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2017 Legislative Update Part 2: Expanded Rights for Community Associations to Require Developer Turn-over

leg-update-2_pic_7-19-17On July 1, 2017, Senate Bill 46 became law, granting community associations in Georgia new statutory rights to require that their association’s Developer turn over control of the association to the homeowners. Previously, the Georgia Condominium Act provided condominium unit owners some rights to require that their condominium Developer turn over control. However, Senate Bill 46 expands these rights for condominium unit owners and for the first time extends the same expanded turnover rights to owners of lots in homeowners associations, including both homeowners associations subject to the Georgia Property Owners Association Act (“POAA”) and those that are not.

Under the new statutory language, if a Developer fails to take any one of six specified actions, any homeowner or homeowners can, after giving the Developer 30 days’ written notice and an opportunity to cure its failure to act, file a lawsuit in superior court to obtain a court order transferring control of the association from the Developer to the owners.   The six specified Developer failures to act that can trigger the owners’ right to request turnover are as follows:

(1) Failure to incorporate the association or maintain the association’s annual registration;

(2) Failure to cause the association’s Board of Directors to be duly appointed and officers elected;

(3) Failure to maintain and make available to owners’ upon written request a list of the names and addresses of the entity’s current directors and officers;

(4) Failure to call meetings of the members as required by the Association’s Bylaws/covenants and/or the Condominium Act or POAA, if applicable;

(5) Failure to prepare an annual operating budget, establish the annual assessment, and distribute the budget and assessment to the owners no later than 30 days after the beginning of the fiscal year;

(6) Failure to pay taxes on common property of the Association for two of more years.

The statute provides that if a homeowner(s) sues as a result of Developer’s committing and refusing to cure any of the above-listed failures, the homeowner is entitled to an expedited hearing process such that the Judge may issue a ruling in the case within 20 days’ of service of the lawsuit on the Developer. There will be no discovery in the case unless ordered by the Court.   In addition to issuing a judgment granting homeowners control of the Association, the statute also allows the Court to issue orders requiring that the Developer convey intended common property to the association, as well as to require that the Developer pay the homeowners the attorneys’ fees and costs they incurred in bringing the action if they prevail.

The new statutory language is codified at O.C.G.A. § 44-3-101(c)(1) of the Condominium Act; O.C.G.A § 44-3-232.1 of the Georgia Property Owners Association Act; and O.C.G.A § 44-5-60(d)(5)(A) governing associations not subject to the Condominium Act or the Georgia Property Owners Association Act.