House Study Bill 165 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ANDERSON) A BILL FOR An Act relating to the operations of certain common interest 1 communities. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1593HC (2) 84 md/sc

H.F. _____ DIVISION I 1 UNIFORM COMMON INTEREST OWNERSHIP ACT 2 Section 1. NEW SECTION . 499C.101 Title. 3 This chapter shall be known and cited as the “Uniform Common 4 Interest Ownership Act” . 5 Sec. 2. NEW SECTION . 499C.102 Public policy. 6 The general assembly declares that it is the public policy of 7 the state that the management and affairs of common interest 8 communities be conducted openly, and this chapter shall be 9 construed, to provide open access to the management of the 10 common interest community to the unit owners. 11 Sec. 3. NEW SECTION . 499C.103 Definitions. 12 As used in this chapter, unless the context otherwise 13 requires: 14 1. “Assessment” means a sum attributable to each unit and 15 due to the unit owners association as may be provided in a 16 declaration or in the bylaws. 17 2. “Bylaws” means the instruments, however denominated, 18 that contain the procedures for conducting the affairs of the 19 unit owners association or the executive board regardless of 20 the form in which the association is organized, including any 21 amendments to such instruments. 22 3. “Common element” means: 23 a. For a cooperative under chapter 499A or a horizontal 24 property regime under chapter 499B, all portions of the common 25 interest community other than the units. 26 b. For a planned community, any real estate within the 27 planned community which is owned or leased by the unit owners 28 association, other than a unit. 29 c. For all common interest communities, any other interests 30 in real estate for the benefit of unit owners which are subject 31 to the declaration. 32 4. “Common expense liability” means the liability for common 33 expenses allocated to each unit pursuant to a declaration or 34 bylaws. 35 -1- LSB 1593HC (2) 84 md/sc 1/ 24

H.F. _____ 5. “Common expenses” means expenditures made by, or 1 financial liabilities of, the unit owners association or the 2 executive board, together with any allocations to reserves. 3 6. a. “Common interest community” means real estate 4 described in a declaration with respect to which a person, 5 by virtue of the person’s ownership of a unit, is obligated 6 to pay for a share of real estate taxes, insurance premiums, 7 maintenance, or improvement of, or services or other expenses 8 related to, common elements, other units, or other real estate 9 described in the declaration. “Common interest community” 10 includes a cooperative under chapter 499A and a horizontal 11 property regime under chapter 499B. 12 b. Common interest community does not include: 13 (1) A covenant that requires the owners of separate parcels 14 of real estate to share costs or other obligations related to a 15 wall, driveway, well, or other similar structure, unless all 16 such owners consent in writing to the creation of a common 17 interest community. 18 (2) Real estate described in paragraph “a” if all units are 19 owned by a single unit owner. 20 7. “Declarant” means any person or group of persons who, 21 as the record title owner of real estate, by a declaration, 22 initially creates a common interest community. 23 8. “Declaration” means the instrument, however denominated, 24 that creates a common interest community, including any 25 amendments to the instrument. 26 9. “Executive board” means the body, regardless of name, 27 designated in the declaration or bylaws to act on behalf of the 28 unit owners association. 29 10. “Planned community” means a common interest community 30 that is not a cooperative under chapter 499A or a horizontal 31 property regime under chapter 499B, and includes property 32 owner or homeowner associations. However, a cooperative under 33 chapter 499A or a horizontal property regime under chapter 499B 34 may be part of a planned community. 35 -2- LSB 1593HC (2) 84 md/sc 2/ 24

