| 6 | 4 | | 95th General Assembly A Bill 2 |
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| 7 | 5 | | Regular Session, 2025 SENATE BILL 323 3 |
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| 8 | 6 | | 4 |
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| 9 | 7 | | By: Senator J. Bryant 5 |
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| 10 | 8 | | By: Representative McCollum 6 |
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| 11 | 9 | | 7 |
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| 12 | 10 | | For An Act To Be Entitled 8 |
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| 13 | 11 | | AN ACT TO AMEND THE HORIZONTAL PROPERTY ACT; AND FOR 9 |
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| 14 | 12 | | OTHER PURPOSES. 10 |
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| 15 | 13 | | 11 |
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| 16 | 14 | | 12 |
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| 17 | 15 | | Subtitle 13 |
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| 18 | 16 | | TO AMEND THE HORIZONTAL PROPERTY ACT. 14 |
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| 19 | 17 | | 15 |
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| 20 | 18 | | BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 16 |
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| 21 | 19 | | 17 |
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| 22 | 20 | | SECTION 1. Arkansas Code § 18 -13-102(1), concerning the definition of 18 |
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| 23 | 21 | | "apartment" under the Horizontal Property Act, is amended to read as follows: 19 |
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| 24 | 22 | | (1)(A) "Apartment" means a part of the property intended for 20 |
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| 25 | 23 | | residential, commercial, industrial, or any other type of independent use 21 |
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| 26 | 24 | | consisting of one (1) or more rooms or spaces occupying all or part of one 22 |
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| 27 | 25 | | (1) or more floors in a building or buildings of one (1) or more floors 23 |
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| 28 | 26 | | designated as an apartment in the master deed and delineated on the plans 24 |
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| 29 | 27 | | provided for in § 18 -13-105 a physical portion of the property that: 25 |
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| 30 | 28 | | (i) Is subject to a master deed designated for 26 |
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| 31 | 29 | | separate ownership or occupancy, the boundaries of which are described by the 27 |
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| 32 | 30 | | master deed and delineated on the plans provided for in § 18‐13‐105; and 28 |
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| 33 | 31 | | (ii) May be further subdivided into additional units 29 |
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| 34 | 32 | | or apartments by the establishment of a subordinate master deed. 30 |
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| 35 | 33 | | (B) Except as otherwise provided by the master deed or 31 |
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| 36 | 34 | | plans provided for in § 18 ‐13‐105: 32 |
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| 37 | 35 | | (i) If walls, floors, or ceilings are designated as 33 |
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| 38 | 36 | | boundaries of an apartment or unit, then all lath, furring, wallboard, 34 |
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| 39 | 37 | | plasterboard, plaster, paneling, tiles, wallpaper, paint, finished flooring, 35 |
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| 45 | 41 | | of the apartment or unit, and all other portions of the walls, floors, or 1 |
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| 46 | 42 | | ceilings are a part of the common elements of the apartment or unit; 2 |
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| 47 | 43 | | (ii) If any chute, flue, duct, wire, conduit, bearing 3 |
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| 48 | 44 | | wall, bearing column, or any other fixture is partially within and partially 4 |
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| 49 | 45 | | outside the designated boundaries of the apartment or unit, then the portion 5 |
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| 50 | 46 | | serving only that apartment or unit is a limited common element allocated 6 |
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| 51 | 47 | | solely to that apartment or unit, and the portion serving more than one (1) 7 |
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| 52 | 48 | | apartment or unit or the common elements is a part of the general common 8 |
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| 53 | 49 | | elements; 9 |
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| 54 | 50 | | (iii) Subject to subdivision (1)(B)(ii) of this 10 |
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| 55 | 51 | | section, the spaces, interior partitions, and other fixtures and improvements 11 |
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| 56 | 52 | | within the boundaries of an apartment or unit are a part of the apartment or 12 |
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| 57 | 53 | | unit; and 13 |
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| 58 | 54 | | (iv) Shutters, awnings, window boxes, doorsteps, 14 |
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| 59 | 55 | | stoops, porches, balconies, patios, exterior doors, and exterior windows or 15 |
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| 60 | 56 | | other fixtures designed to serve a single apartment or unit, but located 16 |
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| 61 | 57 | | outside the apartment or unit's boundaries, are limited common elements 17 |
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| 62 | 58 | | allocated exclusively to that apartment or unit. 18 |
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| 63 | 59 | | (C) "Apartment" includes a unit ; 19 |
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| 64 | 60 | | 20 |
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| 65 | 61 | | SECTION 2. Arkansas Code § 18 -13-102(4), concerning the definition of 21 |
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| 66 | 62 | | "general common elements" under the Horizontal Property Act, is amended to 22 |
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| 67 | 63 | | read as follows: 23 |
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| 68 | 64 | | (4) "General common elements" means the common elements that are 24 |
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| 69 | 65 | | not limited common elements :; 25 |
