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1 1 Section 1. NEW SECTION. 557D.1 DEFINITIONS.
1 2 As used in this chapter, unless the context otherwise
1 3 requires:
1 4 1. "Assessment" or "amenity fee" means a sum of money
1 5 payable to the association, to the developer or other owner of
1 6 common areas, or to recreational facilities and other
1 7 properties serving the parcels by the owners of one or more
1 8 parcels as authorized in the governing documents, which, if
1 9 not paid by the owner of a parcel, can result in a lien
1 10 against the parcel.
1 11 2. "Association" means an Iowa corporation responsible for
1 12 the operation of a community in which the voting membership is
1 13 made up of parcel owners or their agents, or a combination
1 14 thereof, and in which membership is a mandatory condition of
1 15 parcel ownership, and which is authorized to impose
1 16 assessments that, if unpaid, may become a lien on the parcel.
1 17 The term "association" does not include a special district
1 18 created pursuant to chapters 357 through 357H, 358, and 358C.
1 19 3. "Common area" means all real property within a
1 20 community which is owned or leased by an association or
1 21 dedicated for use or maintenance by the association or its
1 22 members, including, regardless of whether title has been
1 23 conveyed to the association, any of the following:
1 24 a. Real property, the use of which is dedicated to the
1 25 association or its members by a recorded plat.
1 26 b. Real property committed by a declaration of covenants
1 27 to be leased or conveyed to the association.
1 28 4. "Community" means the real property that is or will be
1 29 subject to a declaration of covenants which is recorded in the
1 30 county where the property is located.
1 31 5. "Declaration of covenants" or "declaration" means a
1 32 recorded written instrument in the nature of covenants running
1 33 with the land which subjects the land comprising the community
1 34 to the jurisdiction and control of an association in which the
1 35 owners of the parcels, or their association representatives,
2 1 must be members.
2 2 6. "Developer" means a person or entity that does either
2 3 of the following:
2 4 a. Creates the community served by the association.
2 5 b. Succeeds to the rights and liabilities of the person or
2 6 entity that created the community served by the association,
2 7 if the succession is evidenced in writing.
2 8 7. "Governing documents" means both of the following:
2 9 a. The recorded declaration of covenants for a community,
2 10 and all duly adopted and recorded amendments, supplements, and
2 11 recorded exhibits to the declaration.
2 12 b. The articles of incorporation and bylaws of the
2 13 homeowners' association, and any duly adopted amendments to
2 14 them.
2 15 8. "Member" means a member of an association, and may
2 16 include, but is not limited to, a parcel owner or an
2 17 association representing parcel owners or a combination of
2 18 each.
2 19 9. "Parcel" means a platted or unplatted lot, tract, unit,
2 20 or other subdivision of real property within a community, as
2 21 described in the declaration and to which the following apply:
2 22 a. Is capable of separate conveyance.
2 23 b. The parcel owner or an association in which the parcel
2 24 owner must be a member is obligated as follows:
2 25 (1) By the governing documents to be a member of an
2 26 association that serves the community.
2 27 (2) To pay to the association assessments that, if not
2 28 paid, may result in a lien.
2 29 10. "Parcel owner" means the record owner of legal title
2 30 to a parcel.
2 31 11. "Voting interest" means the voting rights distributed
2 32 to the members of the association, pursuant to the governing
2 33 documents.
2 34 Sec. 2. NEW SECTION. 557D.2 PURPOSES, SCOPE, AND
2 35 APPLICATION.
3 1 1. The purposes of this chapter are to give statutory
3 2 recognition to corporations that operate residential
3 3 communities in this state, to provide procedures for operating
3 4 homeowners' associations, and to protect the rights of
3 5 association members without unduly impairing the ability of
3 6 these associations to perform their functions.
3 7 2. The general assembly recognizes that it is not in the
3 8 best interest of homeowners' associations or the individual
3 9 association members to create or require a department or other
3 10 agency of state government to regulate the affairs of
3 11 homeowners' associations. Further, the general assembly
3 12 recognizes that certain contract rights have been created for
3 13 the benefit of homeowners' associations and members thereof
3 14 before the effective date of this Act and that this chapter is
3 15 not intended to impair such contract rights, including, but
3 16 not limited to, the rights of the developer to complete the
3 17 community as initially contemplated.
3 18 3. This chapter does not apply to any of the following:
3 19 a. A community that is composed of property primarily
3 20 intended for commercial, industrial, or other nonresidential
3 21 use.
3 22 b. The commercial or industrial parcels in a community
3 23 that contains both residential parcels and parcels intended
3 24 for commercial or industrial use.
