On May 20, 2025, the Governor signed a new law that will apply to all Community Associations starting January 1, 2026. The new law is intended to assist owners who are struggling financially to pay their assessments and to give them tools to avoid foreclosure. Unfortunately, it will make the lien and foreclosure process significantly more burdensome and expensive for the Community Associations.

Under the new law, the Association must provide a notice to the delinquent owner “not later than 30 days after an assessment becomes past due.” The notice must be sent by first-class mail to the onsite address, any offsite address provided by the owner, and by email if the owner’s email address is known to the Association. The notice must be in English or “any other language indicated as a preference for correspondence by a unit owner.” If the owner has indicated a preference for a different language, a translation program will need to be used to translate the document. Finally, the notice must include the first statutory pre-foreclosure notice. That notice is set forth in the law. We can provide a template upon request.

An Association may not take any of the following steps until the fifteenth (15th) day after it has provided the owner with the notice of delinquency:

• Any type of collection action.
• Charge an owner for any collection costs except:
  • The actual costs of printing and mailing the notice of delinquency;
  • An administrative fee of not more than Ten Dollars ($10) related to providing the notice of delinquency; and
  • A single late fee of Fifty Dollars ($50) or five percent (5%) of the amount of the unpaid assessment which triggered the fee, whichever is less.
    An Association must maintain the pre-foreclosure information with its records, and owners are entitled to receive a free paper copy or electronic copy in English and any other language they indicate as their preference.

The owner may contact a Housing Counselor to receive advice with regard to the delinquency. Housing Counselors are obligated to act in good faith and assist the owner who reaches out to them. They will, among other things, assist in setting up and attending a “meet and confer” meeting with the Association. Once such meeting is requested, the Association must participate within thirty (30) days. During that meeting, the parties are to discuss the issues that led to the delinquency and explore possible resolutions, including, for example, a payment plan, waiver of late fees or attorneys’ fees, modification of delinquent assessments, or any other workout plan. Each party must bear their own attorney fees for the meet and confer session. The parties are not obligated to reach an agreement.

After the “meet and confer” session, the Housing Counselor will determine if the owner should be referred to mediation. If so, then the Association must participate in a mediation process. The Association must again bear its own costs and fees in this process. Prior to mediation, the Association must provide the owner with a ledger, copies of any liens the Association has recorded against the property, and the Association’s governing documents. In return, the owner must provide evidence of any payments not posted to the owner’s account, statement of hardship (if any), and a proposed payment plan if the owner is interested in payment plan.
Mediation must be held within seventy (70) days of the referral. Whenever possible, mediation should be in person, but may be by telephone or video conference. The Association must be represented by a person with authority to agree to a resolution on its behalf. The mediation must address the issues that led to the foreclosure and cover the same topics as those discussed in the “meet and confer” requirement.

The parties must mediate in good faith. If the Association does not mediate in good faith, the owner can use this as a defense to the foreclosure action. The mediator will determine if the Association mediated in good faith. The Association will be deemed to have not mediated in good faith if it does any of the following:

• Fails to timely participate in mediation without good cause;
• Fails to provide the documentation required before the mediation;
• Fails to designate a representative with authority to fully settle, compromise, or otherwise reach resolution with the owner in mediation; or
• Requests the owner to waive future claims against the association. However, the Association may request the owner to dismiss any civil claims against the Association related to the present delinquency.

After mediation, the mediator will send written certification to the parties and Department of Commerce regarding who attended, whether a resolution was reached, and when mediation took place. If no resolution was reached, and so long as the certification from the mediator does not find that the Association acted in bad faith, the Association may proceed with the foreclosure process. This involves, among other things, a second pre-foreclosure notice and Board approval in an open session of the foreclosure action.

The new law is significantly more detailed than this summary. We encourage Community Associations to start preparing for this new law and to implement a foreclosure procedure that is compliant with the law. Feel free to contact us if you have any questions.