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| 70 | 66 | | (A) The land on which the building stands; 26 |
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| 71 | 67 | | (B) The foundations, main walls, roofs, halls, lobbies, 27 |
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| 72 | 68 | | stairways, and entrance and exit or communication ways; 28 |
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| 73 | 69 | | (C) The basements, flat roofs, yards, and gardens, except 29 |
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| 74 | 70 | | as otherwise provided or stipulated; 30 |
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| 75 | 71 | | (D) The premises for the lodging of janitors or persons in 31 |
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| 76 | 72 | | charge of the building, except as otherwise provided or stipulated; 32 |
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| 77 | 73 | | (E) The compartments or installations of central services 33 |
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| 78 | 74 | | such as power, light, gas, cold and hot water, refrigeration, reservoirs, 34 |
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| 79 | 75 | | water tanks and pumps, and the like; 35 |
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| 85 | 79 | | all devices or installations existing for common use; and 1 |
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| 86 | 80 | | (G) All other elements of the building rationally of 2 |
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| 87 | 81 | | common use or necessary to its existence, upkeep, and safety; 3 |
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| 88 | 82 | | 4 |
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| 89 | 83 | | SECTION 3. Arkansas Code § 18 -13-102(5), concerning the definition of 5 |
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| 90 | 84 | | "limited common elements" under the Horizontal Property Act, is amended to 6 |
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| 91 | 85 | | read as follows: 7 |
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| 92 | 86 | | (5) "Limited common elements" means those a portion of the 8 |
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| 93 | 87 | | common elements which are agreed upon by all the co -owners to be reserved for 9 |
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| 94 | 88 | | the use of a certain number of apartments to the exclusion of the other 10 |
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| 95 | 89 | | apartments, such as special corridors, stairways, and elevators, sanitary 11 |
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| 96 | 90 | | services common to the apartments of a particular floor, and the like 12 |
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| 97 | 91 | | allocated by the master deed or by operation of an apartment under § 18 -13-13 |
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| 98 | 92 | | 102(1) for the exclusive use of one (1) or more owner but less than all of 14 |
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| 99 | 93 | | the owners; 15 |
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| 100 | 94 | | 16 |
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| 101 | 95 | | SECTION 4. Arkansas Code § 18 -13-102, concerning the definitions under 17 |
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| 102 | 96 | | the Horizontal Property Act, is amended to add additional subdivisions to 18 |
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| 103 | 97 | | read as follows: 19 |
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| 104 | 98 | | (12)(A)(i) "Common elements" means all portions of a condominium 20 |
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| 105 | 99 | | other than the apartments or units as stated in the master deed. 21 |
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| 106 | 100 | | (ii) "Common elements" includes both general and 22 |
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| 107 | 101 | | limited common elements. 23 |
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| 108 | 102 | | (B) Subject to the master deed, a declarant has an 24 |
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| 109 | 103 | | easement through the common elements as may be reasonably necessary for 25 |
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| 110 | 104 | | discharging the declarant's obligations or exercising special declarant rights 26 |
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| 111 | 105 | | whether or not arising under this chapter or reserved by the master deed; 27 |
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| 112 | 106 | | (13) "Declarant" means a person, group of persons, entity, or 28 |
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| 113 | 107 | | group of entities, acting in concert, that: 29 |
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| 114 | 108 | | (A) As part of a common promotional plan, offers to dispose 30 |
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| 115 | 109 | | of the person's interest in an apartment or unit not previously disposed of; 31 |
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| 116 | 110 | | or 32 |
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| 117 | 111 | | (B) Reserves or succeeds to any development right under a 33 |
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| 118 | 112 | | master deed; and 34 |
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| 119 | 113 | | (14) "Development rights" means a right or combination of rights 35 |
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| 136 | 128 | | (G) Maintain sales, management, leasing offices, and signs 12 |
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| 137 | 129 | | advertising the horizontal property regime and models; 13 |
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| 138 | 130 | | (H) Amend a master deed to comply with mortgage 14 |
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| 139 | 131 | | underwriting requirements; or 15 |
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| 140 | 132 | | (I) Use an easement through the common elements for the 16 |
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| 141 | 133 | | purpose of making improvements within the horizontal property regime or 17 |
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| 142 | 134 | | within real property that may be added to the horizontal property regime. 18 |
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| 143 | 135 | | 19 |
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| 144 | 136 | | SECTION 5. Arkansas Code § 18 -13-103 is amended to read as follows: 20 |
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| 145 | 137 | | 18-13-103. Establishment of horizontal property regimes. 21 |