3 25 4. This chapter does not apply to any association or
3 26 similar entity that is formed by or for owners or residents of
3 27 a manufactured home community or mobile home park, as both are
3 28 defined in section 435.1, a residential cooperative under
3 29 chapter 499A, a horizontal property regime under chapter 499B,
3 30 or a time-share project under chapter 557A.
3 31 Sec. 3. NEW SECTION. 557D.3 ASSOCIATION POWERS AND
3 32 DUTIES – MEETINGS – RECORDS – BUDGETS.
3 33 1. POWERS AND DUTIES. On or after July 1, 2002, an
3 34 association which operates a community in this state must be
3 35 an Iowa corporation. The association must be incorporated and
4 1 the initial governing documents must be recorded in the
4 2 official records of the county in which the community is
4 3 located. An association may operate more than one community.
4 4 The officers and directors of an association have a fiduciary
4 5 relationship to the members who are served by the association.
4 6 The powers and duties of an association include those set
4 7 forth in this chapter and, except as expressly limited or
4 8 restricted in this chapter, those set forth in the governing
4 9 documents. A member does not have authority to act for the
4 10 association by virtue of being a member. An association may
4 11 have more than one class of members and may issue membership
4 12 certificates.
4 13 2. BOARD MEETINGS. A meeting of the board of directors of
4 14 an association occurs whenever a quorum of the board gathers
4 15 to conduct association business. All meetings of the board
4 16 must be open to all members except for meetings between the
4 17 board and its attorney with respect to proposed or pending
4 18 litigation where the contents of the discussion would
4 19 otherwise be governed by the attorney-client privilege.
4 20 Notices of all board meetings must be posted in a conspicuous
4 21 place in the community at least forty-eight hours in advance
4 22 of a meeting, except in an emergency. In the alternative, if
4 23 notice is not posted in a conspicuous place in the community,
4 24 notice of each board meeting must be mailed or delivered to
4 25 each member at least seven days before the meeting, except in
4 26 an emergency. Notwithstanding this general notice
4 27 requirement, for communities with more than one hundred
4 28 members, the bylaws may provide for a reasonable alternative
4 29 to posting or mailing of notice for each board meeting,
4 30 including publication of notice or provision of a schedule of
4 31 board meetings. An assessment shall not be levied at a board
4 32 meeting unless the notice of the meeting includes a statement
4 33 that assessments will be considered and the nature of the
4 34 assessments. Directors shall not vote by proxy or by secret
4 35 ballot at board meetings, except that secret ballots may be
5 1 used in the election of officers. This subsection also
5 2 applies to the meetings of any committee or other similar
5 3 body, when a final decision will be made regarding the
5 4 expenditure of association funds, and to any body vested with
5 5 the power to approve or disapprove architectural decisions
5 6 with respect to a specific parcel of residential property
5 7 owned by a member of the community.
5 8 3. MINUTES. Minutes of all meetings of the members of an
5 9 association and of the board of directors of an association
5 10 must be maintained in written form or in another form that can
5 11 be converted into written form within a reasonable time. A
5 12 vote or abstention from voting on each matter voted upon for
5 13 each director present at a board meeting must be recorded in
5 14 the minutes.
5 15 4. OFFICIAL RECORDS. The association shall maintain each
5 16 of the following items, when applicable, which constitute the
5 17 official records of the association:
5 18 a. Copies of any plans, specifications, permits, and
5 19 warranties related to improvements constructed on the common
5 20 areas or other property that the association is obligated to
5 21 maintain, repair, or replace.
5 22 b. A copy of the bylaws of the association and of each
5 23 amendment to the bylaws.
5 24 c. A copy of the articles of incorporation of the
5 25 association and of each amendment to the articles.
5 26 d. A copy of the declaration of covenants and a copy of
5 27 each amendment to the declaration.
5 28 e. A copy of the current rules of the association.
5 29 f. The minutes of all meetings of the board of directors
5 30 and of the members, which minutes must be retained for at
5 31 least seven years.
5 32 g. A current roster of all members and their mailing
5 33 addresses and parcel identifications.
5 34 h. All of the association's insurance policies or a copy
5 35 of the policies, which policies must be retained for at least
6 1 seven years.
6 2 i. A current copy of all contracts to which the
6 3 association is a party, including, without limitation, any
6 4 management agreement, lease, or other contract under which the
6 5 association has any obligation or responsibility. Bids
6 6 received by the association for work to be performed must also
6 7 be considered official records and must be kept for a period
6 8 of one year.
6 9 j. The financial and accounting records of the
6 10 association, kept according to good accounting practices. All
6 11 financial and accounting records must be maintained for a
6 12 period of at least seven years. The financial and accounting
6 13 records must include all of the following:
6 14 (1) Accurate, itemized, and detailed records of all
6 15 receipts and expenditures.
