There has been a lot happening in the HOA world recently.  There are new and pending laws and policies in 2024 that will affect small HOAs and their owners.

MicroHOA is always looking out for the interests of small HOAs.  Many new requirements are intended for large communities with more complex structure, obligations, and risks. But they’re going to impact small communities, too—whether or not it makes sense.

Ability to collect dues

Ability to sell homes with traditional mortgages

Compliance with a broad new federal law

Compliance with new and pending state laws

Protecting your ability to sell your home: It’s more important than ever to prevent delinquencies and keep up with reserve studies.

Delinquency rates:  Even a few delinquent owners will impact home sales:  If your home is in a condominium (or a project legally organized as a condo) the federal mortgage underwriter Fannie Mae has new policies which will impact home sales in small HOAs.   If 15% of owners are 60 days late with assessments, the association is kicked out of eligibility for federally backed mortgages.   That means for a 10 unit HOA, even two late paying owners will affect everyone’s ability to sell. 

We’ll have more information coming to board volunteers in January about this critical issue.  For more information now, here is a link to the Fannie Mae website: https://selling-guide.fanniemae.com/Underwriting-Property-Projects/Project-Standards-Condos-Co-ops-PUDs/Project-Eligibility/Full-Review/1081306121/What-percentage-of-units-in-a-condo-project-can-be-late-on-HOA-dues.htm

Reserve studies:  Both states and mortgage lenders have increased requirements for reserve studies and long term maintenance planning.  In Washington, reserve updates are required annually.  New Jersey has just adopted new reserve statutes that impose new requirements on small HOAs.  Other states have recent or pending new rules.  Info is also being requested on the Fannie Mae lender form.  This means that if your community isn’t up to date on reserve study requirements, it may make it harder to sell homes in the community.

Protecting your HOA’s ability to collect dues:  Several states including North Carolina have new or pending legislation which limits HOA’s ability to collect delinquent dues.  These policies are a potential disaster for small HOAs, and will very quickly affect the ability to pay operational costs if delinquencies occur. It’s more important than ever to have policies and support to keep dues on track for the whole community.    We’ll have more information coming to you in January about how we can help with this critical issue. 

Compliance with the new federal Corporate Transparency Act:   The Corporate Transparency Act (CTA) is going into effect on January 1, 2024, impacting millions of small businesses across the U.S., including all Homeowners Associations.  Enacted in 2021, the CTA’s purpose is to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information. 

Knowing the intricacies of this act and its potential impact on small HOAs is essential. Otherwise, they may incur criminal or civil penalties for not filing or updating this report.

It is MicroHOA’s position that this law makes no sense for community property associations(especially small ones).  The national Community Associations Institute, of which MicroHOA is a member,  is working toward removing HOAs from this reporting obligation.  If that does not happen by the end of June, we will initiate compliance for our clients in the second half of the year.  More information from the CAI Advocacy blog can be found here: https://advocacy.caionline.org/corporate-transparency-act-community-associations-prepare-and-engage/

Keeping you compliant with Fair Housing Act and state discrimination laws:  Fair Housing laws are federal, state, and local civil rights laws that apply to housing providers including small HOAs. HOAs and their boards, board members, community management companies, staff, and contractors are all required to follow Fair Housing laws.  Some states including Oregon have new laws on discriminatory language in association governing documents.  MicroHOA will keep your association up to date on laws that affect you.

If your small HOA could use help navigating the impacts of new laws, reach out to the experts at MicroHOA. Contact us.