H.F. _____ 11. “Rule” means a policy, guideline, restriction, 1 procedure, or regulation, however denominated, which is not set 2 forth in the declaration or bylaws. 3 12. “Unit” means a physical portion of the common interest 4 community designated for separate ownership or occupancy or 5 as otherwise defined in the statute under which the common 6 interest community is organized. 7 13. “Unit owner” means a declarant or other person that owns 8 a unit, but does not include a person having an interest in a 9 unit solely as security for an obligation. In a horizontal 10 property regime under chapter 499B or a planned community, the 11 declarant is the owner of any unit created by the declaration. 12 In a cooperative under chapter 499A, the declarant is the owner 13 of any unit to which an interest has been allocated until that 14 unit has been conveyed to another person. 15 14. “Unit owners association” means a unit owners 16 association organized under section 499C.201. 17 Sec. 4. NEW SECTION . 499C.104 Variation by agreement. 18 Except as expressly provided in this chapter, the provisions 19 of this chapter may not be varied by agreement, and rights 20 conferred by it may not be waived. 21 Sec. 5. NEW SECTION . 499C.105 Applicability. 22 Unless otherwise provided by law: 23 1. This chapter applies to all common interest communities 24 established within this state on or after July 1, 2011. 25 2. This chapter does not apply to common interest 26 communities of three or fewer units. 27 3. Sections 499C.301, 499C.302, 499C.401, 499C.402, 28 499C.403, and 499C.501 apply to common interest communities 29 established before July 1, 2011. Any portion of a declaration, 30 bylaws, covenant, or other contractual provision existing prior 31 to July 1, 2011, that violates section 499C.301, 499C.302, 32 499C.401, 499C.402, or 499C.403 is not enforceable. However, 33 nothing in this chapter shall be construed to invalidate other 34 provisions of the declaration, bylaws, plats, or plans of those 35 -3- LSB 1593HC (2) 84 md/sc 3/ 24

H.F. _____ common interest communities established before July 1, 2011. 1 Sec. 6. NEW SECTION . 499C.201 Unit owners association. 2 1. A unit owners association shall be organized not later 3 than the date the first unit in the common interest community 4 is conveyed. 5 2. Membership of a unit owners association shall at all 6 times consist exclusively of all unit owners except following 7 termination of the common interest community, at which time 8 the unit owners association shall consist of all former unit 9 owners entitled to distributions of proceeds or their heirs, 10 successors, or assigns. 11 3. A unit owners association shall have an executive board. 12 4. A unit owners association shall be organized as a 13 profit or nonprofit corporation, trust, limited liability 14 company, partnership, unincorporated association, or any other 15 form of organization authorized by the law of this state. 16 The requirements of this chapter relating to a unit owners 17 association shall preempt any conflicting provision of the 18 statute under which the unit owner association is organized. 19 Sec. 7. NEW SECTION . 499C.202 Unit owners association —— 20 powers and duties. 21 1. Except as otherwise provided in this chapter, a unit 22 owners association shall do all of the following: 23 a. Adopt bylaws which may be amended subject to the 24 provisions of section 499C.301. 25 b. Adopt budgets, collect assessments for common expenses 26 from unit owners, and invest funds of the association, if 27 applicable. 28 2. Unless otherwise limited by a declaration or bylaws, a 29 unit owners association shall have authority to do any of the 30 following: 31 a. Adopt and amend rules for operation of the unit owners 32 association. 33 b. Hire, employ, and discharge employees, agents, and 34 independent contractors. 35 -4- LSB 1593HC (2) 84 md/sc 4/ 24

H.F. _____ c. Institute, defend, or intervene in litigation, 1 arbitration, mediation, or administrative proceedings on behalf 2 of the unit owners association or for two or more unit owners 3 on matters affecting the common interest community. 4 d. Make contracts and incur liabilities. 5 e. Regulate the use, maintenance, repair, replacement, and 6 modification of common elements. 7 f. Cause additional improvements to be made to the common 8 elements of the common interest community. 9 g. Acquire, hold, encumber, and convey any right, title, or 10 interest to real estate or personal property. 11 h. Grant easements, leases, licenses, and concessions 12 through or over the common elements of the common interest 13 community. 14 i. Impose and receive any payments, fees, or charges for the 15 use, rental, or operation of the common elements, other than 16 limited common elements as defined in section 499B.2, and for 17 services provided to unit owners. 18 j. Impose charges for late payment of assessments and, 19 after notice and an opportunity to be heard, impose reasonable 20 monetary penalties for violations of the declaration, bylaws, 21 and rules of the association. 22 k. Impose reasonable charges for the preparation and 23 recording of statements of unpaid assessments. 24 l. Provide for the indemnification of its officers and 25 executive board, including maintenance of liability insurance 26 for directors and officers of the unit owners association. 27 m. Assign its right to future income, including the right 28 to receive assessments. 29 n. Exercise powers conferred by the declaration or bylaws. 30 o. Exercise all other powers that may be exercised in this 31 state by organizations of the same type as the unit owners 32 association. 33 p. Suspend any right or privilege of a unit owner who fails 34 to pay an assessment. The unit owners association shall not, 35 -5- LSB 1593HC (2) 84 md/sc 5/ 24

