As a Montanan, veteran, and state senator, I am proud to sponsor Senate Bill 300 – a bill that protects property rights. The bill would create a grandfather clause for owners in homeowners associations to keep only their most basic property rights that were permitted when they bought their properties. This grandfather clause is similar to the grandfather clauses in code in 37 states and in Montana’s own zoning laws.
HOAs and condo associations are depriving individual Montanans and families of their constitutional property rights and forcing them to sell their homes or endure costly litigation. HOAs have no rules at all in Montana – they are not even defined in code.
I have heard stories from families across the state about how their HOA and condo association boards have taken away their rights to rent, develop, or use their property for their intended purposes, over the owners’ objections. When HOAs have changed the rules in those ways, they have put these owners in violation of their mortgage contracts and 1031 tax exchanges, have made investment properties worthless, have devalued many homes, and have forced owners to sell at a loss when they could not afford their mortgage payments without renting. When I tell most people about this problem, they ask, can they really do that? State and local governments cannot; we have zoning law variances for prior uses. But since HOAs have no rules, a majority of owners can currently deprive dissenting owners of their rights.
SB300 would fix that. It would create a grandfather clause that would let owners claim an exception to new rules that would deprive them of their rights to rent; their rights to use their property for agricultural, commercial, or residential purposes; or their rights to develop their property, if those types of use were permitted when the owners acquired their property.
While most of my Montana legislative colleagues understand the bill and have supported it in overwhelming majorities on every one of its votes, I understand that there seem to be a few misunderstandings. I want to clear those up.
- SB300 would not give owners exceptions for many things at all – only those particular types of use. It would not give exceptions for everything associated with those types of use – just the categories of use themselves.
- It would not interfere with HOAs making and enforcing rules about most everything they currently govern – like noise restrictions, painting, dryer vents, lawn care, annual dues, or community roads.
- It specifically states that HOAs can change and enforce whatever rules necessary to comply with laws and regulations.
- It would ensure that HOAs could change whatever rules they want for future owners.
- For example, if condo associations are currently eligible for Freddie Mac and Fannie Mae loans, they can change their rules to ensure that no new owners could rent their properties in order to stay compliant. The law would just prohibit them from taking away the rights to rent of existing owners.
- The bill protects title agents and real estate agent by ensuring that the types of use permitted when an owner buys property will continue to be permitted.
- The bill protects bankers by ensuring that buyers who need to be able to rent their property in order to make their mortgage payments will be able to do so.
Clearly, there should be some limits on HOAs, if whoever happens to be leading them is depriving individual families of their property rights. If not, what else could HOAs do? Could an HOA vote to take everyone’s property and put it into a co-op? According to opponents of SB300, there is nothing the state or any individual homeowners can do about that.
SB300 creates the least invasive limit possible on associations to protect the most basic property rights owners have. When associations’ efforts to self-regulate interfere with owners’ property, privacy, and contract rights, the Legislature should prioritize and protect the fundamental rights that come from property ownership.