D R A F T

FOR DISCUSSION ONLY

UNIFORM [HOMEOWNER BILL OF RIGHTS] ACT

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

For February 28 – March 2, 2008 Drafting Committee Meeting

Without Prefatory Notes or Comments

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

____________________________________________________________________________________________

The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter=s notes, have not been passed upon by the National Conference of Commissioners on Uniform State Laws or the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners and the Drafting Committee and its Members and Reporter. Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal.

UNIFORM [HOMEOWNER BILL OF RIGHTS] ACT

TABLE OF CONTENTS

SECTION 1. SHORT TITLE.......................................................................................................... 1

SECTION 2. DEFINITIONS.......................................................................................................... 1

SECTION 3. NO VARIATION BY AGREEMENT....................................................................... 3

SECTION 4. OBLIGATION OF GOOD FAITH........................................................................... 3

SECTION 5. APPLICABILITY TO NEW COMMON INTEREST COMMUNITIES;
EFFECT OF AMENDMENTS............................................................................................ 3

SECTION 6. APPLICABILITY TO PRE-EXISTING COMMON INTEREST
COMMUNITIES................................................................................................................. 3

SECTION 7 [formerly 3-101]. ORGANIZATION OF UNIT OWNERS' ASSOCIATION.......... 4

SECTION 8 [formerly 3-102]. POWERS AND DUTIES OF UNIT OWNERS' ASSOCIATION 4

SECTION 9 [formerly 3-103]. EXECUTIVE BOARD MEMBERS AND OFFICERS.................. 6

SECTION 10 [formerly 3-106]. BYLAWS.................................................................................... 7

SECTION 11 [formerly 3-108]. MEETINGS................................................................................. 8

SECTION 12 [formerly 3-109]. QUORUMS............................................................................... 12

SECTION 13 [formerly 3-110]. VOTING; PROXIES................................................................. 12

SECTION 14 [formerly 3-116]. LIMITATIONS ON FORECLOSURE...................................... 16

SECTION 15 [formerly 3-118]. ASSOCIATION RECORDS..................................................... 17

SECTION 16 [formerly 3-120]. RULES....................................................................................... 19

SECTION 17 [formerly 3-121]. NOTICE.................................................................................... 21

SECTION 18 [formerly 3-122]. REMOVAL OF OFFICERS AND DIRECTORS...................... 21

SECTION 19 [formerly 3-123]. ADOPTION OF BUDGETS...................................................... 22

SECTION 20 [formerly 4-117]. EFFECT OF VIOLATIONS ON RIGHTS OF ACTION; ATTORNEY'S FEES 23

UNIFORM [HOMEOWNER BILL OF RIGHTS] ACT

We may need to propose an amendment to the name so that it relates to common interest communities.

SECTION 1. SHORT TITLE. This [act] may be cited as the Uniform [Homeowner Bill of Rights] Act.

SECTION 2. DEFINITIONS. In this [act]:

QUESTION B how do many of these provisions interact with contrary provisions of either the State condominium or non-stock corporation statutes?

(1) AAllocated interests@ means the following interests allocated to each unit:

(A) in a condominium, the undivided interest in the common elements, the common expense liability, and votes in the association;

(B) in a cooperative, the common expense liability, the ownership interest, and votes in the association; and

(2) AAssessment@ means the sums attributable to each unit and due to the association pursuant to the budget adopted under Section 19.

(3) AAssociation@ means the unit owners’ association.

(4) ABylaws@ mean the instruments, however denominated, that together contain the procedures for conduct of the affairs of the association regardless of the form in which the association is organized.

(5) ACommon expenses@ means expenditures made by, or financial liabilities of, the association, together with any allocations to reserves.

(6) ACommon expense liability@ means the liability for common expenses allocated to each unit.

(7) ACommon interest community@ means real estate described in a declaration with respect to which a person, by virtue of the person=s ownership of a unit, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or services or other expenses related to, common elements, other units, or other real estate described in that declaration. For purposes of this paragraph, Aownership of a unit@ does not include holding a leasehold interest of less than [20] years in a unit, including renewal options.

(8) ADeclarant@ means any person or group of persons acting in concert who:

(A) as part of a common promotional plan, offers to dispose of the interest of the person or group of persons in a unit not previously disposed of; or

(B) reserves or succeeds to any declarant right.

(9) ADeclaration@ means the instruments, however denominated, that together create a common interest community, including any amendments to those instruments.

