Skip Ribbon Commands
Skip to main content

SB300: A BILL CLAIMING TO PROTECT PROPERTY RIGHTS

BILL STATUS IN THE LEGISLATURE

PROPONENTS:

  • A homeowner who is being sued by her HOA for violating short-term rental rules and who is counter-suing her HOA.
  • The homeowner's attorney.

OPPONENTS:

The growing list of community associations, community management companies, law firms, and trade organizations.

ABOUT SB300

SB 300 was drafted by a homeowner who bought a house in Red Lodge to use as a rental property through VRBO. Every single member of their association voted in favor of an amendment to clarify the covenants on the property, resulting in a complete ban on short term rentals. The attorney for the family drafted the bill language and has been leading the efforts for its passage. 

This bill is being positioned by proponents as protecting property rights. However, the result of the bill would be that the only property rights protected would be of homeowners who don't want to follow new rules.

The broad and sweeping language in SB300 fundamentally changes the way rules apply to residents in homeowners associations and condominiums. The only rules that would apply are the rules that exist when a resident purchases their home. This includes ANY rule; small or large. Changes to HOA covenants reflect the HOA homeowners desire to maintain property values by addressing current issues in the community. Here are a few concerning examples:

  • Increased Expenses on Homeowners: It will be difficult and costly to track homeowners' individual set of rules based on their homes purchase date. This cost will be borne by all the homeowners in the community. Further, the unconstitutional nature of SB300 will cause legal challenges by associations. Legal fees will be borne by the homeowners.
  • Decrease in Property Values: Homes in community associations are generally valued at least 5-6% more than other homes and 90% of people surveyed say their association's rules protect and enhance property values (62% or have a neutral effect (28%); only 4% say the rules harm property values.
  • Healthy and Safety Concerns: Communities would not be able to enforce maintenance to ensure community health and safety issues like sprinkler system, dryer vent maintenance. Communities would not be able to enforce rules related to maintenance of community lighting, occupancy limits, installation of wind turbines and towers (of any size and installed by anyone without concern of safety).
  • Vacation Rentals: Communities would not be allowed to have a community conversation about how to handle vacation rentals in their communities to ensure the preservation of community character and protection of property values.
  • Access to Mortgage Lending may be Negatively Impacted: If communities have more than 50% of the homes owned by investors, Fannie Mae and Freddie Mac will not underwrite loans in those communities according to their federal guidelines. If a community association chooses to adopt a related to the investor/owner ration, it will be unenforceable to some of the owners.  

SB300 is Unconstitutional. It violates the Montana Constitution Section 31 No ex post facto law nor any law impairing the obligation of contracts, making any irrevocable grant of special privileges, franchise, or immunities, shall be passed by the legislature. The Montana Supreme Court in numerous rulings has declared that HOA and condominium covenants are a contract between the association and the owners.

SB300 is Patchwork Legislation. The problem with attempting to alter property rights in a hurried and piecemeal fashion is that no thought is given to all the ramifications of the legislation or to the effect on other areas of the law. SB 300 will create confusion for buyers and residents and will make it  impossible to apply rules and covenants by association board members.  SB300 will compromise the integrity of the community association housing model in Montana. Further and most disturbing, SB 300 will cause chaos, confusion, and lawsuits.   

© 2019-2020 Community Associations Institute