H.F. _____ however, deny a unit owner or other occupant access to the 1 owner’s unit, suspend a unit owner’s right to vote, prevent a 2 unit owner from seeking election as a director or officer of 3 the association, or withhold services provided to a unit or a 4 unit owner by the association if the effect of withholding the 5 service would be to endanger the health, safety, or property 6 of any person. 7 q. Exercise any other powers necessary and proper for the 8 governance and operation of the association. 9 3. If a tenant of a unit owner violates the declaration, 10 bylaws, or rules of the association, in addition to exercising 11 any of its powers against the unit owner, the association may 12 do any of the following: 13 a. Exercise the powers described in subsection 2, paragraph 14 “j” , against the offending tenant. 15 b. After giving notice to the tenant and the unit owner 16 and providing each an opportunity to be heard, levy reasonable 17 monetary penalties against the tenant for the violation. 18 c. Take other action against the tenant for the violation in 19 the same manner as the unit owner, acting as landlord, could 20 have exercised under the lease or in the manner that the unit 21 owners association could lawfully have taken action directly 22 against the unit owner, or both. Action under this paragraph 23 may only be taken if the tenant or unit owner fails to remedy 24 the violation within ten days after notification by the unit 25 owners association of the violation. 26 4. Unless a lease of a unit otherwise provides, this section 27 does not do any of the following: 28 a. Affect rights that the unit owner possesses to enforce 29 the lease or that the unit owners association has under other 30 provisions of law. 31 b. In the absence of a violation of the declaration, bylaws, 32 or rules, authorize the unit owners association to enforce a 33 lease to which the unit owners association is not a party. 34 5. An executive board may determine whether to exercise 35 -6- LSB 1593HC (2) 84 md/sc 6/ 24

H.F. _____ the association’s power to impose sanctions or commence an 1 action for a violation of the declaration, bylaws, or rules, 2 including whether to settle any claim for unpaid assessments or 3 other claim made by or against the unit owners association. An 4 executive board does not have a duty to take enforcement action 5 if the executive board determines, following consideration of 6 the facts and circumstances presented, any of the following: 7 a. The association’s legal position does not justify taking 8 any or further enforcement action. 9 b. The covenant, restriction, or rule being enforced is, or 10 is likely to be construed as, inconsistent with law. 11 c. Despite the existence of a violation, the violation is 12 nonmaterial and does not justify expenditure of the unit owners 13 association resources. 14 d. It is not in the unit owners association’s best interests 15 to pursue an enforcement action. 16 6. The failure of an executive board to take action pursuant 17 to subsection 5 shall not prevent the executive board from 18 taking enforcement action under a similar set of circumstances 19 or facts. The authority of an executive board to take action 20 under this chapter shall not, however, be exercised in a 21 arbitrary or capricious manner. 22 Sec. 8. NEW SECTION . 499C.203 Executive board. 23 1. Except as otherwise provided in the declaration, the 24 bylaws, subsection 2, or provisions of the statute under which 25 the common interest community is organized, an executive 26 board acts on behalf of the unit owners association. In 27 the performance of their duties, officers and members of the 28 executive board appointed by the declarant shall exercise the 29 degree of care and loyalty to the unit owners association 30 required of a trustee. Officers and members of an executive 31 board not appointed by the declarant shall exercise the degree 32 of care and loyalty to the unit owners association required 33 of an officer or director of a corporation organized under 34 chapter 504, and such officers and members are subject to the 35 -7- LSB 1593HC (2) 84 md/sc 7/ 24

