HB1036: HB1036 Property Rights Through the Ballot Act; enact

26 LC 48 1664 House Bill 1036 By: Representatives Scott of the 76th, Schofield of the 63rd, Davis of the 87th, Taylor of the 92nd, Baker of the 64th, and others A BILL TO BE ENTITLED AN ACT To amend Chapter 3 of Title 44 of the Official Code of Georgia Annotated, relating to1 regulation of specialized land transactions, so as to establish a binding referendum process2 allowing homeowners residing in communities governed by propert y owners' or3 homeowners' associations to vote on the continuation or dissolution of such associations; to4 repeal certain provisions for liens on condominiums and lots related to collection of property5 association fees and assessments; to make conforming changes re lated to certain liens; to6 provide for definitions; to provide for legislative findings; to prohibit foreclosure, power of7 sale, and involuntary transfer of owner-occupied residential property by such associations;8 to provide for petition thresholds, voting procedures, and refe rendum administration; to9 provide for the legal effects of dissolution; to require transp arency, nonretaliation, and10 consumer protections; to provide for the transition of essentia l shared infrastructure; to11 provide for enforcement and remedies; to provide for a short ti tle; to provide for related12 matters; to provide for severability; to repeal conflicting laws; and for other purposes.13 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:14 SECTION 1.15 This Act shall be known and may be cited as the "Property Rights Through the Ballot Act."16 H. B. 1036 - 1 - 26 LC 48 1664 SECTION 2.17 The General Assembly finds that:18 (1) Homeowners' associations and similar entities exercise significant control over private19 property without being elected governments;20 (2) Such entities are not subject to the Georgia Constitution' s protections applicable to21 governmental bodies;22 (3) The power to fine, lien, and foreclose on owner-occupied p roperty has resulted in23 losses of homes over minor disputes and non-tax debts;24 (4) Property ownership is a fundamental right protected under the laws and Constitution25 of this state; and26 (5) Democratic consent of the governed is essential when priva te entities exercise27 quasi-governmental authority.28 It is therefore the intent of the General Assembly to restore p roperty rights by granting29 homeowners the right to determine, through a binding referendum, whether such associations30 shall continue to exist.31 SECTION 3.32 Chapter 3 of Title 44 of the Official Code of Georgia Annotated , relating to regulation of33 specialized land transactions, is amended by revising subsectio n (c) of Code Section34 44-3-109, relating to lien for assessments, personal obligation of unit owner, notice and35 foreclosure, lapse, right to statement of assessments, and effe ct of failure to furnish36 statement, as follows:37 "(c) Not less than 30 days after notice is sent by certified ma il or statutory overnight38 delivery, return receipt requested, to the unit owner both at the address of the unit and at39 any other address or addresses which the unit owner may have designated to the association40 in writing, the lien may be foreclosed by the association by an action, judgment, and41 foreclosure in the same manner as other liens for the improvement of real property, subject42 H. B. 1036 - 2 - 26 LC 48 1664 to superior liens or encumbrances, but any such court order for judicial foreclosure shall43 not affect the rights of holders of superior liens or encumbrances to exercise any rights or44 powers afforded to them under their security instruments. The notice provided for in this45 subsection shall specify the amount of the assessments then due and payable together with46 authorized late charges and the rate of interest accruing there on. No foreclosure action47 against a lien arising out of this subsection shall be permitted unless the amount of the lien48 is at least $2,000.00. Unless prohibited by the condominium instruments, the association49 shall have the power to bid on the unit at any foreclosure sale and to acquire, hold, lease,50 encumber, and convey the same. The lien for assessments shall lapse and be of no further51 effect, as to assessments or installments thereof, together wit h late charges and interest52 applicable thereto, four years after the assessment or installm ent first became due and53 payable."54 SECTION 4.55 Said chapter is further amended by revising subsection (c) of Code Section 44-3-232, relating56 to assessments against lot owners as constituting lien in favor of association, additional57 charges against lot owners, procedure for foreclosing lien, and obligation to provide58 statement of amounts due, as follows:59 "(c) Not less than 30 days after notice is sent by certified ma il or statutory overnight60 delivery, return receipt requested, to the lot owner both at the address of the lot and at any61 other address or addresses which the lot owner may have designated to the association in62 writing, the lien may be foreclosed by the association by an ac tion, judgment, and court63 order for foreclosure in the same manner as other liens for the improvement of real64 property, subject to superior liens or encumbrances, but any such court order for judicial65 foreclosure shall not affect the rights of holders of superior liens or encumbrances to66 exercise any rights or powers afforded to them under their security instruments. The notice67 provided for in this subsection shall specify the amount of the assessments then due