6 16 (2) A current account and a periodic statement of the
6 17 account for each member, designating the name and current
6 18 address of each member who is obligated to pay assessments,
6 19 the due date and amount of each assessment or other charge
6 20 against the member, the date and amount of each payment on the
6 21 account, and the balance due.
6 22 (3) All tax returns, financial statements, and financial
6 23 reports of the association.
6 24 (4) Any other records that identify, measure, record, or
6 25 communicate financial information.
6 26 5. INSPECTION AND COPYING OF RECORDS. The official
6 27 records shall be maintained within the state and must be open
6 28 to inspection and available for photocopying by members or
6 29 their authorized agents at reasonable times and places within
6 30 ten business days after receipt of a written request for
6 31 access. This subsection may be complied with by having a copy
6 32 of the official records available for inspection or copying in
6 33 the community.
6 34 a. The failure of an association to provide access to the
6 35 records within ten business days after receipt of a written
7 1 request creates a rebuttable presumption that the association
7 2 willfully failed to comply with this subsection.
7 3 b. A member who is denied access to official records is
7 4 entitled to the actual damages or minimum damages for the
7 5 association's willful failure to comply with this subsection.
7 6 The minimum damages are to be fifty dollars per calendar day
7 7 up to ten days, the calculation to begin on the eleventh
7 8 business day after receipt of the written request.
7 9 c. The association may adopt reasonable written rules
7 10 governing the frequency, time, location, notice, and manner of
7 11 inspections, and may impose fees to cover the costs of
7 12 providing copies of the official records, including, without
7 13 limitation, the costs of copying. The association shall
7 14 maintain an adequate number of copies of the recorded
7 15 governing documents, to ensure their availability to members
7 16 and prospective members, and may charge only its actual costs
7 17 for reproducing and furnishing these documents to those
7 18 persons who are entitled to receive them.
7 19 6. BUDGETS. The association shall prepare an annual
7 20 budget. The budget must reflect the estimated revenues and
7 21 expenses for that year and the estimated surplus or deficit as
7 22 of the end of the current year. The budget must set out
7 23 separately all fees or charges for recreational amenities,
7 24 whether owned by the association, the developer, or another
7 25 person. The association shall provide each member with a copy
7 26 of the annual budget or a written notice that a copy of the
7 27 budget is available upon request at no charge to the member.
7 28 The copy must be provided to the member within the time limits
7 29 set forth in subsection 5.
7 30 7. FINANCIAL REPORTING. The association shall prepare an
7 31 annual financial report within sixty days after the close of
7 32 the fiscal year. The association shall, within the time
7 33 limits set forth in subsection 5, provide each member with a
7 34 copy of the annual financial report or a written notice that a
7 35 copy of the financial report is available upon request at no
8 1 charge to the member. The financial report must consist of
8 2 either of the following:
8 3 a. Financial statements presented in conformity with
8 4 generally accepted accounting principles.
8 5 b. A financial report of actual receipts and expenditures,
8 6 cash basis, which report must show both of the following:
8 7 (1) The amount of receipts and expenditures by
8 8 classification.
8 9 (2) The beginning and ending cash balances of the
8 10 association.
8 11 8. ASSOCIATION FUNDS – COMMINGLING.
8 12 a. All association funds held by a developer shall be
8 13 maintained separately in the association's name. Reserve and
8 14 operating funds of the association shall not be commingled
8 15 prior to turnover except the association may jointly invest
8 16 reserve funds. However, these jointly invested funds must be
8 17 accounted for separately.
8 18 b. A developer in control of an association shall not
8 19 commingle any association funds with the developer's funds or
8 20 with the funds of any other homeowners' association or
8 21 community association.
8 22 Sec. 4. NEW SECTION. 557D.4 RIGHT OF OWNERS TO PEACEABLY
8 23 ASSEMBLE.
8 24 1. All common areas and recreational facilities serving
8 25 any association shall be available to parcel owners in the
8 26 association served thereby and their invited guests for the
8 27 use intended for these common areas and recreational
8 28 facilities. The entity or entities responsible for the
8 29 operation of the common areas and recreational facilities may
8 30 adopt reasonable rules and regulations pertaining to the use
8 31 of these common areas and recreational facilities. An entity
8 32 shall not unreasonably restrict any parcel owner's right to
8 33 peaceably assemble or right to invite public officers or
8 34 candidates for public office to appear and speak in common
8 35 areas and recreational facilities.
