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Senate Bill 61

The Ohio Legislature passed new legislation amending ORC 5311, the Ohio Condominium Act, and ORC 5312, the Planned Community Act. Many of the changes were non-substantive, but there are a few significant changes, some following the decisions of courts around Ohio and others clarifying the previous law. These changes take effect on September 13, 2022.

Ohio Revised Code 5311

Ohio Condominium Act Amendments

Major Change in Reserve Accounts:

SB 61 amends the requirement for reserves to eliminate the 10% rule. It also eliminated the phrase "unless otherwise provided by the Declaration and Bylaws.” Ohio Condominium Act Section 5311.081 now requires that the Association “annually adopt an estimated budget for revenues and expenditures that includes reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments unless either of the following applies: (a) the Declaration or Bylaws include language limiting the ability of the Board of directors to increase assessments for common expenses without a vote of the unit owners; (b) the unit owners, exercising not less than a majority of the voting power of the unit owners association waive the reserve requirement in writing annually.”

Basically, SB 61 allows a condominium association to ignore reserves if the unit owners waive the reserve requirement annually or the Declaration or Bylaws limit the ability of the Board to increase assessments.

This is an astonishing change for the Ohio General Assembly to adopt. We hope most condominium associations will recognize the wisdom in maintaining adequate reserves and not allow their buildings and garages to collapse due to inadequate funding necessary to maintain the common elements.

Expanded Insurance Requirements:

SB 61 expanded the insurance requirements for the Association found in Section 5311.16 to include fidelity or dishonesty insurance for anyone who controls or disburses funds for the Association. The list of those individuals consists of the management company's principals and employees, the bookkeeper, and the president, secretary, or treasurer of the Association – if they have the authority or access to sign checks, conduct electronic transfers, or otherwise withdraw funds. The Act states that the amount of insurance should be for the maximum amount of funds that will be in the custody of the Association or its designated agent at any one time plus three months of operating expenses. We recommend that you contact your insurance agent to comply with this new requirement.

Solar Units:

For condominiums, Section 5311. the Association must allow solar units on roofs (unless they are specifically prohibited by the Declaration) if the roof is part of the Unit as defined by the Declaration or the Declaration specifically allows them. The Association may establish reasonable rules and regulations regarding the solar panel size, place, and manner of placement. If your Association is interested in establishing these rules and regulations, please contact our office for assistance.

Board Amendments:

Condominium Act Section 5311.05 allows the Board to amend the Declaration and Bylaws for certain defined events. SB 61 now allows the Board to amend the Declaration, and Bylaws to permit the Board to send notices to unit owners by electronic mail if the Board received authorization from the unit owner. If the email is returned, the Board must send the notice by regular mail.

Also, the Board may delete, without owner vote, any provision that violates the restrictions on discrimination based upon race, color, national origin, sex, religion, or familial status. Any other proposed changes to the Declaration and Bylaws must go through the normal voting process.

Board Composition:

Regarding the makeup of the Board, Section 5311.08 was modified to add that a majority of the Board cannot consist of unit owners or representatives from the same Unit. The exception is if the Board passes a resolution before the board majority comprises owners or representatives from the same Unit.

Miscellaneous Provisions:

Per Section 5311.081, the Condominium may commence litigation specifically relating to land use which impacts zoning pertaining to the condominium association.

The Association may contribute to social activities or charitable contributions on behalf of the Owners’ Association if permitted by the Declaration or Bylaws.

SB 61 added one item to the list of documents the unit owner cannot examine. A unit owner may not view a document older than five years old.

The Ohio General Assembly finally made a condominium lien “continuing” for an owner’s failure to pay for maintenance fees, enforcement assessments, etc. This allows the Association to collect on the full amount without filing new liens and incurring additional filing fees as an account balance increases.

Ohio Revised Code 5312

OHIO PLANNED DEVELOPMENT ACT AMENDMENTS

Many provisions in the amended Planned Development Act mirror the Ohio Condominium Act’s SB 61 amendments.

Reserve Accounts:

The reserve requirement is not substantially changed. It now requires that the annual vote to waive the reserve requirement be in writing. Planned Communities must still annually adopt and amend an estimated budget for revenues and expenditures. Any budget shall include reserves in an amount adequate to repair and replace major capital items in the normal course of operations without the necessity of special assessments, unless the owners, exercising not less than a majority of the voting power of the owners’ association, waive the reserve requirement in writing annually.

Insurance Requirements:

The insurance requirements for the Owners’ Association found in Section 5312.06(B)(4) were expanded to include fidelity or dishonest insurance for anyone who controls or disburses funds for the Association. The list of those individuals consists of the management company's principals and employees, the bookkeeper, and the president, secretary, or treasurer of the Association – if they have the authority or access to sign checks, conduct electronic transfers, or otherwise withdraw funds. The Act states that the amount of insurance should be for the maximum amount of funds that will be in the custody of the Association or its designated agent at any one time plus three months of operating expenses.

Solar Units:

An Owners’ Association must allow solar units on roofs or other locations within the Owner’s lot unless the Declaration specifically disallows them, or the Declaration specifically allows them and places the responsibility for maintenance on the Owner. The Association may establish reasonable rules and regulations regarding the solar panel size, place, and manner of placement. If a person violates this section, the Association must give the owner notice with a description of the violation, the amount, the right to a hearing, the methods to ask for a hearing, and the date the Owner must cure the violation. These are the same requirements as for a normal enforcement assessment per Section 5312.11.

Miscellaneous Provisions:

Notices may be sent by email if the Board received authorization to send notices to that Owner via email.

Per revised Section 5312.03, the majority of the Board cannot consist of owners or representatives from the same lot unless authorized by a resolution adopted by the Board before the board majority is comprised of owners or representatives from the same lot.

The Board may vote to delete, without owner vote, any provision that violates the restrictions on discrimination based upon race, color, national origin, sex, religion, or familial status.

Section 5312.07 limits the records that an Owner may inspect. Unless approved by the Board, an owner may not examine records that date back over five years before the date of the request.

If you have any questions or concerns with regard to the changes, please do not hesitate to contact our office.

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