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| 146 | 138 | | (a) Whenever a sole owner or the co -owners of a building already 22 |
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| 147 | 139 | | constructed or the owners of property upon which a building is to be 23 |
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| 148 | 140 | | constructed expressly declare, through the recordation of a master deed 24 |
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| 149 | 141 | | setting forth the particulars enumerated in § 18 -13-104, their desire to 25 |
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| 150 | 142 | | submit their property to the regime established by this chapter, there shall 26 |
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| 151 | 143 | | be established a horizontal property regime A horizontal property regime may 27 |
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| 152 | 144 | | be created under this chapter only by recording a master deed executed in the 28 |
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| 153 | 145 | | same manner as a deed by all persons who have an interest in the real 29 |
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| 154 | 146 | | property that will be conveyed to an owner of an apartment or unit and by 30 |
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| 155 | 147 | | every lessor of a lease of an interest in real property that will be subject 31 |
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| 156 | 148 | | to the master deed, the expiration or termination of which will terminate the 32 |
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| 157 | 149 | | horizontal property regime or reduce the size of a horizontal property 33 |
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| 158 | 150 | | regime. 34 |
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| 159 | 151 | | (b) A master deed shall be recorded in each county in which any 35 |
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| 165 | 155 | | regime is located stating the particulars enumerated in § 18 ‐13‐104, and 1 |
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| 166 | 156 | | thereafter shall be established a horizontal property regime. 2 |
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| 167 | 157 | | (c) An apartment or unit in an existing horizontal property regime may 3 |
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| 168 | 158 | | be further lawfully subdivided into subordinate subunits by the recordation 4 |
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| 169 | 159 | | of one (1) or more additional subordinate master deeds that: 5 |
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| 170 | 160 | | (1) Comply with the requirements of this chapter; and 6 |
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| 171 | 161 | | (2) Is permitted in the master deed or is pursuant to any rights 7 |
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| 172 | 162 | | reserved in favor of the declarant under the master deed or this chapter. 8 |
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| 173 | 163 | | (d)(1) If a contract for the sale of a condominium ownership interest 9 |
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| 174 | 164 | | contains the legend described in subdivision (d)(3) of this section, a 10 |
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| 175 | 165 | | declarant may, according to the contractual provisions, use a deposit or down 11 |
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| 176 | 166 | | payment for the acquisition of an apartment or unit upon the commencement of 12 |
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| 177 | 167 | | construction of the structure of the condominium property in which the 13 |
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| 178 | 168 | | purchaser's apartment or unit will be located and use the deposit or down 14 |
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| 179 | 169 | | payment in the actual construction and development of the condominium 15 |
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| 180 | 170 | | property. 16 |
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| 181 | 171 | | (2) The declarant shall not use the deposit or down payment 17 |
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| 182 | 172 | | described under subdivision (d)(1) of this section for: 18 |
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| 183 | 173 | | (A) Advertising purposes; or 19 |
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| 184 | 174 | | (B) The salary, commission, or expenses of an agent. 20 |
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| 185 | 175 | | (3) A contract that permits withdrawals of a deposit or down 21 |
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| 186 | 176 | | payment for the purposes described in subdivision (d)(1) of this section 22 |
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| 187 | 177 | | shall include the following legend conspicuously printed or stamped in 23 |
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| 188 | 178 | | boldface type, on the first page of the contract and immediately above the 24 |
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| 189 | 179 | | signature of the purchaser: 25 |
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| 190 | 180 | | "Purchaser acknowledges that, under this contract, the seller may withdraw 26 |
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| 191 | 181 | | and then use for construction and development of the condominium property a 27 |
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| 192 | 182 | | deposit or down payment that the purchaser makes before closing." 28 |
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| 193 | 183 | | 29 |
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| 194 | 184 | | SECTION 6. Arkansas Code § 18 -13-104 is amended to read as follows: 30 |
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| 195 | 185 | | 18-13-104. Master deed. 31 |
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| 196 | 186 | | (a) The master deed creating and establishing the horizontal property 32 |
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| 197 | 187 | | regime shall be: 33 |
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| 198 | 188 | | (1) executed Executed by the declarant or owner or owners of the 34 |
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| 199 | 189 | | real property making up the horizontal property regime; and 35 |
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| 205 | 193 | | officio recorder of the county where the real property subject to the 1 |
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| 206 | 194 | | horizontal property regime is located. 2 |
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| 207 | 195 | | (b) The A master deed shall express the following particulars: 3 |