(10) AExecutive board@ means the body, regardless of name, designated in the declaration or bylaws to act on behalf of the association.

(11) ALimited common element@ means a portion of the common elements allocated for the exclusive use of one or more but fewer than all of the units.

(12) APerson@ means an individual, corporation, business trust, estate, trust, partnership, association, joint venture, public corporation, government or governmental subdivision or agency, or other legal or commercial entity.

(13) AResidential purposes@ means use for dwelling or recreational purposes, or both.

(14) ARule@ means any policy, guideline, restriction, procedure, or regulation of an association, however, denominated, which is not set forth in the declaration or bylaws and which governs either the conduct of persons or the use or appearance of property. The association=s internal business operating procedures need not be adopted as rules.

(15) AUnit@ means a physical portion of the common interest community designated for separate ownership or occupancy.

(16) AUnit owner@ means a person who owns a unit.

SECTION 3. NO VARIATION BY AGREEMENT. Except as expressly provided in this [act], its provisions may not be varied by agreement, and rights conferred by this act may not be waived.

SECTION 4. OBLIGATION OF GOOD FAITH. Every contract or duty governed by this [act] imposes an obligation of good faith in its performance or enforcement.

SECTION 5. APPLICABILITY TO NEW COMMON INTEREST COMMUNITIES; EFFECT OF AMENDMENTS. Except as otherwise provided in this [act], this [act] applies to all common interest communities that contain 12 or more units and are created within this state after the effective date of this [act]. Amendments to this [act] apply to all common interest communities that contain 12 or more units and are created after the effective date of this [act] or are subjected to this [act] by amendment of their declaration, regardless of when the amendment to this [act] is adopted in this state.

SECTION 6. APPLICABILITY TO PRE-EXISTING COMMON INTEREST COMMUNITIES. Sections [enumerate] apply to all common interest communities created in this state before the effective date of this [act]; but those sections apply only with respect to events and circumstances occurring after the effective date of this [act] and do not invalidate existing provisions of the [declaration, bylaws, or plats or plans] of those common interest communities.

(a) The declaration, bylaws, or plats and plans of any common interest community created before the effective date of this [act] may be amended to achieve any result permitted by this [act], regardless of what applicable law provided before this [act] was adopted.

SECTION 7 [formerly ' 3-101]. ORGANIZATION OF UNIT OWNERS’ ASSOCIATION. A unit owners= association must be organized no later than the date the first unit in the common interest community is conveyed. [The membership of the association at all times consists exclusively of all unit owners.] [All unit owners are members of the association.] [Only unit owners may be members of the association.] The association must have an executive board.

SECTION 8 [formerly ' 3-102]. POWERS AND DUTIES OF UNIT OWNERS’ ASSOCIATION.

(a) Regardless of the powers and duties of the association described in the declaration and bylaws, the association:

(1) shall adopt and may amend bylaws and may adopt and amend rules;

(2) shall adopt and may amend budgets pursuant to this [act] modification of common elements;

(3) may require that disputes between the executive board and unit owners or between two or more unit owners regarding the common interest community be submitted to nonbinding alternative dispute resolution as a prerequisite to commencement of a judicial proceeding;

(4) shall promptly notify the unit owners of any litigation in which the association is a party other than litigation involving enforcement of rules or to recover unpaid common charges.

(5) shall establish a reasonable method for unit owners to communicate among themselves and with the executive board regarding any matter concerning the association.

(6) may suspend any right or privileges of a unit owner who fails to pay an assessment, but may not:

(A) deny an owner or other occupant access to the owner=s unit;

(B) suspend the unit owner=s right to vote;

(D) withhold services provided to the unit or the unit owners by the association if the effect of withholding the service would be to endanger the health, safety, or property of any person;

(7) may determine whether to exercise the association's powers to impose sanctions and pursue legal action for violations of the declaration, bylaws, and rules including whether to compromise any claim for unpaid assessments or other claim made by or against it,. The executive board shall have no duty to take enforcement action if, acting in good faith and without a conflict of interest, it determines that, under the facts and circumstances presented,

(A) the association's legal position does not justify taking any or further enforcement action;

(B) the covenant, restriction, or rule being enforced is, or is likely to be construed as, inconsistent with current law;

(C) although a violation may exist or may have occurred, it is not of such a material nature as to be objectionable to a reasonable person or to justify expending the association's resources; or

(D) it is not in the association's best interests to pursue an enforcement action.

