How to Review Your HOA Governing Documents for SB 406 Compliance

What are governing documents and why do they matter for SB 406?

A Georgia HOA’s enforcement authority comes from two sources: state statute and its own recorded governing documents. SB 406 changes the statutory requirements. Your governing documents must either align with those new requirements or be amended — otherwise, enforcement actions taken under conflicting language may be challenged.

Most Georgia HOAs have three layers of governing documents:

• Declaration of Covenants, Conditions, and Restrictions (CC&Rs): The foundational document. Recorded with the county and binding on all property owners. Covers assessment obligations, use restrictions, and most enforcement mechanisms including liens and foreclosure.
• Bylaws: Govern how the association operates. Board elections, meeting procedures, officer roles, and amendment procedures live here.
• Rules and Regulations: Operational rules adopted by the board. Easier to amend than CC&Rs or bylaws but must be consistent with both.

SB 406 compliance issues are most commonly found in the CC&Rs and bylaws. Rules and regulations may also need updates but are lower risk.

The seven sections most likely to contain SB 406 conflicts

1. Assessment collection and lien authority

This is where most critical conflicts live. Search your CC&Rs for provisions that authorize the association to place liens on delinquent properties. Look specifically for:

• The dollar threshold that triggers lien authority. If it says anything below $4,000, that provision needs updating.
• Language about what counts toward the threshold. Under SB 406, only unpaid assessments count — not fines or fees. If your document counts fines toward the lien threshold, it conflicts.
• The timeframe before lien authority activates. SB 406 adds a 12-month consecutive non-payment alternative threshold.

2. Foreclosure procedures

Foreclosure provisions appear in most CC&Rs and are among the highest-risk provisions under SB 406. Look for:

• Any dollar threshold for foreclosure initiation. The old law permitted foreclosure at $2,000. SB 406 requires $4,000 in unpaid assessments. If your document says $2,000 (or any amount below $4,000), it must be amended.
• Notice requirements. SB 406 extends the required notice period before foreclosure can begin. If your document specifies a shorter notice period, it likely conflicts.
• Any provision that allows fines or attorney fees to count toward the foreclosure threshold. Under SB 406, only assessments count.
• Any conflict of interest provision. SB 406 prohibits board members and their close relatives from purchasing properties at HOA foreclosure sales.

3. Payment application order

Many older CC&Rs specify that owner payments are applied first to the association’s costs, fees, and fines — with assessments satisfied last. This practice is what kept many owners perpetually delinquent on assessments while their fees kept growing. SB 406 flips this: regular assessments must be satisfied first.

Search your documents for any language about how partial payments are applied. Phrases like “applied first to costs of collection” or “attorney fees and late charges before assessments” are red flags that need to be updated.

4. Record retention provisions

Older governing documents commonly specify 3-year or 5-year retention periods for financial records. SB 406 requires 10 years. If your documents specify a shorter period, they conflict with the new requirement and should be updated.

Also look for owner inspection rights language. SB 406 gives owners explicit statutory rights to inspect association records. Governing document provisions that restrict this right may be unenforceable.

5. Notice and enforcement procedures

Review the sections governing how the association notifies owners of violations before imposing fines. SB 406 requires:

• Specific reference to the governing document provision that was allegedly violated
• A cure period before fines begin accruing
• Adequate notice time before enforcement actions

Provisions that allow the board to impose fines immediately without a cure period, or that do not specify what violation triggered the notice, likely need updating.

6. Attorney fee provisions

Look for any section that allows the association to charge attorney fees to homeowners. Common language: “the delinquent owner shall be responsible for all costs of collection including reasonable attorney fees.” SB 406 requires that attorney fees be itemized and subject to judicial review of reasonableness before they can be collected. Blanket attorney fee authority without these safeguards may be challenged.

7. Board election provisions

Review your bylaws for board election procedures. SB 406 requires annual elections for registered associations. If your bylaws permit longer terms without annual elections, or lack formal procedures for contesting election results, amendments will be needed.

How to document your review

A systematic review should produce a written record of:

• Every provision reviewed and its current language
• Which provisions are compliant, which conflict, and which are ambiguous
• The specific SB 406 requirement each conflict implicates
• Recommended amendment language for each conflicting provision

This documentation serves two purposes: it lets your board see the full scope of work needed, and it gives your HOA attorney the foundation to draft amendment language efficiently.

Prioritizing your amendments

Not all amendments carry the same urgency. Here is a practical priority framework:

Highest priority: amend before first enforcement action

• Lien threshold language (must reflect $4,000)
• Foreclosure threshold language (must reflect $4,000)
• Payment application order (assessments first)

High priority: amend with first round of document updates

• Record retention period (must reflect 10 years)
• Notice and cure period language
• Attorney fee collection procedures

Standard priority: include in next planned document review

• Board election procedures
• Owner rights provisions
• Dispute resolution language

Working with an HOA attorney

Georgia law requires that CC&R amendments be recorded with the county and typically requires a homeowner vote. Your HOA attorney will:

• Draft amendment language that is legally precise and enforceable
• Ensure the amendment process follows the procedures in your existing bylaws
• Handle the recording and notice requirements
• Advise on whether a full document restatement is more efficient than piecemeal amendments

If your existing documents require a very high threshold for amendments (some older documents require 80% or more of homeowners to approve), an attorney can advise on whether a court-supervised consent process is an option.