The landscape of homeownership in Minnesota is set for a shift as the Senate clears Senate File 1750, pivoting toward strengthened protections for homeowners under the aegis of neighborhood associations. In a move to curb the autonomy of homeowners associations (HOAs) and common interest communities (CICs), which have been subjects of contention, the bill outlines a series of reforms aimed at instituting transparency and fairness in their governance, according to the Senate DFL caucus.
Among the provisions are measures that will allow dissolving an HOA lacking common elements with a 60% homeowners consensus; additionally, it mandates regular elections for board directors with a term limit of three years, and it stipulates that board members must reveal any potential conflict of interest and recuse themselves when dealing with contracts that may enrich them or their relatives, the Senate DFL caucus further reports with the addition of required disclosure of financial conflicts of interest by HOA management companies and a competitive contract bidding process to be implemented for deals worth over $50,000.
Other facets of the reform comprise a standardized schedule for fines and fees capable of being imposed on unit owners, the stipulation that fines must match the severity of the infraction, and cannot exceed $100 per occurrence. The bill also calls for the introduction of dispute resolution procedures involving fines, violations, and dues, and outlines conditions under which unpaid fines can lead to foreclosure, adding a layer of financial protection for homeowners, possibly already contending with economic strains.
Senator Susan Pha, a member of the 2024 working group on Common Interest Communities and Homeowners Associations, stressed the imperative of check and balances, "HOAs wield enormous power—setting rules, levying fines, and even initiating foreclosures—yet they operate with little oversight and often without the basic transparency we expect from any governing body," she told the Senate DFL caucus, articulating the crux of contention that led to this legislative reform which passed with a 44-22 bipartisan nod, now bound for the House's discernment.
Considering over 1.5 million Minnesotans live within the confines of an HOA or CIC and the prevalence of such arrangements in the properties traded—evident in the 2023 data that pegs more than 80% of newly-sold Minnesota homes as part of an HOA—the bill’s sweep through the Senate marks a potential turning point for residents grappling with, at times, overbearing homeowners associations and presents a framework designed to mitigate future financial and legal strains wrought by unchecked community governance.