(b) The executive board's decision under subsection (a)(7) not to pursue enforcement under one set of circumstances does not prevent the association from taking enforcement action under another set of circumstances, except the executive board may not be arbitrary or capricious in taking enforcement action. Whether the association=s [course of] performance with respect to enforcement of any provision of the declaration, bylaws, and rules constitutes a waiver or modification of that provision is not affected by this [act].

SECTION 9 [formerly ' 3-103]. EXECUTIVE BOARD MEMBERS AND OFFICERS.

(a) In the performance of their duties, officers and members of the executive board appointed by the declarant shall exercise the degree of care and loyalty to the association required of a trustee. Officers and members of the executive board not appointed by the declarant shall exercise the degree of care and loyalty to the association required of an officer or director of a corporation organized under, and are subject to the conflict of interest rules governing directors and officers of, [insert reference to state non-profit corporation law]. The standards of care and loyalty described in this section apply regardless of the form in which the association is organized.

(b) The executive board may not act on behalf of the association to:

(1) amend the declaration except as otherwise provided in this [act];

(2) amend the bylaws;

(3) terminate the common interest community;

(4) elect members of the executive board; or

(5) determine the qualifications, powers, duties, or terms of office of executive board members, although the executive board may fill vacancies in its membership for the unexpired portion of any term.

SECTION 10 [formerly ' 3-106]. BYLAWS.

(a) The bylaws of the association must provide:

(1) the number of members of the executive board and the titles of the officers of the association;

(2) for election by the executive board or, if the declaration so requires, by the unit owners, of a president, treasurer, secretary, and any other officers of the association the bylaws specify;

(3) the qualifications, powers and duties, terms of office, and manner of electing and removing executive board members and offices and filling vacancies;

(4) which of its powers the executive board or officers may delegate to other persons or to a managing agent;

(5) which of its officers may prepare, execute, certify, and record amendments to the declaration on behalf of the association;

(6) a method for amending the bylaws, but only a designated number or percentage of the unit owners may amend the bylaws;

(7) any provisions that may be necessary to satisfy requirements in this [act] or the declaration concerning meetings, voting, quorums, and other matters concerning the activities of the association; and

(8) any matter required by law of this state other than this [act] to appear in the bylaws of organizations of the same type as the association.

(b) Subject to [the provisions of] the declaration, the bylaws may provide for any other matters the unit owners consider necessary or appropriate, including matters that could be adopted as rules, unless the declaration or this [act] requires that those provisions appear in the declaration.

SECTION 11 [formerly ' 3-108]. MEETINGS.

(a) The following rules apply to unit owner meetings:

(1) An association shall hold a meeting of unit owners annually at a time and place stated in or fixed in accordance with the bylaws.

(2) An association shall hold a special meeting of unit owners to address any matter affecting the common interest community or the association on the call of its president, a majority of the executive board, or unit owners having at least 20 percent, or any lower percentage specified in the bylaws, of the votes in the association. If the association does not notify unit owners of a special meeting within thirty days after receipt of such a request from the requisite number or percentage of unit owners, the requesting members may directly notify all the unit owners of that meeting. Only matters described in the meeting notice required by subsection (c) may be considered at a special meeting.

(3) An association shall notify unit owners of the date, time, and place of each annual and special unit owners= meeting not less than 10 or more than 60 days before the meeting date. Notice may be by hand delivery to the unit owners, by any means described in Section 17 or sent pre-paid postage paid by United States mail to any mailing address the unit owner designates in writing. The notice of any meeting must state the time and place of the meeting and the items on the agenda, including:

(A) a statement of the general nature of any proposed amendment to the declaration or bylaws;

(B) any budget changes, and

(4) The minimum time to give notice required by subsection (c) may be reduced or waived in the case of a meeting called to deal with an emergency.

(5) Unit owners must be given a reasonable opportunity at any meeting to offer comments regarding any matter affecting the common interest community or the association.

(b) The following rules apply to the executive board:

(1) All meetings of the executive board and of committees comprised only of board members must be open to the unit owners except during executive sessions. The executive board may hold an executive session only during a regular or special meeting of the executive board. No vote or action may be taken during an executive session. An executive session may be held only to:

(A) consult with the association=s attorney to obtain legal advice;

(B) discuss existing or potential litigation, mediation, arbitration, or administrative proceedings;

(D) discuss matters relating to contract negotiations, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage; or

(E) prevent public knowledge of the matter to be discussed if the executive board determines that public knowledge would violate the privacy of any person.