9 1 2. An owner prevented from exercising rights guaranteed by
9 2 subsection 1 may bring an action in the district court of the
9 3 county in which the alleged infringement occurred and, upon
9 4 favorable adjudication, the court shall enjoin the enforcement
9 5 of any provision contained in any association document or rule
9 6 that operates to deprive the owner of such rights.
9 7 Sec. 5. NEW SECTION. 557D.5 OBLIGATIONS OF MEMBERS –
9 8 REMEDIES, PENALTIES, AND BOARD VACANCIES.
9 9 1. Each member and the member's tenants, guests, and
9 10 invitees, and each association, are governed by, and must
9 11 comply with, this chapter, the governing documents of the
9 12 community, and the rules of the association. Actions at law
9 13 or in equity, or both, to redress alleged failure or refusal
9 14 to comply with these provisions may be brought by the
9 15 association or by any member against any of the following:
9 16 a. The association.
9 17 b. A member.
9 18 c. Any director or officer of an association who willfully
9 19 and knowingly fails to comply with these provisions.
9 20 d. Any tenants, guests, or invitees occupying a parcel or
9 21 using the common areas.
9 22 The prevailing party in any litigation is entitled to
9 23 recover reasonable attorney fees and costs. This section does
9 24 not deprive any person of any other available right or remedy.
9 25 2. If the governing documents so provide, an association
9 26 may suspend, for a reasonable period of time, the rights of a
9 27 member or a member's tenants, guests, or invitees, or both, to
9 28 use common areas and recreational facilities and may levy
9 29 reasonable penalties, not to exceed one hundred dollars per
9 30 violation, against any member or any tenant, guest, or
9 31 invitee. A penalty may be levied on the basis of each day of
9 32 a continuing violation, with a single notice and opportunity
9 33 for hearing, except that the penalty shall not exceed one
9 34 thousand dollars in the aggregate unless otherwise provided in
9 35 the governing documents.
10 1 a. A penalty or suspension shall not be imposed without
10 2 notice of at least fourteen days to the person sought to be
10 3 penalized or suspended and an opportunity for a hearing before
10 4 a committee of at least three members appointed by the board
10 5 who are not officers, directors, or employees of the
10 6 association, or the spouse, parent, child, brother, or sister
10 7 of an officer, director, or employee. If the committee, by
10 8 majority vote, does not approve a proposed penalty or
10 9 suspension, it shall not be imposed.
10 10 b. The requirements of this subsection do not apply to the
10 11 imposition of penalties or suspensions upon any member because
10 12 of the failure of the member to pay assessments or other
10 13 charges when due if that action is authorized by the governing
10 14 documents.
10 15 c. Suspension of common-area-use rights shall not impair
10 16 the right of an owner or tenant of a parcel to have vehicular
10 17 and pedestrian ingress to and egress from the parcel,
10 18 including, but not limited to, the right to park.
10 19 3. If the governing documents so provide, an association
10 20 may suspend the voting rights of a member for the nonpayment
10 21 of regular annual assessments that are delinquent in excess of
10 22 ninety days.
10 23 4. If an association fails to fill vacancies on the board
10 24 of directors sufficient to constitute a quorum in accordance
10 25 with the bylaws, any member may petition the district court
10 26 that has jurisdiction over the community served by the
10 27 association for the appointment of a receiver to manage the
10 28 affairs of the association. At least thirty days before
10 29 applying to the district court, the member shall mail to the
10 30 association, by certified mail or restricted certified mail,
10 31 and post, in a conspicuous place on the property of the
10 32 community served by the association, a notice describing the
10 33 intended action, giving the association thirty days to fill
10 34 the vacancies. If during such time the association fails to
10 35 fill a sufficient number of vacancies so that a quorum can be
11 1 assembled, the member may proceed with the petition. If a
11 2 receiver is appointed, the association shall be responsible
11 3 for the salary of the receiver, court costs, attorney fees,
11 4 and all other expenses of the receivership. The receiver has
11 5 all the powers and duties of a duly constituted board of
11 6 directors and shall serve until the association fills a
11 7 sufficient number of vacancies on the board so that a quorum
11 8 can be assembled.
11 9 Sec. 6. NEW SECTION. 557D.6 MEETINGS OF MEMBERS –
11 10 VOTING AND ELECTION PROCEDURES – AMENDMENTS.
11 11 1. QUORUM – AMENDMENTS.
11 12 a. Unless a lower number is provided in the bylaws, the
11 13 percentage of voting interests required to constitute a quorum
11 14 at a meeting of the members shall be thirty percent of the
11 15 total voting interests. Unless otherwise provided in this
11 16 chapter or in the articles of incorporation or bylaws,
11 17 decisions that require a vote of the members must be made by
11 18 the concurrence of at least a majority of the voting interests
11 19 present, in person or by proxy, at a meeting at which a quorum
11 20 has been attained.
