By Ben Hamborg, Dylan Wallace, & Michael Clements (Summer Law Clerk)

Introduction

You open your annual meeting packet to find a proposed special assessment for roof and siding work that rivals a year’s mortgage payments. When you ask basic questions about the scope, bidding, and whether directors have ties to the contractor, you are told to “address it with the association’s attorney”—and then warned you could be billed for that time. If this scenario feels familiar, Minnesota’s new HOA/common interest community (CIC) reforms are designed to change that dynamic by expanding transparency, tightening conflict-of-interest rules, capping fines and fees, and clarifying owner rights.

Overview

Minnesota has enacted sweeping changes to the Minnesota Common Interest Ownership Act that strengthen owner rights by standardizing notice and meeting practices, curbing abusive fines and late charges, prohibiting conflicts of interest for boards and managers, requiring competitive bidding for large maintenance and construction contracts, and prohibiting retaliation against owners who assert their rights. The new legislation also refines termination procedures for certain single-family CICs, sets clearer resale and disclosure obligations, and restricts local governments from conditioning permit approvals on creating or shaping HOAs. Senate File 1750 details the changes, which take effect on January 1, 2027.

New Limits on Fines and Fees

Under the new legislation, associations can no longer set fines however they choose. Standard fines for a single violation of the declaration, bylaws, or rules are capped at $100, unless the violation repeats, creates a serious and immediate health or safety risk, causes property damage, or involves using the property for financial gain. If you dispute a fine, you are entitled to a hearing before the board, and the association cannot charge you for its attorney’s fees unless the board upholds the fine after that hearing. Associations must also publish a schedule of their standard fines and available remedies, so owners know what to expect before a dispute arises.

The same section caps interest on delinquent common expenses and special assessments at 8% and late fees at the greater of $20 or 5% of the amount owed. If you fall behind on payments, any amount you pay must be applied to your common expense assessments first, before it goes toward fines or other charges, and the association generally cannot refuse your payment outright unless it has already started foreclosure.

Notice of Legal Fees

If your association wants to refer your question or dispute to its attorney, it must first notify you, at no cost, that it intends to do so and that legal fees may result in an assessment against you. This notice is not required if litigation is already pending or threatened, if you have your own attorney involved, or if the association needs to act immediately to protect health, safety, or its legal rights.

Retaliation and Governmental Limits

Associations cannot retaliate against you for exercising a right the statute gives you, whether that means restricting a privilege or imposing an unauthorized fine or charge. And starting with CICs created after January 1, 2027, local governments can no longer require the creation of an HOA, or dictate what goes into its governing documents, as a condition of approving a building permit or subdivision. Additionally, Director elections must occur regularly, terms cannot exceed three years, and terms must be staggered unless terms are one year or less. Boards must make meeting agendas and contracts to be voted on reasonably available beforehand, provide reasonable meeting notice, and allow owner comment on agenda items before votes. Boards may close meetings for limited topics such as litigation, personnel matters, and criminal activity concerns.

Conflicts of Interest and Competitive Bidding

Board members may not deliberate or vote on contracts where they or family members have a financial interest or are likely to realize a financial gain, and may not solicit or accept inducements for property maintenance or construction contracts; similar restrictions apply to property managers. For contracts estimated at $50,000 or more, the association must solicit at least three written competitive bids, make required affiliated-bidder disclosures, and retain records for six years.

Terminations of Certain Single-Family CICs

Detached single-family developments without common elements or building maintenance obligations may terminate with 67% owner approval, with silence deemed consent if owners do not object within 60 days of certified-mail notice; other CICs continue to require 80% owner and first-mortgagee approvals unless governing documents require more.

Parking and Alterations

Associations cannot regulate parking within a publicly maintained right-of-way except to require compliance with applicable laws via governing documents or rules. Upon owner request, associations must offer a procedure for deciding proposed alterations, issue a written, reasonable decision, and act within 90 days of a complete submission or requested revisions.

Foreclosure

Associations may not commence foreclosure unless common expenses and special assessments, and qualifying fines (when applicable), are more than three months delinquent.

Practical Advice for HOA/CIC Boards and Managers

1. Update rulemaking calendars to ensure at least 21 days’ owner notice and adopt an emergency-rule protocol with prompt follow-up notice.
2. Revise fine schedules, hearing procedures, and templates to reflect the $100 cap, exceptions, owner hearing rights, and 30-day final decision delivery.
3. Rework agendas, meeting notices, and owner-comment practices; publish contracts slated for votes in advance.
4. Adopt conflict of interest and vendor policies; implement three-bid procedures and six-year record retention for work that requires $50,000 or more.
5. Update collection policies to cap interest and late fees, accept payments unless in foreclosure, apply payments first to assessments, and consider reasonable payment plans.
6. Train on anti-retaliation standards and document neutral, rule-based enforcement decisions.
7. Refresh alteration and parking policies to meet the 90-day written-decision rule and public right of way limits.
8. Modernize resale and disclosure packs, add deductible/loss-assessment warnings, and include any reserve studies.

Practical Advice for Homeowners

1. Review your association’s updated fine schedule and hearing process; exercise your right to be heard before a fine is upheld.
2. Expect agendas and contracts to be available before meetings and use the owner-comment period to raise concerns.
3. If you have a delinquency, you can tender payments that must be applied first to assessments and may request a reasonable payment plan.
4. If you assert your rights, the association may not retaliate by restricting your privileges or imposing unauthorized charges.
5. Verify that your insurance for loss-assessment coverage is at least equal to the association’s deductible.

Conclusion

For home and unit owners, the law offers meaningful new tools, but understanding how a fine dispute, a delinquency, or a legal-fee notice plays out under the amended statute still requires careful reading of the text. Our firm advises Minnesota HOAs/CICs, property managers, homeowners, and developers on compliance planning, governance reforms, document amendments, competitive bidding and vendor oversight, collections and payment plans, disclosure and resale compliance, and dispute resolution and litigation under the new law. If you have questions about updating your governing documents and policies, responding to owner inquiries, navigating a major construction project, or addressing a fine or foreclosure dispute, contact our firm to discuss a practical path forward.

Disclaimer

This article provides general information for Minnesota HOA/CIC stakeholders and does not constitute legal advice. Laws and facts vary by community and circumstance, and outcomes may differ. Reading this article or contacting our firm does not create an attorney‑client relationship. For advice about your situation, consult an attorney.

The purpose of this article is merely to provide general information and should not be construed as legal advice.