(2) For purposes of this section, a gathering of board members at which the board members do not conduct association business is not a meeting of the executive board. The executive board and its members may not use incidental or social gatherings of board members or any other devices to evade the open meeting requirements of this section.

(3) The executive board shall meet at least four times per year, and during the period of declarant control, at least one of those meetings must be held at or convenient to the common interest community. After termination of the period of declarant control, all executive board meetings shall be at or convenient to the common interest community unless the unit owners amend the bylaws to vary the minimum number or location of those meetings.

(4) At each executive board meeting, the executive board shall provide a reasonable opportunity for unit owners to offer comments regarding any matter affecting the common interest community and the association.

(5) Unless the meeting has been included in a schedule given to the unit owners or the meeting has been called to deal with an emergency, the secretary or other officer specified in the bylaws shall cause notice of each executive board meeting to be given to each board member and to the unit owners. The notice to unit owners may be by any means reasonably calculated to inform owners of the meeting, including those means described in Section 17 or in the declaration or bylaws of the association. The notice must be given not fewer than 10 days in advance of the meeting and must state the time, place, and agenda of the meeting

(6) If any materials are distributed to the executive board before the meeting, the executive board at the same time shall make copies of those materials reasonably available to unit owners, except that the board need not distribute copies of unapproved minutes or materials that are to be considered in executive session.

(7) Unless the declaration or bylaws otherwise provide, the executive board may meet in by a telephonic, video, or other conferencing process provided that:

(A) the meeting notice must indicate that the meeting is to be a telephonic[,][or] video [,or other] conference and provide information as to how unit owners may participate in the conference directly or by meeting at a central location or conference connection; and

(B) the process must provides all unit owners the opportunity to hear or perceive the discussion and offer comments as provided in subsection (4).

(8) After termination of the period of declarant control, unit owners may amend the bylaws to vary the procedures for conference calls described in subsection 7(ii).

(9) In lieu of a meeting, the executive board may act by unanimous consent as documented in a record signed by all its members. The secretary shall promptly give notice to all unit owners of any action taken by unanimous consent. After termination of the period of declarant control, the executive board may act by unanimous consent only to undertake ministerial actions; or implement actions previously agreed to by the executive board.

(10) Notwithstanding noncompliance with this section, an action by the executive board is valid unless the action is subject to subsection (11) and is set aside by a court in an action brought pursuant to Section 20. A challenge to the validity of an action of the executive board for failure to comply with this section may not be brought more than [60] days after the minutes of the executive board where the action was taken are approved; or after the record of that action is distributed to unit owners, whichever first occurs.

(11) The association is bound by a contract with a third party that has detrimentally relied on an action of the executive board and that had no knowledge that the action was contrary to this section.

SECTION 12 [formerly ' 3-109]. QUORUMS.

(a) Unless the [declaration or] bylaws provide otherwise, a quorum is present throughout any meeting of the unit owners if:

(1) persons entitled to cast [20] percent of the votes in the association are present in person, by proxy, or by ballot at the beginning of the meeting; or

(2) ballots cast pursuant to Section 13(e) are delivered to the secretary in a timely manner by persons that, together with those present in person or by proxy at the beginning of the meeting, would comprise a quorum for that meeting.

(b) Unless the bylaws otherwise provide, a quorum of the executive board is present at the time a vote is taken only if individuals entitled to cast a majority of the votes on that board are present at that time. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the executive board unless a greater vote is required by the declaration or bylaws.

(c) Votes allocated to a unit owned by the association shall not be calculated in a quorum [but shall be cast in any vote of the unit owners in the same proportion as the votes cast on the matter by unit owners other than the association.]

SECTION 13 [formerly ' 3-110]. VOTING; PROXIES.

(a) Unless prohibited or limited by the declaration or bylaws, unit owners may vote [needed? in any election or regarding any action that the association may take] [either at a meeting] in person, by absentee ballot, by a proxy pursuant to subsection (d) of this section, or [without a meeting] by electronic or paper ballot.

[(b) Votes allocated to a unit owned by the association shall be cast in any vote of the unit owners in the same proportion as the votes cast on the matter by unit owners other than the association.]

