Client Alert from the Real Estate Group - October 2010
Ohio's New "Planned Community Act" Regulates Existing and Future
Homeowners' Associations
By Heather R. Baldwin Vlasuk
The Ohio Legislature's new "Planned Community Act" took effect on September 10, 2010 (as Ohio Revised Code Chapter 5312), placing specific restrictions on residential "Planned Communities" and their homeowners' associations. Planned Communities are, generally, those neighborhoods that originate with a common deed or plan and have a homeowners' association and common areas. The Act applies to Planned Communities that were created before and after the law's effective date. Therefore, all homeowners' associations and Planned Community developers must comply with the provisions of the new law.
The new law is quite comprehensive and regulates such matters as the creation, powers, and duties of homeowners' associations, the recording of the declaration and bylaws, the association's finances and assessments, and the collection of association fees. Although future homeowners' associations must comply with all of the Act's requirements, the law only supplements the bylaws of homeowners' associations that were in existence prior to September 10, 2010, to the extent that their bylaws are silent on any issue. Thus, specific provisions of the new law apply to previously existing associations only if the bylaws of the association do not have provisions directly addressing a particular matter regulated by the new law.
A few of the Act’s most notable provisions are highlighted below.
- With respect to existing Planned Communities, the law requires that the bylaws of the association be recorded in the land records of the applicable county by March 10, 2011. The law prohibits an association from pursuing a lawsuit to enforce violations of the bylaws, such as delinquent association fees, until the bylaws are recorded. All Planned Communities that are created after September 10, 2010 must record their bylaws with the county within 90 days after adoption. Amendments to bylaws must be recorded within 60 days after adoption.
- The law requires that homeowners' associations maintain property and liability insurance for the common areas as well as liability insurance for the officers and directors of the association.
- Unless otherwise stated in the declaration or bylaws, associations must adopt an annual estimated budget with a reserve amount adequate to repair and replace major capital items in the normal course of operation without the need for special assessments, unless a majority of the homeowners vote to waive the reserve requirement annually.
- Unless otherwise provided in the declaration or bylaws, payments made by a homeowner to the association must be credited to the homeowner's account in the following order: (1) to interest owed to the association; (2) to late fees or penalties; (3) to collection costs, such as attorneys' fees and court costs; and (4) to the oldest principal amounts.
- Prior to enforcing a delinquent assessment or charge against a homeowner, the association must provide the homeowner written notice of the basis and the amount of the assessment or charge, as well as an opportunity for a hearing before the association's board of trustees. The Act also specifically sets forth the hearing process.
Because the Act is comprehensive, each homeowners' association and Planned Community developer should immediately review the new law carefully in conjunction with legal counsel to ensure compliance and to consider amendments to their bylaws, as may be applicable. The information in
this Client Alert is a summary of often complex legal issues and may not cover
all of the "fine points" of a specific situation or court jurisdiction.
Accordingly, it is not intended to be legal advice, which should always be
obtained in consultation with an attorney. Heather R. Baldwin Vlasuk and John W. Waldeck, Jr. of
will be pleased to assist with any
questions about this new development in the law. |
