Committee advances bill to standardize HOA and condo disclosures for buyers

Senator Josh Bauschade (District 44) told the Senate Industry and Business Committee he introduced Senate Bill 2229 at the request of the North Dakota Association of Realtors to create a standardized disclosure process for homeowners and condominium associations.

"The legislation is intended to provide guidance to homeowners associations and condo associations throughout the state on the documents commonly required to ensure smooth transfer of real property in an established HOA or condo development," Bauschade told the committee. He said the bill was prepared by an NDAR task force with input from the Community Association Institute and other stakeholders.

Under the bill as described to the committee, the statute would: establish definitions; require that, absent a buyer and seller agreement to a different timeline, the documents listed in subsection 2 be provided to a buyer within 10 days of the purchase agreement being executed; list roughly 15 documents and policies commonly requested by lenders and buyers; require documents to be current within the last 90 days (applying primarily to financial statements and insurance renewals); allow associations to charge a "reasonable fee" for producing the package, but require disclosure of that fee; and create a default contingency in favor of a buyer when the association does not provide required documentation or discloses a document does not exist.

Bauschade and testimony from Desiree Nieder, vice president of the North Dakota Association of Realtors, emphasized that documentation such as bylaws and an insurance certificate are typically static and should be straightforward to provide. Nieder gave examples of recurring problems the bill aims to prevent: buyers closing only to learn later of leasing rules that prohibit short-term rentals, rules added outside recorded covenants that forbid pets despite the bylaws, or unexpected move-in fees discovered after closing. Nieder said those undisclosed items can leave buyers with difficult choices and unexpected costs.

Jill Beck, CEO of the North Dakota Association of Realtors, told the committee the organization consulted bankers and land-title stakeholders while developing the proposal.

Senators asked practical questions about enforcement and scope. Senator Klein said lenders now scrutinize condominium and HOA finances more closely following high-profile structural failures elsewhere and described a case where additional scrutiny caused a buyer to walk away from a March sale; the property did not close until November and the seller lost about $13,000 in equity. Senator Kessel asked how the bill would affect owner-to-owner transfers not handled by a realtor; Nieder compared the requirement to existing property-condition disclosures, saying consumer-to-consumer transfers would still be covered under the law and the association would need to respond when asked for documents.

Senator Klein moved for a due-pass recommendation on Senate Bill 2229; Vice Chairman Behm seconded the motion. The clerk called the roll and senators recorded "Aye." The chair announced a due-pass recommendation and named a carrier for the bill.

Supporters said the bill aims to be non-burdensome, relying on documents many associations already hold and recommending education and outreach to small associations; the North Dakota Association of Realtors offered to update its disclosure forms and to partner with bankers, title companies, Community Association Institute and others to provide training.

Opposition testimony was not recorded in the hearing. Committee members closed the hearing after receiving testimony from association representatives and the bill sponsor.