(1) A vote in person may be by voice vote, show of hands, by standing or by ballot.

(2) If only one of several owners of a unit is present, the owner is entitled to cast all the votes allocated to the unit. If more than one of the owners are present, the votes allocated to the unit may be cast only in accordance with the agreement of a majority in interest of the owners, unless the declaration expressly provides otherwise. There is majority agreement if any one of the owners casts the votes allocated to the unit without protest being made promptly to the person presiding over the meeting by any of the other owners of the unit.

(3) Unless a greater percentage or fraction of the votes in the association is required by this [act] or the declaration, a majority of the votes cast determines the outcome of any action of the association so long as the number of votes cast in favor comprise at least a majority of the number of votes required for a quorum for the meeting.

(4) A unit owner may vote by absentee ballot without being present at the meeting. The association must promptly deliver an absentee ballot to an owner who requests it if the request is made at least [3] days before the scheduled meeting. [needed? Votes cast by absentee ballot shall be included in the tally of a vote taken at that meeting]

(5) When unit owners vote by absentee ballot in an election [of the executive board],

(A) The association must be able to verify that the ballot is cast by a unit owner having the right to do so, and

(B) The ballot must either be cast anonymously or, when that is not reasonably practicable, the identity of the unit owner and the selections indicated on the ballot shall be known only to the persons appointed to count ballots who shall be obliged not to disclose the identities of the voters.

(d) Except as otherwise provided in the declaration or bylaws:

(1) votes allocated to a unit may be cast pursuant to a [directed or undirected] proxy duly executed by a unit owner [only if the proxy instructs the holder how the proxy is to be voted regarding each matter to be voted on at the meeting].

(2) If a unit is owned by more than one person, each owner of the unit may vote or register protest to the casting of votes by the other owners of the unit through a duly executed proxy.

(3) A unit owner may revoke a proxy given pursuant to this section only by actual notice of revocation to the person presiding over a meeting of the association.

(4) A proxy is void if it is not dated or purports to be revocable without notice.

(5) A proxy is valid only for the meeting at which it is used and any recessed session of that meeting.

[(6) No person may cast general proxies representing units owned by more than [ ] unit owners.]

(e) Unless prohibited or limited by the declaration or bylaws, an association may conduct a vote without a meeting in accordance with the following rules:

(1) The association must notify the unit owners that the vote will be taken by ballot.

(2) The association must deliver a paper or electronic ballot to every unit owner entitled to vote on the matter.

(3) The ballot must set forth each proposed action and provide an opportunity to vote for or against the action.

(4) When the association delivers the ballots, it must also

(A) indicate the number of responses needed to meet the quorum requirements;

(B) state the percentage of approvals necessary to approve each matter other than election of directors;

(C) specify the time by which a ballot must be delivered to the association in order to be counted, which time shall not be fewer than [three] days after the date that the association delivers the ballot; and

(D) describe procedures (including time, size and manner) by which unit owners wishing to deliver information to all unit owners regarding the subject of the vote may do so.

(5) Except as otherwise provided in the declaration or bylaws, a ballot is not revoked after delivery to the association by death, disability, or revocation by the person who cast that vote.

(6) Approval by ballot pursuant to this subsection is valid only if the number of votes cast by ballot equals or exceeds both the quorum required to be present at a meeting authorizing the action; and the number of ballots approving the action equals or exceeds the number that would be required to approve the matter at that meeting.

(f) If the declaration requires that votes on specified matters affecting the common interest community be cast by lessees rather than unit owners of leased units:

(1) the provisions of this section apply to lessees as if they were unit owners;

(2) unit owners who have leased their units to other persons may not cast votes on those specified matters; and

(3) lessees are entitled to notice of meetings, access to records, and other rights respecting those matters as if they were unit owners.

(g) Unit owners must also be given notice, in the manner provided in Section [3-108], of all meetings at which lessees are entitled to vote.

SECTION 14 [formerly ' 3-116]. LIMITATIONS ON FORECLOSURE.

(a) Regardless of provisions in the declaration [or other law? ], an association may not commence an action to foreclose a lien on a unit unless:

(1) the unit owner, at the time the action is commenced, owes a sum equal to at least (3) months of common expense assessments based on the periodic budget last adopted by the association pursuant to Section 19 and the unit owner has failed to accept or comply with a payment plan offered by the association; and

(2) the executive board expressly votes to commence a foreclosure action against a specific unit.

