ATTORNEY FORUM

To: POA, HOA, and Condo Association Boards who are clients of Dunlap Gardiner LLP

RE: Senate Bill 406 — What Does It Mean for Us?

General Information

Senate Bill 406 became law on May 12, 2026. Its stated purpose is to increase oversight of HOAs and protect homeowners from perceived unfair practices by HOA boards. As with many laws, however, its stated purpose may differ from its practical effect. While the bill will add bureaucracy and costs for HOAs, many—if not all—of the procedural protections it claims to provide already exist through the court system. In addition, the law’s cost- and fee-related protections will likely shift those expenses from homeowners who fail to pay or comply with community rules to those who consistently do.

However, it is important for POA, HOA, and condo boards to understand these new requirements and prepare accordingly. If experience is any guide, there will likely be an initial wave of complaints alleging technical violations, which will consume time and resources for many associations. Much of this activity may come from homeowners who have historically caused problems for their neighbors and increased association costs. In short, boards should comply carefully with the law’s technical requirements to avoid allowing an owner to use these protections as a weapon against the association.

There are two important dates to remember

On July 1, 2026, the provisions of this bill relating to collection actions filed on or after that date take effect.

On January 1, 2027, the remainder of the law relating to recordkeeping, HOA registration, payment application rules, and the administrative complaint process through the Secretary of State takes effect.

Attorney Fee Provisions Effective July 1, 2026

Section 7 of Senate Bill 406 does not allow associations to charge delinquent owners' attorney’s fees unless the association first does the following:

1. Send an initial written notice by certified mail or overnight delivery to the lot owner identifying any outstanding fines or delinquent fees;

2. Allow the lot owner 30 days from receipt of that notice to pay the outstanding fines or delinquent fees; 

3. Provide an itemized statement of the attorney’s fee claim.

After that notice, judges conducting bench trials must review all attorneys’ fee claims for reasonableness and enter an order stating whether the fees are reasonable before they are awarded.

So what do Dunlap Gardiner clients need to do differently under this law?

Nothing. Dunlap Gardiner’s fee structure is a true contingency. We do not charge an fee unless we collect from the debtor. We have also consistently advised our clients not to add our attorney’s fees to the debtor’s ledger if the debtor pays or agrees to a payment arrangement. If the debtor does not pay, or refuses to enter into a payment arrangement, and the association is forced to obtain a judgment, we request that the court award our fees at that time. 

Our process remains compliant with the law. The one adjustment that we will need to make is mailing the initial demand by certified mail instead of first class mail in order to comply and be eligible for an attorney fee award. This will result in roughly an additional $10.00 in postage for each account that will need to be budgeted for by boards.

Our fee structure has always been designed to ensure that our association clients pay us only if we are able to collect and to ensure that our fees do not exceed a percentage of the amount owed. This benefits both the association and the homeowner/debtor because it limits our fees to a reasonable portion of the debt. In circumstances where someone truly refuses to make arrangements to resolve the debt, we have always sought court approval for our fees. Because our fees are reasonable, we rarely have difficulty obtaining such awards.

However, for clients of other law firms that charge upfront or deferred attorney’s fs on an hourly, flat-fee, or per-action basis, this law will require those firms to first allow the homeowner an opportunity to pay any outstanding fees before any attorney’s fees may be passed on to the debtor. Under that structure, HOAs may pay lawyers for collection matters upfront and then be unable to pass those costs on to the debtor unless they satisfy all other conditions of the law. This would include obtaining a court award approving those fees. In those circumstances, the amount the association spends on attorney fees could offset or exceed the total amounts collected.

Provisions Effective January 1, 2027

The bulk of the law takes effect on January 1, 2027. Most of its provisions relate to procedural requirements designed to create a complaint process through the Secretary of State. Many other provisions are duplicative of existing statutory or case law, and this bill largely organizes those matters into a single statute.  However, there are also specific changes associations will need to make in order to collect assessments, foreclose, or take other actions once the law takes effect.

1. Registration Provisions

The most significant change is that associations must now register annually with the Secretary of State, in order to collect fees or fines, file liens, pursue accelerated assessments, or initiate foreclosure for delinquencies. This registration is in addition to their existing annual corporate registration. If an association fails to complete this separate registration, it may be barred from collecting delinquent assessments and related charges. Practically speaking, an unregistered association may have little or no effective means of enforcing payment obligations.

The Secretary of State is tasked with developing rules and regulations, and presumably an additional website or links, to implement this process before Januar 1.

Once those rules and regulations are issued, the process should become clearer.

For now, the statute states that the annual registration will require the association to provide:

a. The name, address, and officers of the owners’ association; and

b. A financial statement of the owners’ association dated within one year of the filing.

In addition, if any of the above information changes, or if any other material change occurs, the statute requires an amendment to be filed within 30 days. Obvious examples include the resignation or replacement of board members or officers. The statute sets the filing fee at $100.00.