and68 H. B. 1036 - 3 - 26 LC 48 1664 payable together with authorized late charges and the rate of interest accruing thereon. No69 foreclosure action against a lien arising out of this subsection shall be permitted unless the70 amount of the lien is at l east $2,000.00 . Unless prohibited by the instrument, the71 association shall have the power to bid on the lot at any forec losure sale and to acquire,72 hold, lease, encumber, and convey the same. The lien for assessments shall lapse and be73 of no further effect, as to assessments or installments thereof , together with late charges74 and interest applicable thereto, four years after the assessment or installment first became75 due and payable."76 SECTION 5.77 Said chapter is further amended by adding a new Code section to read as follows:78 "44-3-232.2.79 (a) As used in this chapter, the term:80 (1) 'Association' means any homeowners' association, property owners' association,81 condominium association, master association, or similar entity governing residential82 property.83 (2) 'Covered community' means any residential development subj ect to recorded84 covenants that are enforced by an association.85 (3) 'Eligible voter' means the owner of record of an owner-occupied residential dwelling86 unit within a covered community.87 (4) 'Referendum' means a binding vote conducted to determine whether an association88 shall continue to exist.89 (5) 'Essential shared infrastructure' means any roads, stormwa ter systems, utilities, or90 similar facilities serving multiple dwelling units that cannot reasonably be owned or91 maintained individually.92 H. B. 1036 - 4 - 26 LC 48 1664 (b) Owners of residential property within a covered community shall have the right to93 petition for a referendum on whether the association governing such community shall94 continue to exist.95 (c)(1) A referendum shall be triggered upon the submission of a petition signed by not96 less than 20 percent of eligible voters.97 (2) No association shall interfere with, discourage, or retaliate against any eligible voter98 for participation in a petition.99 (d) Within 90 days after certification of a valid petition, a referendum shall be conducted100 by:101 (1) The county elections superintendent; or102 (2) An independent third-party administrator approved by the county.103 (e) Each dwelling unit in a covered community shall be entitled to one vote. Proxy voting,104 weighted voting, developer controlled voting, and class voting are prohibited.105 (f) All of the costs of the referendum shall be paid by the association.106 (g) The outcome of the referendum shall be determined by a simple majority of the votes107 cast. If the majority votes to dissolve the association:108 (1) The association shall be legally dissolved within 180 days;109 (2) All governing documents, covenants, rules, and enforcement authority shall be void110 and unenforceable;111 (3) All liens held by the association shall be converted to unsecured civil debt;112 (4) No foreclosure, power of sale, or involuntary transfer of property may be initiated or113 continued; and114 (5) Remaining association funds shall be distributed pro rata to owners after the115 satisfaction of lawful debts.116 (h) If the association is retained, another referendum may be initiated only after three117 years.118 (i) Notwithstanding any other provision of law:119 H. B. 1036 - 5 - 26 LC 48 1664 (1) An association shall have no authority to foreclose upon, sell, or otherwise effect an120 involuntary transfer of an owner-occupied residential dwelling within a covered121 community based on unpaid assessments, dues, fines, or fees; and122 (2) Any covenant, declaration, or agreement purporting to gran t such authority is123 declared void as against public policy.124 (j) Until dissolution of an association, all associations shall:125 (1) Conduct open meetings;126 (2) Provide access to records upon request;127 (3) Obtain annual independent financial audits; and128 (4) Owe fiduciary duties enforceable in superior court.129 (k)(1) Upon dissolution of an association, essential shared infrastructure shall be:130 (A) Dedicated to the county or municipality;131 (B) Managed through a voluntary maintenance agreement; or132 (C) Converted to a special service district only upon separate voter approval.133 (2) No eligible voter shall be required to join a new assessment entity without affirmative134 consent.135 (l) An association shall not fine, lien, harass, or retaliate against an eligible voter for136 supporting or opposing a referendum.137 (m) A violation of this Code section constitutes an unfair or deceptive act pursuant to138 Part 2 of Article 15 of Chapter 1 of Title 10, the 'Fair Business Practices Act of 1975.'"139 SECTION 6.140 In the event any section, subsection, paragraph, subparagraph, item, sentence, clause, phrase,141 or word of this Act shall be declared or adjudged invalid or un constitutional, such142 adjudication shall in no manner affect the remaining provisions of this Act, which shall143 remain in full force and effect as if the section, subsection, paragraph, subparagraph, item,144 sentence, clause, phrase, or word so declared or adjudged invalid or unconstitutional were145 H. B. 1036 - 6 - 26 LC 48 1664 not originally a part hereof. The General Assembly declares that it would have passed the146 remaining provisions of this Act if it had known that such prov ision or provisions hereof147 would be declared or adjudged invalid or unconstitutional.148 SECTION 7.149 All laws and parts of laws in conflict with this Act are repealed.150 H. B. 1036 - 7 -