Legislature(2021 - 2022)BARNES 124
03/16/2022 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB363 | |
| Presentation: Child Care Trust Fund | |
| SB143 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 363 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | SB 143 | TELECONFERENCED | |
SB 143-COMMON INTEREST COMMUNITIES; LIENS
4:59:09 PM
CO-CHAIR FIELDS announced that the final order of business would
be SENATE BILL NO. 143, "An Act relating to horizontal property
regimes and common interest communities; and relating to
mortgages, deeds of trust, and other property liens."
4:59:31 PM
EMMA TORKELSON, Staff, Senator Josh Revak, Alaska State
Legislature, on behalf of Senator Revak, sponsor of SB 143,
introduced the bill. She stated that SB 143 fixes two issues
that have been causing problems for homeowner associations
(HOAs) and condominium owner associations (COAs) for years. She
explained that in 1986, the [Alaska] Uniform Common Interest
Ownership Act (UCIOA) made an overhaul of HOA and COA statute.
The amendment process created by UCIOA requires that HOAs
receive written consent from all loan holders before HOAs can
make amendments to their governing documents. However, HOAs
have found it nearly impossible to get these written responses
to their request for consent from the lienholders so they are
left with long outdated rules that they cannot change.
MS. TORKELSON explained that SB 143 does not repeal the current
process but codifies a process so that if HOAs provide the
required notice to lienholders and do not receive a response
within 60 days the lienholder is considered to have approved it
and the association can proceed with the rest of the regular
process to amend its governing documents. She clarified that SB
143 does not change anything about the requirement for HOAs to
receive written consent from homeowners or any other written
requirement, it will just simply stop HOAs from being unable to
change their documents if lienholders don't respond to their
requests.
MS. TORKELSON further explained that currently when a homeowner
stops paying their dues or abandons their home, HOAs created
after 1986 can collect up to six months of unpaid dues from the
primary lienholder. However, HOAs created before 1986 don't get
that same right and must absorb the cost, often passing it
directly along to the other homeowners in the association. So,
SB 143 clarifies what is already in statute to assure that the
approximately 150 pre-1986 or pre-UCIOA associations will also
be able to collect their unpaid dues just like their post-1986
counterparts. This clarification will provide consistency with
how these liens are handled for both pre- and post-1986.
MS. TORKELSON concluded her introduction of SB 143 by pointing
out that the bill will directly benefit all dues paying home and
condominium owners associations and grant all associations,
regardless of when they were formed, the same flexibility and
rights.
5:02:22 PM
MS. TORKELSON provided the sectional analysis of SB 143. She
paraphrased from the written sectional analysis, which read as
follows [original punctuation provided]:
Section 1 Amends AS 34.07 by adding a new section
which lays out an alternative method for Common
Interest communities formed before Uniform Common
Interest Ownership Act of 1986 (UCIOA) to obtain
lienholder approval of proposed changes to their
governing documents.
Under this section, pre-UCIOA communities who choose
to use this alternative "shall send to a lienholder a
dated written notice and a copy of the proposed
amendment by certified mail, return receipt
requested[.]" If the association complies with the
written notice requirements and the lienholder does
not respond within 60 days of the postmark date of the
notice, "the lienholder is considered to have approved
the proposed amendment."
Section 2 Amends AS 34.08 to clarify that
communities formed before UCIOA are granted super-
priority lien status in the same way that their post-
UCIOA counterparts are currently granted by AS
34.08.470(b).
Section 3 Inserts the same language as in Section 1
to AS 34.08 by to provide an alternative method for
Common Interest Communities formed after 1986 to
obtain lienholder approval of proposed changes to
their governing documents.
Under this section, post-UCIOA communities who choose
to use this alternative "shall send to a lienholder a
dated written notice and a copy of the proposed
amendment by certified mail, return receipt
requested[.]" If the association complies with the
written notice requirements and the lienholder does
not respond within 60 days of the postmark date of the
notice, "the lienholder is considered to have approved
the proposed amendment."
CO-CHAIR FIELDS open invited testimony on SB 143.