11 21 b. Unless otherwise provided in the governing documents or
11 22 required by law, and other than those matters set forth in
11 23 paragraph "c", any governing document of an association may be
11 24 amended by the affirmative vote of two-thirds of the voting
11 25 interests of the association.
11 26 c. Unless otherwise provided in the governing documents as
11 27 originally recorded, an amendment shall not affect vested
11 28 rights unless the record owner of the affected parcel and all
11 29 record owners of liens on the affected parcels join in the
11 30 execution of the amendment.
11 31 2. ANNUAL MEETING. The association shall hold a meeting
11 32 of its members annually for the transaction of any and all
11 33 proper business at a time, date, and place stated in, or fixed
11 34 in accordance with, the bylaws. The election of directors, if
11 35 one is required to be held, must be held at, or in conjunction
12 1 with, the annual meeting or as provided in the governing
12 2 documents.
12 3 3. SPECIAL MEETINGS. Special meetings must be held when
12 4 called by the board of directors or, unless a different
12 5 percentage is stated in the governing documents, by at least
12 6 ten percent of the total voting interests of the association.
12 7 Business conducted at a special meeting is limited to the
12 8 purposes described in the notice of the meeting.
12 9 4. CONTENT OF NOTICE. Unless law or the governing
12 10 documents require otherwise, notice of an annual meeting need
12 11 not include a description of the purposes for which the
12 12 meeting is called. Notice of a special meeting must include a
12 13 description of the purpose for which the meeting is called.
12 14 5. ADJOURNMENT. Unless the bylaws require otherwise,
12 15 adjournment of an annual or special meeting to a different
12 16 date, time, or place must be announced at that meeting before
12 17 an adjournment is taken, or notice must be given of the new
12 18 date, time, or place pursuant to section 557D.3, subsection 2.
12 19 Any business that might have been transacted on the original
12 20 date of the meeting may be transacted at the adjourned
12 21 meeting.
12 22 6. PROXY VOTING. The members have the right, unless
12 23 otherwise provided in this subsection or in the governing
12 24 documents, to vote in person or by proxy. To be valid, a
12 25 proxy must be dated, must state the date, time, and place of
12 26 the meeting for which it was given, and must be signed by the
12 27 authorized person who executed the proxy. A proxy is
12 28 effective only for the specific meeting for which it was
12 29 originally given, as the meeting may lawfully be adjourned and
12 30 reconvened from time to time, and automatically expires ninety
12 31 days after the date of the meeting for which it was originally
12 32 given. A proxy is revocable at any time at the pleasure of
12 33 the person who executes it. If the proxy form expressly so
12 34 provides, any proxy holder may appoint, in writing, a
12 35 substitute to act in the proxy holder's place.
13 1 7. ELECTIONS. Elections of directors must be conducted in
13 2 accordance with the procedures set forth in the governing
13 3 documents of the association. All members of the association
13 4 shall be eligible to serve on the board of directors, and a
13 5 member may nominate the member's self as a candidate for the
13 6 board at a meeting where the election is to be held. Except
13 7 as otherwise provided in the governing documents, boards of
13 8 directors must be elected by a plurality of the votes cast by
13 9 eligible voters.
13 10 8. RECORDING. A parcel owner may audiotape or videotape
13 11 meetings of the board of directors and meetings of the
13 12 members. The board of directors of the association may adopt
13 13 reasonable rules governing the taping of meetings of the board
13 14 and of the members.
13 15 Sec. 7. NEW SECTION. 557D.7 TRANSITION OF ASSOCIATION
13 16 CONTROL IN A COMMUNITY.
13 17 With respect to associations, all of the following apply:
13 18 1. Members other than the developer are entitled to elect
13 19 at least a majority of the members of the board of directors
13 20 of the association when the earlier of the following events
13 21 occurs:
13 22 a. Three months after ninety percent of the parcels in all
13 23 phases of the community that will ultimately be operated by
13 24 the association have been conveyed to members.
13 25 b. Another percentage of the parcels has been conveyed to
13 26 members, or another date or event has occurred, as is set
13 27 forth in the governing documents in order to comply with the
13 28 requirements of any governmentally chartered entity with
13 29 regard to the mortgage financing of the parcels.
13 30 For purposes of this section, the term "members other than
13 31 the developer" shall not include builders, contractors, or
13 32 others who purchase a parcel for the purpose of constructing
13 33 improvements on the parcel for resale.