2. Records Retention

The Georgia Nonprofit Corporation Code has long included provisions relating to records inspection by members, and those provisions apply to associations. However, the new statute makes certain materials available for inspection by the Secretary of State that might not otherwise be subject to review. Specifically, it requires that all documents regarding finances, assessments, fines, fees, liens, and foreclosures be subject to examination by the Secretary of State. Accordingly, it will be important for the association to have an agent maintain these records in an orderly manner.

In addition, the statute requires all records related to assessments, fines, fees, liens, and foreclosures to be maintained for ten years. The association must also notify the Secretary of State of the address where these records are maintained.

3. Secretary of State Administrative Procedures, Complaints and Hearings, Automatic Stay

The biggest change created by this law is the establishment of an administrative hearing process through the Georgia Secretary of State. In essence, the Secretary of State now becomes a complaint-processing center for community associations.

Under this new procedure, any owner or resident within the Association may file a complaint with the Secretary of State within 180 days of the alleged harm arising from an association’s action or inaction. Filing such a complaint triggers an automatic stay that prohibits the association from collecting, or attempting to collect, the disputed fines or fees while the matter is pending.

This could significantly slow the collection of assessments. It will also add attorney’s fees and other costs associated with handling these complaints outside the regular collection process.

Once an owner files a complaint, the Secretary of State may review the complaint, investigate it, or order a hearing.

Once a hearing is ordered, the Secretary of State will appoint a “referee,” who in this context functions as an administrative judge, to decide the case. The referee then makes a recommendation to the Secretary of State, who may issue orders. Although this process is presented as a quick and easy method of dispute resolution, I suspect the opposite will be true.

In addition, either party may appeal any decision of the Secretary of State to the magistrate court of the county where the majority of the association is located, or to the superior court if the amount in controversy exceeds the magistrate court’s jurisdiction.

4. Changes to Foreclosures and the POA Act

Foreclosure of association liens was one of the primary reasons this legislation was introduced. It is clear that the general sentiment in the state is that assessment foreclosures are disfavored. Many of the stories shared about this process involve associations pursuing relatively small assessment balances while also seeking large attorney’s fees, and those examples have been used to justify reform.

The new statute requires notice to be sent to the owner before any foreclosure, giving the owner 60 days to pay the delinquent amount before the foreclosure may proceed. It also changes the minimum delinquency threshold from a flat $2,000.00 to the lesser of $4,000.00 or an amount equal to 12 months of regular assessments in arrears, but not less than $2,000.00. This amount may not include any specific assessment or other fine or fee.

The one benefit from our perspective under the new law is for associations who have already adopted the Georgia Property Owners’ Association Act (the “POA Act”), the statute of limitations on liens for unpaid fees will now be increased by 2 years (from 4 to 6 years). This is a great reason to adopt the POA Act if you are not already subject to it.

5. Specific Rules or Requirements Added by the Statute (43-17A-8)

In addition to the areas above, the statute imposes other requirements, including payment application rules and a specific list of owner rights, some of which are somewhat redundant.

a. Payment Application Rules

The statute requires that any payment made by an owner be applied in the following order of priority:

  i. Regular assessments or dues;

  ii. Special assessments;

 iii. Specific assessments; and

 iv. Other fees and fines.

This provision also prohibits an association from refusing to accept a payment and prohibits associations from collecting accelerated assessments.

b. Specific Rights Granted by Statute (43-17A-7)

 Owners have the right to:

(1) Inspect and obtain copie

s of owners' association records, accounting records, and other records of the owners' association upon written demand and in compliance with the laws of this state and the governing documents. Such accounting records shall be the finalized balance sheet, budget, profit and loss statements, and bank statements for the past three years;

(2) Upon written demand to the owners' association, a copy of the owners' association certificate of insurance for all such insurance obtained by the owners' association for the benefit of the owner and that may apply to a potential claim or submitted claim:

(3) Notice of meetings of members in a fair and reasonable manner consistent with the governing documents and the laws of this state;

(4) Attend meetings of the members of the owners' association, which shall be called and held by the board of directors at least annually;

(5) Access to common areas, amenities, and common elements subject to the terms contained in the governing documents;

(6) Ingress, egress, and access to their individually owned property;

(7) Statutory notice and process requirements under the laws of this state should an owners' association proceed with foreclosure action against an individually owned property;

(8) Amend governing documents with the approval thresholds required by the laws of this state and the governing documents;

(9) Expect, unless otherwise provided by the laws of this state, that a director of an owners' association board of directors shall perform his or her duties in good faith and with the degree of care an ordinary, prudent person in a like position would exercise under similar circumstances;

(10) Expect directors to disclose to the other directors on the owners' association's board of directors any conflicting interest with respect to a transaction; 

(11) Be free from governing documents that interfere with the freedom of residents to determine the composition of their household, except that owners' associations shall have the power, subject to the laws of this state and federal law, to require that all occupants of a household be members of a single housekeeping unit, and to limit the total number of occupants permitted in each individually owned property and its fair share use of the common facilities, including parking; and

(12) Challenge discriminatory practices by an owners' association as authorized by the laws of this state or federal law.