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Committee approves HOA accountability bill to require registration, financial disclosures and administrative hearings
Summary
Senate Bill 406, a multifaceted homeowners-association reform bill that would require many HOAs to register with the Secretary of State, file annual financials and create an administrative hearing process, passed the Judiciary Committee unanimously and will proceed to rules.
ATLANTA — The Senate Judiciary Committee passed Senate Bill 406 after extended discussion about homeowner protections, administrative remedies and the Secretary of State's capacity to administer a new program.
The bill's presenter described four primary elements: (1) mandatory registration and annual filing of bylaws and financial statements for HOAs/POAs/COAs with the Secretary of State; (2) creation of an administrative hearing board and investigative capacity to provide a lower-cost alternative to litigation; (3) a homeowners' bill of rights consolidating existing protections; and (4) raising the threshold for HOA-initiated foreclosure to $4,000 and requiring dues be applied first toward arrears before fines and fees. The presenter said the Secretary of State already houses nonprofit filing infrastructure and could administer the program with fee receipts and modest additional funding.
Committee members asked detailed questions about workload and funding for the Secretary of State's office, the potential use of the existing Statewide Business Court, and whether small or informal neighborhood associations would be required to register or could submit a simple notice. The author said small associations could inform the office that they are "nonregistered" and discussed exemptions for associations where members "get along" and do not impose fines and fees; the draft also gave the rulemaking authority to the Secretary of State to implement certain details.
An amendment proposing training requirements for board members was discussed and subsequently withdrawn to preserve support for the underlying bill on the committee floor. Following discussion, the committee voted to pass SB 406 by committee substitute; the chair announced the vote was unanimous. The bill will move on to rules for further consideration.
Next steps: SB 406 will be scheduled by the Senate for further action according to chamber rules.