13 34 2. The developer is entitled to elect at least one member
13 35 of the board of directors of the association as long as the
14 1 developer holds for sale in the ordinary course of business at
14 2 least five percent of the parcels in all phases of the
14 3 community. After the developer relinquishes control of the
14 4 association, the developer may exercise the right to vote any
14 5 developer-owned voting interests in the same manner as any
14 6 other member, except for purposes of reacquiring control of
14 7 the association or selecting the majority of the members of
14 8 the board of directors.
14 9 3. At the time the members are entitled to elect at least
14 10 a majority of the board of directors of the association, the
14 11 developer shall, at the developer's expense, within no more
14 12 than ninety days deliver all of the following to the board:
14 13 a. All deeds to common property owned by the association.
14 14 b. The original of the association's declarations of
14 15 covenants and restrictions.
14 16 c. A certified copy of the articles of incorporation of
14 17 the association.
14 18 d. A copy of the bylaws.
14 19 e. The minute books, including all minutes.
14 20 f. The books and records of the association.
14 21 g. Policies, rules, and regulations, if any, which have
14 22 been adopted.
14 23 h. Resignations of directors who are required to resign
14 24 because the developer is required to relinquish control of the
14 25 association.
14 26 i. The financial records of the association from the date
14 27 of incorporation through the date of turnover.
14 28 j. All association funds and control of them.
14 29 k. All tangible property of the association.
14 30 l. A copy of all contracts which may be in force with the
14 31 association as one of the parties.
14 32 m. A list of the names and addresses and telephone numbers
14 33 of all contractors, subcontractors, or others in the current
14 34 employ of the association.
14 35 n. Any and all insurance policies in effect.
15 1 o. Any permits issued to the association by governmental
15 2 entities.
15 3 p. All warranties in effect.
15 4 q. A roster of current members and their addresses and
15 5 telephone numbers and section and lot numbers.
15 6 r. Employment and service contracts in effect.
15 7 4. This section does not apply to an association in
15 8 existence on the effective date of this Act.
15 9 Sec. 8. NEW SECTION. 557D.8 PROHIBITED CLAUSES IN
15 10 ASSOCIATION DOCUMENTS.
15 11 1. It is declared that the public policy of this state
15 12 prohibits the inclusion or enforcement of certain types of
15 13 clauses in association documents, including declaration of
15 14 covenants, articles of incorporation, bylaws, or any other
15 15 document of the association which binds members of the
15 16 association, which either have the effect of or provide that:
15 17 a. A developer has the unilateral ability and right to
15 18 make changes to the association documents after the transition
15 19 of association control in a community from the developer to
15 20 the nondeveloper members, as set forth in section 557D.7, has
15 21 occurred.
15 22 b. An association is prohibited or restricted from filing
15 23 a lawsuit against the developer, or the association is
15 24 otherwise effectively prohibited or restricted from bringing a
15 25 lawsuit against the developer.
15 26 c. After the transition of association control in a
15 27 community from the developer to the nondeveloper members, as
15 28 set forth in section 557D.7, has occurred, a developer is
15 29 entitled to cast votes in an amount that exceeds one vote per
15 30 residential lot.
15 31 The clauses in this subsection are declared null and void
15 32 as against the public policy of this state.
15 33 2. Association documents, including declarations of
15 34 covenants, articles of incorporation, or bylaws, shall not
15 35 preclude the display of one United States flag by property
16 1 owners. However, the flag must be displayed in a respectful
16 2 way and may be subject to reasonable standards for size,
16 3 placement, and safety, as adopted by the association,
16 4 consistent with federal law and any local ordinances.
16 5 Sec. 9. NEW SECTION. 557D.9 ASSESSMENTS AND CHARGES.
16 6 For any community created on or after July 1, 2002, the
16 7 governing documents must describe the manner in which expenses
16 8 are shared and specify the member's proportional share of
16 9 them. Assessments levied pursuant to the annual budget or
16 10 special assessment must be in the member's proportional share
16 11 of expenses as described in the governing document, which
16 12 share may be different among classes of parcels based upon the
16 13 state of development of the parcels, levels of services
16 14 received by the applicable members, or other relevant factors.
16 15 While the developer is in control of the association, the
16 16 developer may be excused from payment of its share of the
16 17 operating expenses and assessments related to its parcels for
16 18 any period of time for which the developer has, in the
16 19 declaration, obligated itself to pay any operating expenses
16 20 incurred that exceed the assessments receivable from other
16 21 members and other income of the association.
16 22 Sec. 10. NEW SECTION. 557D.10 AGREEMENTS ENTERED INTO BY
16 23 THE ASSOCIATION.
