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House approves amendment to require developer seed funds for new HOAs to shore up reserves
Summary
HB 10-99 passed after the House adopted an amendment (L003) requiring developers of new common-interest communities to deposit an amount approximating liability insurance plus 10% into reserves; sponsors said upfront seed money can save homeowners long term.
The House adopted an amendment to House Bill 10-99 that asks developers of new common-interest communities to deposit initial seed money into reserve accounts equal to liability insurance costs plus 10 percent, a provision supporters say helps new homeowners avoid higher future assessments.
Representative ToTone, sponsor of the bill to protect the financial condition of HOAs, moved committee-report amendments and then proposed amendment L003, which directs a developer to deposit funds to permit the HOA to pay for an initial year's liability insurance and build reserves. Representative ToTone described a real-world example in which an HOA that paid insurance up front saved substantial money over 20 years.
Critics cautioned that requiring developers to deposit funds could increase upfront housing costs, but proponents said the additional initial cost per unit is relatively small (sponsor used an example of about $577 per unit) and would yield long-term savings for homeowners and avoid emergency assessments.
The amendment L003 was adopted and the committee report for HB 10-99 was approved; the bill passed on voice vote.
What’s next: Committee of the Whole recommended HB 10-99 as amended for second reading and placed it on the calendar for third reading.