H.F. _____ conflict of interest rules governing directors and officers 1 under chapter 504. 2 2. An executive board shall not act on behalf of the unit 3 owners association to amend the declaration, to terminate the 4 common interest community, to elect members of the executive 5 board, or determine the qualifications, powers and duties, or 6 terms of office of executive board members. An executive board 7 may fill vacancies in its membership for the unexpired portion 8 of any term. 9 3. a. Subject to subsection 4, the declaration may 10 provide for a period of declarant control of the unit owners 11 association, during which a declarant, or persons designated by 12 the declarant, may appoint and remove the officers and members 13 of the executive board. In no case, however, shall a period of 14 declarant control continue upon the occurrence of any of the 15 following: 16 (1) Sixty days after the conveyance of seventy-five percent 17 of all units in the common interest community to unit owners 18 other than a declarant; 19 (2) Two years after all declarants have ceased to offer 20 units for sale in the ordinary course of business. 21 (3) Two years after the addition of any number of new units 22 to the common interest community. 23 (4) The date the declarant, after giving written notice 24 to all unit owners, records an instrument voluntarily 25 surrendering all rights to control activities of the unit 26 owners association. 27 b. A declarant may voluntarily surrender the right to 28 appoint and remove officers and members of the executive board 29 before termination of the period under paragraph “a” . However, 30 the declarant may retain, for the duration of the period of 31 declarant control, approval authority for specified actions of 32 the unit owners association or executive board, as described in 33 a recorded instrument executed by the declarant. 34 4. a. Not later than sixty days after conveyance of 35 -8- LSB 1593HC (2) 84 md/sc 8/ 24

H.F. _____ twenty-five percent of the units to unit owners other than a 1 declarant, at least one member and not less than twenty-five 2 percent of the members of the executive board must be elected 3 by unit owners other than the declarant. 4 b. Not later than sixty days after conveyance of fifty 5 percent of the units to unit owners other than a declarant, not 6 less than one-third of the members of the executive board must 7 be elected by unit owners other than the declarant. 8 5. Following the termination of any period of declarant 9 control under this section, the unit owners shall elect an 10 executive board of at least three members, at least a majority 11 of whom must be unit owners. The executive board members shall 12 elect officers of the executive board. The executive board 13 members and officers shall take office upon election. This 14 subsection shall not apply to a common interest community if 15 all the units of the community are owned by one owner. 16 6. Notwithstanding any provision of the declaration or 17 bylaws to the contrary, the unit owners, by a two-thirds vote 18 of all persons present and entitled to vote at any meeting of 19 the unit owners at which a quorum is present, may remove any 20 member of the executive board with or without cause, other than 21 a member appointed by the declarant. 22 Sec. 9. NEW SECTION . 499C.301 Amendments to governing 23 instruments. 24 1. Except as otherwise provided in this section: 25 a. The declaration, bylaws, or plans of a common interest 26 community established before July 1, 2011, may be amended upon 27 approval of two-thirds of the unit owners or as otherwise 28 provided in the declaration or bylaws. 29 b. The declaration, bylaws, or plans of a common interest 30 community created on or after July 1, 2011, may be amended by 31 two-thirds of the unit owners unless the declaration or bylaws 32 expressly require a greater or lesser percentage. 33 2. Notwithstanding any provision of law to the contrary, a 34 declaration may expressly reserve authority to the executive 35 -9- LSB 1593HC (2) 84 md/sc 9/ 24

