Effective Jan. 1, 2006, SB 137 places limits on when and how a homeowner association (HOA) can initiate foreclosure proceedings on a homeowner's unit or lot for delinquent assessments. Previously, the HOA could initiate non-judicial foreclosure proceedings against a homeowner who only owed a few hundred dollars in delinquent HOA dues. Under the new law, before the HOA can initiate foreclose proceedings for delinquent dues or assessments, either: (1) the assessed debt must be $1,800 or more, exclusive of assessment charges; or (2) the debt must be delinquent for more than 12 months. Until the debt reaches the threshold limit of $1,800 or is 12-months delinquent, an HOA seeking to collect delinquent dues and/or assessments can either: (1) file a civil action in Small Claims Court; or (2) record a lien on the delinquent homeowner's property upon which it can later institute foreclose proceedings after the debt meets either the $1,800, or 12 month delinquency, threshold.

The new law also requires the HOA, at least 30 days before initiating foreclosure proceedings to: (1) hold an executive meeting of the Board, (2) by majority vote decide to initiate foreclosure proceedings, (3) record the results of the Board's vote in the HOA's minutes, and (4) disclose its foreclosure activities to the to be foreclosed upon homeowner by sending all debt collection correspondence, a legal notice of delinquent dues and/or assessments, and an itemized list of charges owed by the delinquent homeowner. These four items must be sent to the homeowners' primary address, and if a secondary address is available to that address as well.

The new law also allows the delinquent homeowner, in writing, to seek a meeting with the HOA's Board to resolve any dispute over an assessed debt. The Board, upon receipt of such a written request, must respond to the homeowner's written request within 15 days of the postmark on the written request. If a court, or arbitrator, finds the HOA has filed a lien in error, the HOA must reverse the lien and assume all costs.