Give Homeowners Board Control

Section 1. The real property law is amended by adding a new article 16 to read as follows:

ARTICLE 16

TRANSITION TO HOMEOWNERS' ASSOCIATION CONTROL Section 500. Transition to homeowners' association control.

501. Definitions.

§ 500. Transition to homeowners' association control. 1. Homeowners, other than the real estate developer of a residential housing community are entitled to elect at least a majority of the members of the board of directors of the homeowners' association when the earlier of the following events occurs:

(a) three months after ninety percent of the parcels in all phases of the residential housing community that will ultimately be operated by the homeowners' association have been conveyed to members other than the developer;

(b) such other percentage of the parcels has been conveyed to members, or such other date or event has occurred, as is set forth in the articles of incorporation and bylaws of the homeowners' association in order to comply with the requirements of any governmentally chartered entity with regard to the mortgage financing of parcels;

(c) upon the developer abandoning or deserting its responsibility to maintain and complete the amenities or infrastructure as disclosed in the articles of incorporation and bylaws of the homeowners' association. There is a rebuttable presumption that the developer has abandoned and

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD03711-01-5

deserted the property if the developer has unpaid assessments or guaranteed amounts a period of more than two years;

(d) upon the developer filing a petition seeking protection under chapter seven of the federal bankruptcy code;

(e) upon the developer losing title to the property through a foreclosure action or the transfer of a deed in lieu of foreclosure, unless the successor owner has accepted an assignment of developer rights and responsibilities first arising after the date of such assignment; or

(f) upon a receiver for the developer being appointed by a circuit court and not being discharged within thirty days after such appointment, unless the court determines within thirty days after such appointment that transfer of control would be detrimental to the association or its members.

2. (a) Members of a homeowners' association, other than the developer, are entitled to elect at least one member of the board of directors of the homeowners' association if fifty percent of the parcels in all phases of the residential housing community which will ultimately be operated by the association have been conveyed to members other than the developer. For purposes of this section, the term "members other than the developer" shall not include builders, contractors, or others who purchase a parcel for the purpose of constructing improvements thereon for resale.

(b) The developer is entitled to elect at least one member of the board of directors of the homeowners' association as long as the developer holds for sale in the ordinary course of business at least five percent of the parcels in all phases of the residential housing community. After the developer relinquishes control of the homeowners' association, the developer may exercise the right to vote any developer-owned voting interests in the same manner as any other member, except for purposes of reacquiring control of the homeowners' association or selecting the majority of the members of the board of directors.

3. At the time the members are entitled to elect at least a majority of the board of directors of the homeowners' association, the developer shall, at the developer's expense, within no more than ninety days deliver the following documents to the board:

(a) All deeds to common property owned by the association;

(b) The original of the association's declarations of covenants and restrictions;

(c) A certified copy of the articles of incorporation of the association;

(d) A copy of the bylaws;

(e) The minute books, including all minutes;

(f) The books and records of the association;

(g) Policies, rules, and regulations, if any, which have been adopted;

(h) Resignations of directors who are required to resign because the developer is required to relinquish control of the association;

(i) The financial records of the association from the date of incorporation through the date of turnover;

(j) All association funds and control thereof;

(k) All tangible property of the association;

(l) A copy of all contracts which may be in force with the association as one of the parties;

(m) A list of the names and addresses and telephone numbers of all contractors, subcontractors, or others in the current employ of the association;

(n) Any and all insurance policies in effect;

(o) Any permits issued to the association by governmental entities;

(p) Any and all warranties in effect;

(q) A roster of current homeowners and their addresses and telephone numbers and section and lot numbers;

(r) Employment and service contracts in effect;

(s) All other contracts in effect to which the association is a party; and

(t) The financial records, including financial statements of the association, and source documents from the incorporation of the association through the date of turnover. The records shall be audited by an independent certified public accountant for the period from the incorporation of the association or from the period covered by the last audit, if an audit has been performed for each fiscal year since incorporation. All financial statements shall be prepared in accordance with generally accepted accounting principles and shall be audited in accordance with generally accepted auditing standards. The certified public accountant performing the audit shall examine to the extent necessary supporting documents and records, including the cash disbursements and related paid invoices to determine if expenditures were for association purposes and the billings, cash receipts, and related records of the association to determine that the developer was charged and paid the proper amounts of assessments.

§ 501. Definitions. For the purposes of this article:

1. "Residential housing community" means the real property that is or will be subject to a declaration of covenants which is recorded in the county where the property is located. The term "residential housing community" includes all real property, including undeveloped phases, that is or was the subject of a development-of-regional-impact development order, together with any approved modification thereto.

2. "Developer" means a person or entity that:

(a) creates the residential housing community served by the association; or

(b) succeeds to the rights and liabilities of the person or entity that created the residential housing community served by the association, provided that such is evidenced in writing.

3. "Homeowners' association" or "association" means a New York corporation responsible for the operation of a residential housing community or a mobile home subdivision in which the voting membership is made up of parcel owners or their agents, or a combination thereof, and in which membership is a mandatory condition of parcel ownership, and which is authorized to impose assessments that, if unpaid, may become a lien on the parcel. The term "homeowners' association" does not include a community development district or other similar special taxing district created pursuant to statute.

§ 2. This act shall take effect on the sixtieth day after it shall have become a law.