2012 Kentucky Legislative Session Review

Transcription

1 2012 Kentucky Legislative Session Review L. Thomas Richards, CMCA, AMS, PCAM President/Founder Community Management Associates, LLC. AAMC (859) Lexington (502) Louisville Chair; CAI-KY Legislative Affairs Committee March 29, 2012 Andover Country Club

2 Legislative Affairs Committee 2 Authorized affiliate of the CAI National Government and Public Affairs Committee 501c(3) Tax exempt, not-for for-profit organization Mission is to support a Legislative Agenda that benefits Kentucky s s Homeowner Association Industry Stakeholders Comprised of Six Volunteer Delegates Periodic meetings throughout the year State-wide organization Self-funded funded

3 2009 Legislative Efforts Pushed through an Amendment to Chapter KRS 324 (Real Estate Brokers and Salesman) regarding Licensing KRS : The management of Condominium, Townhome, and Homeowner associations is exempted from the jurisdiction of the Kentucky Real Estate Commission and any requirement to be a Licensed Real Estate Broker 3

4 2010 Legislative Efforts Kentucky Uniform Condominium Act (KUCA) Culmination of a three year effort to update the Condominium Law First significant overhaul of Kentucky Condominium Law since the original 1962 Horizontal Property Act Became effective January 1, 2011 Portions of the Act apply to all future and existing condominium projects 4

5 2012 Legislative Bills Tracked HB 62 Bank Deed Recording time limit HB 160 Accommodation for Disabled Children HB 396 Expedited Process established for Vacant Property Foreclosure HB KUCA Revision Bill HB120 Expansion of Sales Tax to Service Industries Reviewed another ten (10) bills 5

6 2012 Bill Disposition HB 62 Passed Banks obtaining ownership through a Deed in Lieu of Foreclosure have 70 days to record a new deed HB 160 Did not pass Accommodation for Disabled Children Right to install a flagpole and display the American Flag Allows display of non-commercial signs (9 ft 2 ) & banners (15 ft 2 ) HB 396 Passed Establishes a new provision requiring a Master Commissioner sale be held within 70 Days for Vacant or Abandoned Property Foreclosures (any lien) HB 433 Passed 2012 KUCA Revision Bill HB120 Did not pass Expansion of Sales Tax 6

7 HB Condo Revision Bill 7 Multi-industry industry task force worked together to arrive at a Consensus Revision Bill Task force working groups included members from: Kentucky Bar Association Real Estate Section Community Associations Institute; Chapter and LAC Homebuilders Association of Kentucky Kentucky Association of Realtors Kentucky Real Estate Commission Kentucky Society of CPAs Kentucky Insurance Industries (Independent Agents) Kentucky Banking and Mortgage Banker Associations Attorneys, CPAs, Managers, Volunteers 7

8 Emergency Assessment KRS ( 4)( Available for all condominiums regardless of provisions declaration An Emergency Assessment is not a Special Assessment Must have Judicial Order or an Opinion affixed with a professional seal from Architect or Engineer Two ways to initiate an Emergency Assessment Approval by 75% of the Total Board of Directors, or Approval by a majority vote of owners present at a special membership meeting Assessment may be lessened or rescinded by simple majority vote of the total owners 8 8

9 9 Board Responsibility and Authority KRS ( 3)( Revises the process of Budget approval and requirement for approval by the owners Board must provide a budget summary to all owners within 30 days after adoption by the board If the adopted budget contains an increase of greater than fifteen percent (15%) from the previous year s budget: Schedule a meeting for the owners to consider ratification of the budget The budget is deemed to be ratified unless at that meeting, a majority of all owners vote to reject the budget 9

10 10 Board Member and Officer Conduct KRS 381.New Subsection Defines the standards of conduct that already exists in the Kentucky not-for for-profit Corporation Act (KRS ) Directors and Officers must discharge their duties: In good faith; On an informed basis; In the best interest of the association and members Improved definition of Fiduciary Responsibility Establishes the same standard of care for unincorporated associations that exists for incorporated associations 10

11 Association Financial Reporting and Records 11 KRS Requires associations to maintain financial records and prepare financial statements in accordance with generally accepted accounting principles Within 150 days after the Fiscal Year end, an independent public accountant shall prepare a financial report in accordance with the following income standards: < $100,000; Report of cash receipt and disbursements Between $100,000 and $250,000; Report based on standards of a Compilation Between $250,000 and $500,000; Report based on standards of a Review > $500,000; Report based on standards of an Audit Boards have the authority and sole discretion to increase the standard of preparation ` 11

12 Resale Certificate KRS Required for every Condominium sale Association has ten (10) days from receipt of written request to provide seller the Certificate Association must disclose: Current monthly assessment, special assessments or emergency assessments currently due & payable Amount of Reserves for Capital Expenditures Proposed Capital Expenditure plan for next two years Balance Sheet, Income & Expense statement Current Year Budget Special Assessment History (past two years) Disclose proposed Future Special Assessments Disclose litigation with more than $10,000 in contest 12

13 Resale Certificate KRS Disclose the date of the most recent financial report prepared by an independent public accountant that is available for review Ties back to the Financial Records provision in KRS Association may not deny the validity of any statement Association may charge for the preparation of the certificate: Not to exceed 80% of one month s s assessment up to a maximum of $225 May charge $50 for an update to a previously issued certificate. 13

14 How will the Condo Act impact my homeowner association? 14 Townhome (Patio Home) associations Associations that operate like a condominium The owner owns the structure/lot on a fee simple basis Condo Act provisions do not apply, however; The act provides a framework for how your association should be managed Sophisticated Buyers/Agents are going to request similar resale certificate document Re-sale market forces will push your association to operate in a similar manner 14

15 HB 120 Expanding Sales Taxes to Service Industries Fourth year in a row a version of this bill has been introduced Previous attempts to apply sales tax to landscaping and professional services Sales Tax is already being applied to Utility bills Will add six percent (6%) to every association operating budget Vendor costs (and rates) will increase just to deal with compliance Passage is inevitable as the government needs to generate new revenue streams 15

16 Upcoming Legislative Agenda Passage of a Uniform Common Interest Community Act Similar to Condominium Legislation, but applies to Townhome and Homeowner Associations Provide an umbrella statute to fend off introduction of special interest bills Create an exemption for the application of sales tax on not-for for-profit homeowner and condominium associations 16

17 Questions & Funding Assistance Operating Budget is $11,000 Collect $15 per CAI membership Grant (small) from CAI National G&PA Annual Golf Outing fundraiser Expenses include general administrative expense, legislative agent fees, etc. Launching a $1 a door per year fundraiser Questions? Contact information on title page