H.F. _____ board, with or without the consent of unit owners, to amend the 1 declaration, bylaws, or plans of a common interest community to 2 add land, buildings, or both. 3 3. a. Following adoption of an amendment to a declaration, 4 bylaws, or plans, the amendment or a copy of the amended 5 declaration, bylaws, or plan shall be recorded with the county 6 recorder of the county where the property is located. 7 b. An amendment may be recorded on behalf of the required 8 number of unit owners by the officers of the association if the 9 officers verify under oath that the proceedings to approve the 10 amendment satisfied the requirements of this chapter. 11 4. An amendment to a declaration, the bylaws, or plans to 12 prohibit or materially restrict the permitted uses of a unit, 13 the permitted uses of a common element, or the number or other 14 qualifications of persons who may occupy units shall only be 15 approved upon the affirmative vote of unit owners equal in 16 number to at least eighty percent of the total unit owner votes 17 in the association, unless the declaration requires a larger 18 percentage. An amendment approved under this subsection shall 19 provide reasonable protection for a use or occupancy permitted 20 prior to adoption of the amendment. 21 5. a. If a declaration, the bylaws, or a plan requires 22 the consent of a holder of a security interest in a unit as a 23 condition to the adoption or implementation of an amendment, 24 consent is deemed provided if a written refusal to consent 25 is not received by the association within sixty days after 26 the association delivers notice of the proposed amendment to 27 the holder of the security interest at an address provided by 28 the holder or after the association mails the notice of the 29 proposed amendment to the holder by certified mail, return 30 receipt requested, at the address provided. If the holder of 31 a security interest has not provided to the association an 32 address for notice, the association shall provide notice to the 33 address in the security interest of record, if available. 34 b. Notwithstanding any provision of this section to the 35 -10- LSB 1593HC (2) 84 md/sc 10/ 24

H.F. _____ contrary, an amendment to the declaration, bylaws, or plans 1 that affects the priority of a holder’s security interest or 2 the ability of a holder to foreclose a security interest may 3 not be adopted without the security holder’s written consent if 4 the declaration, bylaws, or plans requires that consent as a 5 condition to the adoption or implementation of the amendment. 6 6. If a declaration requires that amendments, including 7 amendments under subsection 4, to the declaration, bylaws, or 8 plans be adopted only upon the affirmative vote of unit owners 9 equal in number to at least eighty percent of the total unit 10 owner votes in the association, the amendment is approved if 11 one of the following is met: 12 a. A number of unit owners comprising at least eighty 13 percent of the total unit owner votes in the association votes 14 affirmatively for the proposed amendment, no owner votes 15 against the proposed amendment, all required notices of the 16 proposed amendment are delivered to each unit owner as required 17 under this chapter, and the association does not receive a 18 written objection to the proposed amendment within sixty days 19 after delivery of the notice. 20 b. A number of unit owners comprising at least eighty 21 percent of the total unit owner votes in the unit owners 22 association votes affirmatively for the proposed amendment 23 unit, one or more owner votes against the proposed amendment, 24 and pursuant to an action brought by the association in the 25 district court of the county where the property is located 26 against all objecting unit owners, the court finds that the 27 objecting unit owners do not have an interest different in kind 28 from the interests of the other unit owners that the voting 29 requirement of the declaration, bylaws, or plans was intended 30 to protect. 31 7. An action challenging the validity of an amendment 32 adopted pursuant to this chapter shall not be brought more than 33 one year after the amendment is recorded. 34 Sec. 10. NEW SECTION . 499C.302 Rules. 35 -11- LSB 1593HC (2) 84 md/sc 11/ 24

H.F. _____ 1. Unless otherwise limited by a declaration or bylaws, an 1 executive board may adopt and amend rules for the operation 2 of the executive board or other matters authorized in the 3 declaration or bylaws. Before adopting, amending, or repealing 4 a rule, the executive board shall give each unit owner a notice 5 that states the executive board’s intention to adopt, amend, 6 or repeal a rule, provides the text of the rule or the proposed 7 change, and states the date the executive board intends to act 8 on the proposed rule or amendment following consideration of 9 comments from unit owners. 10 2. A unit owners association may adopt rules to establish 11 and enforce construction and design criteria and aesthetic 12 standards if the declaration so provides. In accordance 13 with the declaration, a unit owners association shall adopt 14 procedures for enforcement of those standards and for approval 15 of construction applications, including a timeline within which 16 the unit owners association must act on an application and the 17 consequences of a unit owners association’s failure to act. 18 3. Following adoption, amendment, or repeal of a rule, the 19 officers of the unit owners association or executive board, 20 as applicable, shall notify each unit owner of the action and 21 provide a copy of any new or revised rule. 22 4. A rule regulating display of the flag of the United 23 States shall be consistent with federal law. A unit owners 24 association shall not prohibit on a unit or on a limited 25 common element, as defined in section 499B.2, adjoining a unit 26 the display of the flag of this state, or signs regarding 27 candidates for public office or unit owners association 28 office or public measures, but the association may adopt rules 29 governing the time, place, size, number, and manner of those 30 displays. 31 5. Unit owners may peacefully assemble on common elements to 32 consider matters related to the common interest community, but 33 the unit owners association may adopt rules governing the time, 34 place, and manner of such assemblies. 35 -12- LSB 1593HC (2) 84 md/sc 12/ 24