16 24 Any grant or reservation made by any document, and any
16 25 contract with a term in excess of ten years made by an
16 26 association before control of the association is turned over
16 27 to the members other than the developer, which provide for
16 28 operation, maintenance, or management of the association or
16 29 common areas must be fair and reasonable.
16 30 Sec. 11. NEW SECTION. 557D.11 RECREATIONAL LEASEHOLDS –
16 31 RIGHT TO ACQUIRE – ESCALATION CLAUSES.
16 32 1. A lease of recreational or other commonly used
16 33 facilities serving a community, which lease is entered into by
16 34 the association or its members before control of the
16 35 association is turned over to the members other than the
17 1 developer, must provide as follows:
17 2 a. That the facilities shall not be offered for sale
17 3 unless the association has the option to purchase the
17 4 facilities, provided the association meets the price and terms
17 5 and conditions of the facility owner by executing a contract
17 6 with the facility owner within ninety days, unless agreed to
17 7 otherwise, from the date of mailing of the notice by the
17 8 facility owner to the association. If the facility owner
17 9 offers the facilities for sale, the owner shall notify the
17 10 association in writing stating the price and the terms and
17 11 conditions of sale.
17 12 b. If a contract between the facility owner and the
17 13 association is not executed within the ninety-day period,
17 14 unless extended by mutual agreement, then, unless the facility
17 15 owner thereafter elects to offer the facilities at a price
17 16 lower than the price specified in the owner's notice to the
17 17 association, the owner has no further obligations under this
17 18 subsection, and the owner's only obligation shall be as set
17 19 forth in subsection 2.
17 20 c. If the facility owner thereafter elects to offer the
17 21 facilities at a price lower than the price specified in the
17 22 owner's notice to the association, the association will have
17 23 an additional ten days to meet the price and terms and
17 24 conditions of the facility owner by executing a contract.
17 25 2. If a facility owner receives a bona fide offer to
17 26 purchase the facilities that the owner intends to consider or
17 27 make a counteroffer to, the owner's only obligations shall be
17 28 to notify the association that the owner has received an
17 29 offer, to disclose the price and material terms and conditions
17 30 upon which the owner would consider selling the facilities,
17 31 and to consider any offer made by the association. The
17 32 facility owner shall be under no obligation to sell to the
17 33 association or to interrupt or delay other negotiations, and
17 34 the owner shall be free at any time to execute a contract for
17 35 sale of the facilities to a party or parties other than the
18 1 association.
18 2 3. a. As used in subsections 1 and 2, the term "notify"
18 3 means the placing of a notice in the United States mail
18 4 addressed to the president of the association. Each notice
18 5 shall be deemed to have been given upon the deposit of the
18 6 notice in the United States mail.
18 7 b. As used in subsection 1, the term "offer" means any
18 8 solicitation by the facility owner directed to the general
18 9 public.
18 10 4. This section does not apply to any of the following:
18 11 a. A sale or transfer to a person who would be included
18 12 within the table of descent and distribution if the facility
18 13 owner were to die intestate.
18 14 b. A transfer by gift, devise, or operation of law.
18 15 c. A transfer by a corporation to an affiliate. As used
18 16 in this paragraph, "affiliate" means a shareholder of the
18 17 transferring corporation; a corporation or entity owned or
18 18 controlled, directly or indirectly, by the transferring
18 19 corporation; or another corporation or entity owned or
18 20 controlled, directly or indirectly, by a shareholder of the
18 21 transferring corporation.
18 22 d. A transfer to a governmental or quasi-governmental
18 23 entity.
18 24 e. A conveyance of an interest in the facilities
18 25 incidental to the financing of the facilities.
18 26 f. A conveyance resulting from the foreclosure of a
18 27 mortgage, deed of trust, or other instrument encumbering the
18 28 facilities or a deed given in lieu of the foreclosure.
18 29 g. A sale or transfer between or among joint tenants in
18 30 common owning the facilities.
18 31 h. The purchase of the facilities by a governmental entity
18 32 under its powers of eminent domain.
18 33 5. a. The general assembly declares that the public
18 34 policy of this state prohibits the inclusion or enforcement of
18 35 escalation clauses in land leases or other leases for
19 1 recreational facilities, land, or other commonly used
19 2 facilities that serve residential communities, and those
19 3 clauses are declared void. For purposes of this subsection,
19 4 an escalation clause is any clause in a lease which provides
19 5 that the rental rate under the lease or agreement is to
19 6 increase at the same percentage rate as any nationally
19 7 recognized and conveniently available commodity or consumer
19 8 price index.
19 9 b. This public policy prohibits the inclusion of the
19 10 escalation clauses in leases entered into on or after July 1,
19 11 2002.
