H. B. 2150


(By Delegate Mezzatesta)
[Introduced January 13, 2003; referred to the
Committee on Political Subdivisions then the Judiciary.]
A BILL to amend article one, chapter thirty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section one hundred fifty-nine, relating to home owner associations; requiring officers and directors to post bond; registration with the county commission; county commission to appoint agent to hold association officers and directors to their fiduciary responsibility; qualifications of agent; appointment of knowledgeable person to carry out functions of association in times that disputes are not resolved; dismantling the association when disputes are not solvable; authorizing the secretary of state to restructure the association; and providing that no past officers or directors may serve on newly restructured association.

Be it enacted by the Legislature of West Virginia:
That article one, chapter thirty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section one hundred fifty-nine, to read as follows:
ARTICLE 1. BUSINESS AND NONPROFIT CORPORATIONS.
§31-1-159. Home owner and residential subdivision associations.

Notwithstanding any provision of law to the contrary, in the case of home owner and residential subdivision associations that incorporate and which are otherwise governed by the provisions of this article, all officers and directors that serve on these associations shall be required to post a surety bond in an amount equal to the value of one fifteenth of the appraised value of the entirety of the real property subject to the governance of the association. Upon incorporation, the association shall register with the county commission on a form provided by the county clerk. The registration form shall require disclosure of the names and addresses of all directors and officers of the association and shall set forth what pecuniary interests they hold in the property of the association or any other interests in any other property that would bear on or influence their activity as an officer or director of the association in the holdings of the association.
The county commission shall appoint its agent to insure that directors and officers of the association uphold their respective fiduciary responsibilities to the shareholders of the association. A person appointed as an agent under the provisions of this section shall be knowledgeable in matters involving real property, corporations and dispute resolution. In the event of substantial conflict among shareholders, officers or directors of the association, which is not amenable to dispute resolution in the opinion of the appointed agent, the county commission may appoint a knowledgeable individual in the affairs of real estate and corporations to carry out the affairs of the association until such time that the dispute is resolved. The individual shall be entitled to a reasonable hourly rate which shall be paid out of the association dues. If, after the appointment of the individual a period of six months passes without resolution to the particular dispute, and if in the discretion of the appointed individual the dispute is not susceptible to resolution, the association shall be dissolved under the provisions of this article.
If after dissolution under this section a majority of past shareholders petition the secretary of state for restructuring, the secretary shall assist in restructuring and reformulation of the association. The secretary shall insure that no former officer or director of the association may serve on the newly restructured association.

NOTE: The purpose of this bill is to provide a mechanism to regulate the affairs of home owner or subdivision associations.

This section is new; therefore, strike-throughs and underscoring have been omitted.