H.F. _____ 6. A unit owners association may adopt rules that restrict 1 the use of unit or behavior within units that may be used for 2 residential purposes, but only to do the following: 3 a. Implement a provision of the declaration. 4 b. Regulate a behavior in or the occupancy of a unit that 5 violates the declaration or adversely affects the use and 6 enjoyment of other units or the common elements by other unit 7 owners. 8 c. Restrict the leasing of residential units to the 9 extent the rules are reasonably designed to meet underwriting 10 requirements of institutional lenders that regularly make 11 loans secured by first mortgages on units in common interest 12 communities or regularly purchase such mortgages. 13 7. A unit owners association’s internal business operating 14 procedures are exempt from the requirements of this section. 15 8. Each rule adopted by a unit owners association or 16 executive board shall be reasonable in nature and scope. 17 Sec. 11. NEW SECTION . 499C.401 Meetings. 18 1. Meetings of a unit owners association, whether such 19 association is incorporated or unincorporated, shall comply 20 with all of the following: 21 a. A unit owners association shall hold a meeting of 22 unit owners annually at a time, date, and place stated in or 23 determined in accordance with the declaration or bylaws. 24 b. A unit owners association shall hold a special meeting 25 of unit owners to address any matter affecting the unit owners 26 association if the association’s president, a majority of the 27 executive board, or an amount of unit owners comprising at 28 least twenty percent of all votes in the association, unless a 29 different percentage is specified in the bylaws, request that 30 the secretary call the meeting. If the unit owners association 31 does not notify unit owners of a special meeting within thirty 32 days after the required number of unit owners has requested the 33 secretary to call a special meeting, the requesting members may 34 directly notify all unit owners of the meeting. Only matters 35 -13- LSB 1593HC (2) 84 md/sc 13/ 24

H.F. _____ described in the meeting notice may be considered at a special 1 meeting. 2 c. A unit owners association shall notify each unit owner 3 of the time, date, and place of each annual and special unit 4 owners meeting not less than ten days and not more than sixty 5 days before the meeting date. Notice may be by any means 6 described in section 499C.403. Each meeting notice shall state 7 the time, date, and place of the meeting and the items on the 8 agenda, including but not limited to: 9 (1) A statement of the general nature of any proposed 10 amendment to the declaration or bylaws. 11 (2) A statement describing any budget changes. 12 (3) Any proposal to remove an officer or member of the 13 executive board. 14 d. The requirements relating to the timing of meeting 15 notices under paragraph “c” may be reduced or waived for a 16 meeting called to address an emergency. A meeting called to 17 address an emergency shall be limited to matters arising out of 18 the emergency. The decision of an officer of the unit owners 19 association to convene a meeting for an emergency shall be 20 ratified by a majority of unit owners required by the bylaws to 21 conduct the business of the unit owners association. 22 e. Each unit owner shall be given a reasonable opportunity 23 at any meeting to comment on any matter affecting the common 24 interest community or the unit owners association. 25 f. The declaration or bylaws may allow for meetings of 26 unit owners to be conducted by telephonic, video, or other 27 conferencing method, if such method is consistent with 28 subsection 2, paragraph “g” . 29 2. Meetings of the executive board and committees of the 30 unit owners association, authorized to act for the unit owners 31 association, shall comply with all of the following: 32 a. Meetings shall be open to the unit owners except during 33 executive sessions. The executive board and committees of 34 the unit owners association may hold an executive session 35 -14- LSB 1593HC (2) 84 md/sc 14/ 24