19 12 c. This section is inapplicable to any of the following:
19 13 (1) If the lessor is the federal government, this state,
19 14 any political subdivision of this state, or any agency of a
19 15 political subdivision of this state.
19 16 (2) To an association that is in existence before July 1,
19 17 2002.
19 18 Sec. 12. NEW SECTION. 557D.12 DISPUTE RESOLUTION.
19 19 The general assembly finds that alternative dispute
19 20 resolution often reduces court dockets and trials and offers a
19 21 more efficient, cost-effective option to litigation. At any
19 22 time after the filing in a court of competent jurisdiction of
19 23 a complaint relating to a dispute under this chapter, the
19 24 court may order that the parties enter mediation or
19 25 arbitration procedures.
19 26 Sec. 13. NEW SECTION. 557D.13 DECLARATION OF COVENANTS
19 27 AND SURVIVAL AFTER TAX DEED OR FORECLOSURE.
19 28 All provisions of a declaration of covenants relating to a
19 29 parcel that has been sold for taxes or special assessments
19 30 survive and are enforceable after the issuance of a tax deed,
19 31 or upon the foreclosure of an assessment, a certificate or
19 32 lien, a tax deed, tax certificate, or tax lien, to the same
19 33 extent that the provisions would be enforceable against a
19 34 voluntary grantee of title to the parcel immediately before
19 35 the delivery of the tax deed or immediately before the
20 1 foreclosure.
20 2 EXPLANATION
20 3 This bill provides statutory recognition to corporations
20 4 that operate residential communities in this state, to provide
20 5 procedures for operating homeowners' associations, and to
20 6 protect the rights of association members without unduly
20 7 impairing the ability of these homeowners' associations to
20 8 perform their functions. The bill does not apply to a
20 9 community that is composed of property primarily intended for
20 10 commercial, industrial, or other nonresidential use and does
20 11 not apply to commercial or industrial parcels in a community
20 12 that has both residential parcels and parcels intended for
20 13 commercial and industrial use. In addition, the bill does not
20 14 apply to associations formed by owners or residents of a
20 15 manufactured home community, mobile home park, residential
20 16 cooperative, horizontal property regime (condominiums), and a
20 17 time-share project.
20 18 The bill provides the following:
20 19 That the association has broad powers limited only by the
20 20 chapter in the bill and the initial governing documents.
20 21 Meetings of the board of directors of the association, which
20 22 must be established as an Iowa corporation, must be open to
20 23 all owners of parcels in the community and general notice must
20 24 be provided of the meeting dates. No assessment my be adopted
20 25 at a meeting unless the notice of the meeting provides that an
20 26 assessment will be considered. Minutes of each meeting shall
20 27 be available to members and include all matters voted upon.
20 28 Official records of the association shall be kept and made
20 29 available to members. These include: plans for the
20 30 community, bylaws, articles of incorporation, minutes, list of
20 31 members, insurance policies, and financial and accounting
20 32 records.
20 33 That the parcel owners have a right to use the common areas
20 34 and recreational facilities of the community and the right of
20 35 the parcel owners to peaceably assemble is not to be
21 1 restricted. Penalties are assessed for failure to follow the
21 2 rules of the association or pay assessments.
21 3 That meetings of the members of the association be held
21 4 annually for the election of directors of the association and
21 5 the transaction of any other proper business. Proxy voting is
21 6 allowed at these meetings.
21 7 That the control of the association is turned over to the
21 8 members other than the developer when at least 90 percent of
21 9 the parcels are owned by such members and all documents
21 10 relating to and personal property and funds of the association
21 11 are turned over to the members.
21 12 That the governing documents must describe the manner in
21 13 which expenses are shared and the member's proportional share
21 14 of them. Assessments shall be levied pursuant to an annual
21 15 budget and must be in the member's proportional share.
21 16 However, the share may be different among classes of parcels,
21 17 services rendered, or other relevant factors.
21 18 That recreational facilities or other common facilities
21 19 that are leased by the association prior to control of the
21 20 association being turned over to the members must provide that
21 21 the facility shall not be offered for sale unless the
21 22 association has the option to purchase the facility. In
21 23 addition, escalation clauses in leases are void. These
21 24 clauses provide that the rental rate of the recreational
21 25 facilities, land, or other common facilities increase at the
21 26 same percentage rate as any nationally recognized and
21 27 conveniently available commodity or consumer price index.
21 28 These provisions relating to leases only apply to those
21 29 entered into on or after July 1, 2002.
21 30 LSB 5650HH 79
21 31 mg/sh/8
Text: HF02441 Text: HF02443 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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