Insight What’s New in Idaho’s New Homeowner’s Association Act

Governor Little signed House Bill 703 (“HB 703”) on March 31, 2022, to be effective on July 1, 2022. HB 703 consolidates the bulk of Idaho laws related to homeowner’s associations (“HOA”) into a single location in Title 55, Chapter 32 of the Idaho Code, known as the “Homeowner’s Association Act.” Although HB 703 is primarily a reorganization of existing laws, there are some important changes. Below is a brief discussion of how HB 703 has modified Idaho’s HOA laws.

The locations of existing HOA-related laws in the Idaho Code, that is to say, §§ 45-810, 55-115, and 55-116, have moved. Below is a chart showing how existing HOA laws were remapped under HB 703:

The majority of changes that HB 703 makes to existing HOA laws are merely clean-up revisions. “Clean-up” refers to changes that are primarily stylistic and have no effect (or a very limited effect) on the meaning of the original language. Examples of “clean-up” include (a) streamlining the use of definitions, which are all now defined in one location in the new § 55-3203, (b) separating long, compound sentences into shorter, manageable sentences, and (c) replacing “shall” with “must.”

HB 703 makes two significant additions to existing HOA laws. First, two new requirements have been added to an HOA’s financial disclosure requirements. Under the new § 55-3205, an HOA is required to provide up-to-date financial disclosures within 10 days of receiving such a request from a member and is required to deliver a copy of its financial disclosures to members within 60 days of the close of the HOA’s fiscal year. The term “financial disclosures” means the up-to-date accounting records that an HOA is required to keep under the Idaho Nonprofit Corporation Act.

The second and most notable change to existing HOA laws is § 55-3204, which establishes new governance and administrative requirements for HOAs. Prior to HB 703, an HOA was only required to meet certain administrative requirements (e.g., holding annual meetings, record minutes, etc.) if the HOA wanted to have statutory authority to file liens against a lot. Going forward, the requirements of an HOA to follow good corporate governance and records practices is a standalone requirement that can be enforced against the HOA by any of its members. The requirements of § 55-3204 are as follows:

(1) A HOA Board must ensure that Board meetings must be open to all HOA members, except for meetings that are considered “executive sessions”, which can only be held upon a majority vote of a Board for the following purposes: (a) to consider matters of personnel, hiring, bid review, or contract negotiation, (b) issues not subject to financial disclosure, (c) to consult with legal counsel, although the presence of legal counsel does not alone justify entering into an executive session, (d) to discuss ongoing or potential litigation, mediation, arbitration, or administrative proceedings, or (e) to discuss sensitive matters related to a Member’s assessments, violations, or delinquent assessments;

(2) A HOA Board must: (a) hold an annual meeting (in person, electronically, or a hybrid of both), (b) be governed by the Idaho Nonprofit Corporation Act’s rules concerning meetings and notice (see 30-30-501 and see 30-30-505) and removal of Board members (see 30-30-502 and 30-30-608), (c) record minutes at each HOA meeting and preserve those minutes for at least 10 years, (d) establish assessments in accordance with its governing documents or, in the absence of governing documents, approval from a majority of HOA Members.

(3) A HOA Board cannot use its rule-making power with respect to common property to expand any restrictive covenants as they relate to a Member’s property.

(4) A HOA that is not incorporated must still be governed by bylaws that provide for the following requirements: (a) an annual meeting, (b) notice to all HOA members of any HOA meeting, (c) recording and preservation of meeting minutes, (d) a method adopting and amending fees, and (e) restrict fee increases except with at least majority approval of the HOA’s members.

For more information on these new HOA statutes or other questions concerning real estate law, please contact attorney Justin Cranney.

This article is provided by Hawley Troxell Ennis & Hawley LLP for educational and information purposes only. It is intended to notify our clients and friends of certain events or issues. It is not intended to be, nor should it be, used as a substitute for legal advice regarding specific factual circumstances. © Hawley Troxell Ennis & Hawley LLP all rights reserved.