H.F. _____ only during a regular or special meeting of the board or the 1 committee. No final vote or action may be taken during an 2 executive session. An executive session may only be held for 3 the following reasons: 4 (1) To consult with the unit owners association’s attorney 5 concerning legal matters governed by attorney-client privilege. 6 (2) To discuss existing or potential litigation or 7 mediation, arbitration, or administrative proceedings. 8 (3) To discuss labor or personnel matters. 9 (4) To discuss contracts, leases, and other commercial 10 transactions for goods or services that are under negotiation, 11 including the review of bids or proposals, if public disclosure 12 of such matters would place the unit owners association at a 13 disadvantage. 14 (5) To prevent public knowledge of a matter if the executive 15 board or the committee determines that public disclosure would 16 violate the privacy of any person. 17 b. For purposes of this section, a gathering of board 18 members at which the board members do not conduct unit owners 19 association business is not a meeting of the executive board. 20 Executive board members shall not use incidental or social 21 gatherings of board members or any other method to evade the 22 meeting and notice requirements of this section. 23 c. During a period of declarant control, the executive board 24 shall meet at least four times a year. At least one of the 25 meetings shall be held at the common interest community or at 26 a place convenient to the unit owners of the common interest 27 community. After termination of the period of declarant 28 control, all executive board meetings shall be at the common 29 interest community or at a place convenient to the unit owners 30 of the common interest community unless the unit owners amend 31 the bylaws to vary the location of such meetings. 32 d. At each executive board meeting, the executive board 33 shall provide a reasonable opportunity for unit owners to 34 comment on any matter affecting the common interest community 35 -15- LSB 1593HC (2) 84 md/sc 15/ 24

H.F. _____ and the unit owners association. 1 e. Unless the meeting is included in a schedule given to the 2 unit owners or the meeting is called to address an emergency, 3 the secretary or other officer specified in the bylaws shall 4 give notice of each executive board meeting to each executive 5 board member and to each unit owner. Such notice shall be 6 given at least ten days before the meeting and shall state the 7 time, date, place, and agenda of the meeting. 8 f. If any materials are distributed to the executive board 9 before a meeting, the executive board, upon receipt of the 10 materials, shall make copies reasonably available to unit 11 owners, except that the executive board is not required to make 12 available copies of unapproved minutes or materials that are to 13 be considered during an executive session. 14 g. Unless otherwise provided in the declaration or bylaws, 15 the executive board may conduct a meeting by telephonic, video, 16 or other conferencing method if all of the following conditions 17 are met: 18 (1) The meeting notice states the conferencing method to 19 be used and provides information explaining how unit owners 20 may participate in the conference directly or by meeting at a 21 central location or conference connection. 22 (2) The process provides all unit owners the opportunity 23 to hear or perceive the discussion and to comment on matters 24 before the executive board. 25 h. Following termination of the period of declarant control, 26 unit owners may amend the bylaws to vary the procedures for 27 meetings described in paragraph “g” . 28 i. In lieu of a meeting, the executive board may act by 29 unanimous consent if such action is documented in a record 30 authenticated by all executive board members. The secretary 31 shall give prompt notice to all unit owners of any action 32 taken by unanimous consent. After termination of the period 33 of declarant control, an executive board may act by unanimous 34 consent only to undertake ministerial actions or to implement 35 -16- LSB 1593HC (2) 84 md/sc 16/ 24

