Pending legislation that was originally introduced in 2025 that seeks to make major changes to the Minnesota Common Interest Ownership Act, Chapter 515B (“MCIOA”), is poised to become law within the next few weeks. The bill passed the floor of the Senate but failed to make it through all necessary committees in the House in 2025. However, during the current 2026 legislative session, a revised version of the bill now awaits a vote on the House floor. Various stakeholders continue to negotiate changes to the bill prior to the House vote, so we do not yet know what the final version will look like, but it appears likely that some version of HF 1268/SF 1750 will be enacted this session. Most provisions of the bill would then become effective on January 1, 2027, giving affected associations roughly 7 months to come into compliance with the new statutory requirements.
The current version of the bill includes changes to numerous provisions of MCIOA impacting many areas of an association’s operations, such as:
- Changes making it easier for certain types of associations to dissolve
- A requirement that owners receive a 21-day notice before new or changed rules are approved
- Limitations on fine amounts and a requirement to adopt a written fine schedule
- Limitations on charging interest and late fees, and on initiating foreclosures
- Changes in the application of payments from owners and updates to violation notices
- Adoption of a grievance process for disputes other than fines
- Provisions regarding board elections and terms
- Clarifications on conflict of interest provisions and requirements for multiple bids on projects
- New requirements regarding the processing of architectural change requests
- Unit owners will be allowed to speak on agenda items during board meetings and will have access to certain additional association documents
- Updated requirements for inclusion in the annual report and resale disclosures
- Associations will have to adopt new written collection policies requiring additional notices to delinquent owners
- Associations will be prohibited from restricting the parking of certain personal and work vehicles
- New required notices to owners prior to referring matters to the association’s attorney
- Prohibition against retaliation
- Prohibits cities from requiring developers to create associations
The bill would provide associations 3 years from the date of enactment to update their rules or other governing documents to comply with most of these new changes. In the interim, a copy of the new statutory changes must be provided to buyers of new construction with the disclosure statement required under 515B.4-102 and 515B.4-1021.
If enacted, this bill will require associations and/or their management companies to implement significant changes in their processes and procedures governing almost every aspect of association operations and to do so within a very short period of time. Associations that fail to update their procedures will likely run into legal issues with collecting assessments and enforcing their rules and governing documents, and could see a spike in homeowner disputes and even potential litigation over adherence to the new requirements. Associations are advised to consult with legal counsel to ensure that their policies, procedures, and forms are in compliance with any statutory changes before the proposed effective date of January 1, 2027.
As many of these new changes will result in higher costs to associations, associations will also need to start budgeting for these additional expenses, which will mean an increase in assessments at a time when high HOA fees and assessments resulting from increases in insurance and construction costs are already making it difficult for many owners to afford living in an association. Associations that have restrictions in their governing documents on levying or increasing assessments as needed to meet these increased budgetary needs may want to consider amending their documents to provide more flexibility and authority to properly budget for expenses or to otherwise limit their financial exposure in this regard.
If you have any questions about the pending legislation, compliance with anticipated new statutory requirements, amending governing documents, or any other matter affecting your association, please contact Phaedra Howard at phoward@hjlawfirm.com.
