Homeowners’ associations in Minnesota must be registered as corporations and therefore must follow all state corporate laws. Most choose to be organized as non-profits. In addition to corporate law, HOAs are also subject to the Minnesota Common Interest Ownership Act which provides more specific regulations regarding the management and organization of community associations.
The Minnesota Common Interest Ownership Act applies to all common interest communities created on and after June 1st, 1994. Communities created before that may choose to adopt any regulations from the act. If any bylaws or declarations from older communities contradict the regulations expressed within the Common Interest Ownership Act, they are now void and must adapt to current regulations.
Homeowners Association’s Rights and Responsibilities
The primary purpose of an HOA is to protect property values and provide maintenance to all common elements of the community. To raise funds for maintenance, the HOA has the power to collect regular assessments from homeowners. Homeowner membership in the HOA is mandatory upon purchase of property within a common interest community (CIC).
It is the responsibility of the board of directors to maintain detailed records including association membership, minutes for all official meetings, contracts, leases, and other agreements, financial records, and material correspondence relating to association operation. All association documents must be made reasonably available to all members.
The board of directors must adopt a written preventative maintenance plan, schedule, and budget for maintaining common elements of the community. This plan can be amended by the board of directors without the consent of association members. The maintenance plan must be provided to homeowners upon adoption.
Property insurance and general commercial liability insurance is required to the extent that it is reasonably available. Insurance fees will be considered a common expense and included in homeowner assessments. If a common element is damaged and is not covered by insurance, the board may implement a special assessment to cover the cost. If the damage is extensive, homeowners may choose not to repair or rebuild with an 80% vote.
All the power in the HOA comes from the unit owners and their ability to vote. The amount of votes a homeowner is allotted depends on their interest in the community. The formula for calculating community interest is included in the association declaration. Typically, interest is based either on the square footage or value of a property compared to the community as a whole.
A meeting of the members must be held annually, if not more frequently as described by community bylaws. Annual meetings are held to elect new board members, discuss any changes to community regulations, and to go over the annual report. Special member meetings may be called with a petition from a majority of unit owners or by the president of the association. Notice for regular meetings must be given no less than 21 days and no more than 30 days before the meeting. Special meetings require at least 7 days’ notice.
In addition to member meetings, homeowners have the right to attend any board meetings and must be allowed a reasonable opportunity to participate. The board of directors may have a closed meeting only when discussing sensitive matters such as legal litigation or specific member accounts. Reasonable notice is required for all board meetings as well.
The board of directors cannot make changes or amendments to community documents without 67% approval from association members unless a larger percentage is required according to the bylaws. Any amendments made must be recorded with the county government to be official.
Common Interest Community
Homeowners have the right to terminate a common interest community. To terminate a CIC, 80% of the common interest along with 80% of the mortgages must vote in favor. For a mortgage percentage, one mortgage equals one vote; no percentage of interest. In this case, both conditions must be met to pass the resolution.
Minnesota Common Interest Ownership Act
To ensure that your community association is being run following all state and local laws, it helps to have a professional on your side. CSM has a team of experienced professionals that have worked with communities in almost every state in the US. Specializing in HOA financial management, we can help your board of directors manage association finances, write and submit documents, and prepare for audits. If you have any questions regarding state HOA laws and regulations, give us a call at (865) 315-7505, contact us online or email us at email@example.com.