H.F. _____ actions previously taken at a meeting of the executive board. 1 j. Unless otherwise restricted by this chapter or the common 2 interest community’s bylaws, an executive board may determine 3 rules of procedure for the executive board. 4 k. An executive board may remove any person from a meeting 5 of the executive board upon a finding by a majority of the 6 board members that the person is being disruptive to the 7 meeting. An executive board may bar any person from meetings 8 of the executive board or other meetings of the common interest 9 community for a period of up to one year if the person has 10 been twice removed from a meeting within the preceding twelve 11 months. 12 l. An action by an executive board that is not in compliance 13 with this section is valid unless invalidated by a court. A 14 challenge to the validity of an action of the executive board 15 for failure to comply with this section shall not be brought 16 more than sixty days after the minutes of the executive board 17 of the meeting at which the action was taken are approved 18 or the record of that action is distributed to unit owners, 19 whichever is later. 20 Sec. 12. NEW SECTION . 499C.402 Association records. 21 1. A unit owners association shall retain all of the 22 following: 23 a. Detailed records of receipts and expenditures relating to 24 the operation and administration of the unit owners association 25 and other appropriate accounting records. 26 b. Minutes of all unit owners meetings and executive board 27 meetings other than executive sessions, a record of all actions 28 taken by the unit owners or the executive board without a 29 meeting, and a record of all actions taken by a committee in 30 place of the executive board on behalf of the unit owners 31 association. 32 c. The names of all unit owners in a form that permits 33 preparation of a list of the names of all owners and the 34 addresses at which the unit owners association communicates 35 -17- LSB 1593HC (2) 84 md/sc 17/ 24

H.F. _____ with them, the records shall indicate the number of votes each 1 unit owner is entitled to cast. 2 d. The unit owners association’s original and amended 3 organizational documents, bylaws including all amendments to 4 the bylaws, and all rules of the common interest community 5 currently in effect. 6 e. All financial statements and tax returns of the unit 7 owners association for the past three years. 8 f. A list of the names and addresses of the current 9 executive board members and officers. 10 g. The unit association’s most recent annual report 11 delivered to the secretary of state, if applicable. 12 h. Copies of each contract to which the unit owners 13 association is currently a party. 14 i. Records of executive board or committee actions relating 15 to requests for design or architectural approval from unit 16 owners. 17 j. Ballots, proxies, and other records related to voting by 18 unit owners for one year after the election, action, or vote. 19 2. Except as provided under subsections 3 and 4, all records 20 retained by a unit owners association must be available for 21 examination and copying by a unit owner or the unit owner’s 22 authorized agent during reasonable business hours or at a 23 mutually convenient time and location upon providing a five 24 days’ notice that reasonably identifies the specific records 25 that are being requested. 26 3. Records retained by a unit owners association may be 27 withheld from inspection and copying to the extent that they 28 concern: 29 a. Personally identifiable information, salary, and medical 30 records relating to specific individuals. 31 b. Information relating to contracts, leases, and other 32 commercial transactions to purchase or provide goods or 33 services, currently under negotiation. 34 c. Information relating to existing or potential litigation, 35 -18- LSB 1593HC (2) 84 md/sc 18/ 24

H.F. _____ mediation, arbitration, or administrative proceedings. 1 d. Information relating to existing or potential matters 2 involving federal, state, or local administrative proceedings 3 or other proceedings before a government tribunal for 4 enforcement of the declaration, bylaws, or rules. 5 e. Communications with the unit owners association attorney 6 which are otherwise protected by the attorney-client privilege 7 or the attorney work-product doctrine. 8 f. Information that if disclosed would violate another 9 provision of law. 10 g. Records of an executive session of the executive board. 11 h. Records relating to a specific unit owner, if the person 12 requesting the records is not the unit owner that is the 13 subject of the records. 14 4. A unit owners association may charge a reasonable fee 15 for providing copies of any records under this section and for 16 supervising the inspection of such records. 17 5. The right to inspect records under this section includes 18 the right to copy records by photocopying or other means 19 including copies through an electronic transmission, if 20 available, upon request of the requester. 21 6. A unit owners association is not obligated to compile or 22 synthesize information or records under this section. 23 7. Information or records obtained under this section shall 24 not be used for commercial purposes. 25 Sec. 13. NEW SECTION . 499C.403 Notice to unit owners. 26 1. A unit owners association or an executive board, as 27 applicable, shall deliver each notice required to be given by 28 the association or board under this chapter to the regular mail 29 address or electronic mail address provided by each unit owner. 30 If a regular mail address or electronic mail address is not 31 provided by the unit owner, the notice may be delivered using 32 any of the following methods: 33 a. Hand delivery to the unit owner. 34 b. Mailing by regular mail or certified mail, as defined in 35 -19- LSB 1593HC (2) 84 md/sc 19/ 24