(b) Unless the parties otherwise agree, the association shall apply any sums paid by unit owners who are delinquent in paying assessments in the following order:

(1) unpaid assessments;

(2) late charges;

(3) attorneys fees and other reasonable collection charges and costs; and

(4) all other unpaid fees, charges, penalties, interest and late charges.

(c) If the only sums due with respect to a unit consist of fines and related sums levied against the unit, a foreclosure action may not be commenced against the unit unless the association has a judgment against the unit owner with respect to the fines and has perfected a judgment lien against the unit under [insert reference to state statute on perfection of judgments]

(d) Any sale or other disposition conducted in connection with a foreclosure action under this section shall be commercially reasonable.

SECTION 15 [formerly ' 3-118]. ASSOCIATION RECORDS.

(a) The association must [(create and maintain) (keep)] the following records:

(1) detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records;

(2) minutes of all meetings of its unit owners and executive board, a record of all actions taken by the unit owners or executive board without a meeting, and a record of all actions taken by a committee in place of the executive board on behalf of the association;

(3) the names of unit owners in a form that permits preparation of a list of the names and the addresses at which the association communicates with them of all owners, in alphabetical order showing the number of votes each owner is entitled to cast;

(4) its original or restated organizational documents, if any, bylaws and all amendments to them, and all rules currently in effect;

(5) any financial statements and tax returns of the association for the past three years;

(6) a list of the names and addresses of its current executive board members and officers;

(7) its most recent annual report delivered to the [Secretary of State], if any;

(8) financial and other records sufficiently detailed to enable the association to comply with other requirements of law;

(9) current contracts to which it is a party and which are in record form;

(10) records of executive board or committee actions to approve or deny any requests for design or architectural approval from unit owners; and

(11) ballots, proxies, and other records related to voting by unit owners for one year after the election, action, or vote to which they relate.

(b) Subject to subsections (c) and (d), all records maintained by the association, including aggregate salary information of employees of the association, shall be available for examination and copying by a unit owner or the owner's authorized agent:

(1) during reasonable business hours or at a mutually convenient time and location; and

(2) upon [5] days= written notice reasonably identifying the specific records of the association requested.

(1) personnel and salary matters relating to specific persons or a person=s medical records;

(2) contracts, leases, and other commercial transactions to purchase or provide goods or services, currently in or under negotiation;

(3) pending or potential litigation;

(4) matters involving state or local administrative or other formal proceedings before a government tribunal for enforcement of the declaration, bylaws, or rules;

(5) communications with legal counsel which are otherwise protected by the attorney-client privilege or the attorney work product doctrine;

(6) disclosure of information in violation of law;

(7) records of an executive session of the executive board; or

(8) individual unit files other than those of the requesting owner.

(d) The association may charge a fee for providing copies of any records under this section and for supervising the unit owner<s inspection but those fees may not exceed the actual cost of any materials and labor incurred by the association.

(e) The right to copy records under this section includes the right to receive copies by photocopying or other means, including copies through an electronic transmission if available and so requested by the unit owner.

(f) The association is not obligated to compile or synthesize information. Information provided pursuant to this section may not be used for commercial purposes.

SECTION 16 [formerly ' 3-120]. RULES.

(a) Before adopting, amending, or repealing any rule, the executive board must give all unit owners notice of:

(1) its intention to adopt, amend, or repeal a rule and provide the text of the proposed [change] [adoption, amendment or repeal]; and

(2) a date on which the executive board will act on the proposed rule or amendment after considering comments on those changes from unit owners.

(b) Following adoption, amendment, or repeal of a rule, the association shall notify the unit owners of its action and provide a copy of any new or revised rule.

(c) The association may adopt rules to establish and enforce construction and design criteria and aesthetic standards if the declaration so provides,. If the declaration does so provide, the association must adopt procedures for enforcement of those standards and for approval of applications, including a reasonable time within which the association must act after an application is submitted and the consequences of its failure to act.

(d) A rule regulating display of the flag of the United States must be consistent with federal law. [In addition, the] The association may not prohibit display on a unit or on a limited common element adjoining a unit of the flag of this state, or signs regarding candidates for public or association office or ballot questions, but the association may adopt rules governing the time, place, size, number and manner of those displays.

(e) Unit owners may peacefully assemble on the common elements to consider matters related to the common interest community but the association may adopt rules governing the time, place and manner of those assemblies.

