appoint a receiver to take charge of an association during the period of pending litigation.  The Department cannot estimate what resources would be needed to administer an unknown increase in investigations and prosecutions, therefore, the fiscal impact is indeterminable.

 

The bill allows association bylaws to require an employee of a managing agent or homeowner's association to complete a background check prior to employment, with the cost to be paid by the managing agent or association.  There may be an indeterminable fiscal impact to the criminal records check fund (RSA 106-B:7, II) and on the Department of Safety due to an unknown increase in the demand for such services.

 

The bill creates numerous civil penalties and appeals.  The average routine civil case in superior court is estimated to cost $514 in FY 2021 and $521 in FY 2022.  The average complex civil case in superior court is estimated to cost $782 in FY 2021 and $790 in FY 2022.  These costs are based on studies that are now more than 10 years old.

 

AGENCIES CONTACTED:

Department of Justice and Judicial Branch

 

Links

SB710 at GenCourtMobile
SB710 Discussion

Action Dates

Date Body Type
Jan. 28, 2020 Senate Hearing
March 5, 2020 Senate Floor Vote

Bill Text Revisions

SB710 Revision: 8042 Date: Jan. 16, 2020, 9:07 a.m.

Docket

Date Status
Jan. 8, 2020 Introduced 01/08/2020 and Referred to Commerce; SJ 2
Jan. 28, 2020 Hearing: 01/28/2020, Room 100, SH, 01:45 pm; SC 4
March 5, 2020 Committee Report: Inexpedient to Legislate; Vote 5-0; CC; 03/05/2020; SC 9
March 5, 2020 Inexpedient to Legislate, MA, VV === BILL KILLED ===; 03/05/2020; SJ 5
March 11, 2020 Without Objection, SB 710 is ordered to be considered at the present time, MA; 03/11/2020; SJ 6
March 11, 2020 Sen. Fuller Clark Moved to Reconsider the vote on: Inexpedient to Legislate, MA, VV; 03/11/2020; SJ 6
March 11, 2020 Inexpedient to Legislate, MF, VV; 03/11/2020; SJ 6
March 11, 2020 Sen. Fuller Clark Move to Refer to Interim Study, MA, VV; 03/11/2020; SJ 6