The Minnesota Senate on Tuesday approved a comprehensive bipartisan reform package to increase protections for homeowners living in Home Owners Associations (HOAs) and Common Interest Communities (CICs). Senate File 1750, authored by Senator Eric Lucero (R-St. Michael), reflects recommendations of the HOA-CIC workgroup that gathered input from residents, homeowners’ associations, and other stakeholders and experts across the state.
“Homeowners across Minnesota have been sharing their stories of experiencing exploitative fines, unjust foreclosures, decisions lacking transparency impacting their homes and finances, and more,” Sen. Lucero, who serves as the Lead Republican on the Senate Housing Committee, said. “This bill is the product of months of work to address those stories by bringing common sense reforms and balancing the scales between residents, boards, and management companies. Most HOAs work to do the right thing, but some don’t. The reforms in this bill will rein in abusive HOAs by empowering residents with more information, more rights, and more protections. This bill is a true bipartisan compromise – in addition to adding consumer protections, nearly every concern raised in good faith was addressed.”
Key provisions of the bill:
- Limits excessive fines and late fees: Fines are generally capped at $100 per violation and must be proportionate to the violation. Higher fines are allowed for repeat violations in certain circumstances. Late fees are limited to $15 or 5% of the amount owed, whichever is greater.
- Sets fair thresholds for foreclosure: HOAs can no longer foreclose on a home solely over unpaid fines, except in cases involving repeat or more serious violations. To foreclose over unpaid assessments, the total must exceed $1,500 (or $2,500 for higher-dues properties) or be at least 120 days past due. This ensures foreclosure is a last resort, not a first option.
- Strengthens conflict of interest rules: Board members and property managers must disclose financial relationships and recuse themselves from decisions involving personal or family interests. Large contracts must receive three competitive bids and be selected based on clear, fair criteria.
- Improves transparency and homeowner rights: HOAs must share proposed budgets and meeting agendas ahead of time, allow residents to speak at meetings, and provide access to contracts and financial documents upon request.
- Protects homeowners from unfair charges: Associations may not charge attorney fees simply for a homeowner asking a question or disputing a charge that is later dropped. This ensures residents aren’t punished for exercising their rights.
- Adds reasonable guardrails for rulemaking: HOAs must give 60 days’ notice before adopting new rules, and homeowners can vote to overturn rules if at least 20% request a vote and a majority agree to repeal.
- Establishes a path to dissolve inactive or unnecessary HOAs: Makes it easier to dissolve associations for detached single-family homes with no shared maintenance obligations, as long as contracts are honored.
- Promotes fair dispute resolution: Requires HOAs to adopt an informal internal process to resolve disputes before escalating matters legally, a model used in several other states.
- Prevents forced HOA creation by local governments: Local governments may no longer require the formation of a homeowners association as a condition for approving residential developments. This prevents unnecessary or unwanted HOA obligations from being imposed on homeowners by cities or counties, unless explicitly requested by the developer.
Most of the reforms included in SF1750, like as capping fines and late fees, requiring open meetings, and establishing basic conflict of interest rules, are already law in many other states, including Colorado, Nevada, Texas, Virginia, and California. Minnesota is simply catching up by giving homeowners here the same protections, transparency, and fairness that residents in other already enjoy.
This bill is the result of months of negotiation and dozens of changes to address concerns from stakeholders on all sides. More than 30 major issues raised during the process were resolved, including how fees are applied, how meetings are conducted, and how contracts are awarded. For example, provisions that created burdens for small HOAs were adjusted, concerns about board election rules were addressed, and a controversial ban on proxies was removed entirely. Virtually every concern raised in good faith was considered and resolved.
The bill awaits passage by the House of Representatives.