5:04:38 PM
SARAH BADTEN, Attorney, Birch Horton Bittner & Cherot, provided
invited testimony in support of SB 143. She noted that she's
been practicing community association law in Alaska for about 15
years. She said SB 143 is much needed legislation for
especially the older homeowners' associations in Alaska. She
explained that she helps homeowner associations and condominium
associations enforce their governing documents and interpret
their governing documents. She cannot tell the committee how
many times over the years she has had condominium and homeowner
associations be unable to amend their governing documents
because of this onerous written requirement by the lienholders.
Some of these associations even require 100 percent written
consent from the lienholders, which is very burdensome when
national banks hold these liens and they don't care about a
little HOA in Alaska, so getting that written approval is almost
impossible. What that means is that older associations are
having to either violate their own governing documents to take
some action, which she can never recommend, or they must govern
under archaic rules, which is unfair. She posed an example of
all unit owners in an association wanting the association to
take over the maintenance of mailboxes, but the current
declaration requires that the unit owners themselves maintain
their own mailboxes. Because of this requirement, any amendment
must be approved by the lienholder in writing, so even a change
as simple as this cannot be done.
5:07:32 PM
MS. BADTEN stated that SB 143 also solves another major problem,
which is that pre-1986 properties are continually getting
financially stuck with having to absorb costs that their post-
1986 counterparts are not having to deal with. She said this is
because of language that banks are saying invalidates the
declaration, so the banks are therefore refusing to pay the
super-priority lien on these pre-existing associations. It is
these older associations that need this protection the most
because they are the ones that have the older buildings in need
of repair, and they also tend to have more lower-income people
living in these buildings. It is only fair that these older
associations be given the same benefits that are granted to
post-1986 properties, especially when considering that it is
these mortgage lenders that are making the loans and, when an
owner doesn't pay, the association is still contractually
obligated to maintain and uphold the buildings and do yard
maintenance and snow removal, which benefits the secured
interest of that lienholder. Since it is the associations that
are maintaining the secured interest of the lienholders it is
only fair that the lienholders pay their fair share. Ms. Badten
added that SB 143 would put pre- and post-1986 properties on the
same footing.
5:09:36 PM
SUSAN JENSEN, Manager, Bayshore Owners Association, provided
invited testimony in support of SB 143. She noted that for the
past 18 years she has been the operations manager of Bayshore
Owners Association, which has 454 private homes and was founded
in 1974. She concurred with Ms. Badten's testimony and said SB
143 has important provisions for her association. She related
that Bayshore has wanted to amend its declarations many times
over the years and has been unable to do so because of the
burdensome requirement of bank approval in writing. For
example, she continued, Bayshore could find itself in violation
of its own governing documents when doing necessary maintenance
projects. There is a provision that any expenditure over
$20,000 requires a two-thirds approval of the members of the
association, already a hurdle, but without bank approval the
association cannot go forward even if it succeeds [in receiving
the two-thirds homeowner approval]. The association's governing
documents need to be amended to reflect the reality and the
association today. She recounted an example of when her
association lost out on a $100,000 improvement that would have
made it safer for children to walk to school using the
greenbelts and main roadway. The association was offered, at no
cost to the association, a paved lighted pathway connecting the
roadway through the association's greenbelt to three other roads
and further greenbelts in the subdivision. However, the
association would have had to cede the property to the
municipality, and because of being unable to amend its governing
documents the association lost out on that opportunity.
MS. JENSEN further related that the association often stands to
lose out on thousands of dollars owed to it for dues, attorney
fees, or maintenance on individual properties while the lenders
pay nothing while waiting for the eventual sale or foreclosure
of a home. Numerous lenders, she pointed out, have lawyers who
vigorously defend their right to pay nothing based on the Alaska
law as it stands now or their interpretation of it. The bag
gets passed on to innocent dues paying owners. She urged that
the bill be passed to protect older associations by being able
to amend their declarations and give super priority liens.
5:12:11 PM
CO-CHAIR FIELDS announced that SB 143 was held over.