(f) An association may adopt rules that affect the use of or behavior in units that may be used for residential purposes, only to:

(1) implement a provision of the declaration;

(2) regulate any behavior in or occupancy of a unit which violates the declaration or adversely affects the use and enjoyment of other units or the common elements by other unit owners; or

(3) restrict the leasing of residential units to the extent those rules are reasonably designed to meet underwriting requirements of institutional lenders who regularly lend money secured by first mortgages on units in common interest communities or regularly purchase those mortgages.

(g) Every rule must be reasonable.

SECTION 17 [formerly ' 3-121]. NOTICE.

(a) Any notice required to be given by the association under this [act] may be:

(1) personally hand-delivered to each person;

(2) hand-delivered or sent postage paid by United States mail or by express or delivery service to the mailing address of each unit, unless the owner has designated in writing a different mailing address in which case, it shall be sent to the designated address;

(3) sent by electronic means if the unit owner has given the association prior written authorization to provide notice by that means, together with an electronic address.; or

(4) unless directed otherwise by a unit owner, delivered by any other method reasonably calculated to provide notice to that person.

(b) The ineffectiveness of a good faith effort to deliver notice by any authorized means does not invalidate action taken at a meeting or in lieu of a meeting.

WRB NOTE B I THINK THIS TEXT IS MISSING SOME STANDARD PROVISIONS ON ELECTRONIC NOTICE.

SECTION 18 [formerly ' 3-122]. REMOVAL OF OFFICERS AND DIRECTORS.

(a) Notwithstanding any provision of the declaration or bylaws to the contrary, unit owners, by a majority vote of all persons present, in person, by proxy, or by ballot, at any meeting of the unit owners at which a quorum is present, may remove any member of the executive board and any officer elected by the unit owners with or without cause, except that:

(1) a member appointed by the declarant may not be removed by a unit owner vote during the period of declarant control;

(2) a member appointed under Section [3-103(f)] may be removed only by the person that appointed that member; and

(3) the unit owners may not consider whether to remove a member of the executive board at any meeting (D. Biklen B is listing it on the agenda sufficient even if not in the notice of the meeting?) of the unit owners unless that subject was listed in the notice of the meeting.

(b) At any meeting at which a vote to remove a member of the executive board is to be taken, the member being considered for removal shall have a reasonable opportunity to speak before the vote.

SECTION 19 [formerly ' 3-123]. ADOPTION OF BUDGETS.

(a) The executive board, at least annually, shall prepare a proposed budget for the common interest community for consideration by the unit owners. Not later than [30] days after adoption of a proposed budget, the executive board shall provide to all the unit owners a summary of the budget, including any reserves, and a statement of the basis on which any reserves are calculated and funded. Simultaneously, the board shall set a date for a meeting of the unit owners to consider ratification of the budget not less than 10 or more than 60 days after mailing of the summary. Unless at that meeting a majority of all unit owners or any larger vote specified in the declaration rejects the budget, the budget is ratified, whether or not a quorum is present. If a proposed budget is rejected, the budget last ratified by the unit owners continues until such time as the unit owners ratify a subsequent budget.

(b) The executive board may at any time propose a special assessment. Except as [otherwise] provided in subsection (c), the assessment is effective only if the executive board follows the procedures for ratification of a budget described in subsection (a) and the unit owners do not reject that proposed assessment.

(c) If the executive board determines by a two-thirds vote that a special assessment is necessary to respond to an emergency:

(1) the special assessment shall become effective immediately in accordance with the terms of the vote;

(2) notice of the emergency assessment shall be promptly provided to all unit owners; and

(3) the executive board shall spend the funds paid on account of the emergency assessment solely for the purposes described in the vote.

SECTION 20 [formerly ' 4-117]. EFFECT OF VIOLATIONS ON RIGHTS OF ACTION; ATTORNEY'S FEES.

(a) Any right granted or obligation imposed by this [act] is enforceable by judicial proceeding. If a declarant, the association, or any other person subject to this [act] fails to comply with any of its provisions or any provision of the declaration or bylaws [or rules], any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief. Punitive damages may be awarded for a willful failure to comply with this [act]. The court, in an appropriate case, may award court costs and reasonable attorney's fees.

(b) Parties to a dispute arising under this [act], the declaration, or the bylaws may agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution, but:

(1) a declarant may agree with the association to do so only after the period of declarant control has expired; and