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| 208 | 196 | | (1) The description of the land and the building, expressing 4 |
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| 209 | 197 | | their respective areas real property subject to the horizontal property 5 |
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| 210 | 198 | | regime; 6 |
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| 211 | 199 | | (2) The general description and number of each apartment, 7 |
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| 212 | 200 | | expressing its area, location, and any other data necessary for its 8 |
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| 213 | 201 | | identification The name of the declarant, if any, reserving the development 9 |
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| 214 | 202 | | rights and special declarant rights under this chapter, and a time limit, if 10 |
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| 215 | 203 | | applicable, for which each of the development rights or special declarant 11 |
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| 216 | 204 | | rights shall be exercised ; 12 |
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| 217 | 205 | | (3) The name of the association, if any, or a description of the 13 |
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| 218 | 206 | | operations or rights reserved to the council of co‐owners, in either case that 14 |
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| 219 | 207 | | will: 15 |
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| 220 | 208 | | (A) Enforce the terms and conditions expressed in the 16 |
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| 221 | 209 | | master deed; and 17 |
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| 222 | 210 | | (B) Operate and manage the common elements; 18 |
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| 223 | 211 | | (4) A description of the boundaries of each apartment or unit 19 |
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| 224 | 212 | | created by the master deed, including without limitation the apartment's or 20 |
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| 225 | 213 | | unit's identifying number and any other data necessary for the identification 21 |
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| 226 | 214 | | of the apartment or unit; 22 |
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| 227 | 215 | | (5) The description of the general common elements of the 23 |
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| 228 | 216 | | building and, in proper cases, of the limited common elements restricted to a 24 |
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| 229 | 217 | | given number of apartments or units, expressing which are those apartments or 25 |
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| 230 | 218 | | units; and 26 |
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| 231 | 219 | | (4) The value of the property and of each apartment and, 27 |
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| 232 | 220 | | according to these basic values, the percentage appertaining to the co -owners 28 |
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| 233 | 221 | | in the expenses of, and rights in, the elements held in common 29 |
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| 234 | 222 | | (6) An allocation to each apartment or unit of the apartment's 30 |
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| 235 | 223 | | or unit's allocated interests in the common elements and common expenses, 31 |
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| 236 | 224 | | which the allocation does not have to be equal to each other such that an 32 |
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| 237 | 225 | | allocation of interests in the common elements may differ from the 33 |
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| 238 | 226 | | apartment's or the unit's allocation of common expenses; 34 |
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| 239 | 227 | | (7) A statement of the maximum number of apartments or units 35 |
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| 245 | 231 | | development rights under § 18 -13-102(14); 1 |
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| 246 | 232 | | (8) The time period in which any development rights that are 2 |
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| 247 | 233 | | reserved by a declarant in a master deed may be exercised; 3 |
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| 248 | 234 | | (9) The method of amending a master deed; 4 |
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| 249 | 235 | | (10) The allocation to each apartment or unit a portion of the 5 |
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| 250 | 236 | | votes in the association; 6 |
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| 251 | 237 | | (11) The formula used to establish the allocations under 7 |
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| 252 | 238 | | subdivision (b)(6) of this section; 8 |
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| 253 | 239 | | (12) If the master deed permits an apartment or unit to be added 9 |
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| 254 | 240 | | to or withdrawn from the horizontal property regime, state the formula that 10 |
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| 255 | 241 | | shall be used to reallocate the allocated interest among the apartments and 11 |
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| 256 | 242 | | units included in the horizontal property regime after the addition or 12 |
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| 257 | 243 | | withdrawal of an apartment or unit; and 13 |
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| 258 | 244 | | (13) Any other matters a declarant considers appropriate . 14 |
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| 259 | 245 | | (c) Except as may otherwise be provided in a master deed, an amendment 15 |
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| 260 | 246 | | to a master deed requires consent of all apartment owners or unit owners. 16 |
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| 261 | 247 | | 17 |
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| 262 | 248 | | SECTION 7. Arkansas Code § 18 -13-112 is amended to read as follows: 18 |
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| 263 | 249 | | 18-13-112. Ownership and valuation of separate units and common 19 |
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| 264 | 250 | | elements. 20 |
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| 265 | 251 | | (a)(1) An apartment owner or unit owner shall have the exclusive 21 |
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| 266 | 252 | | ownership of his or her apartment or unit and shall have a common right to a 22 |
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| 267 | 253 | | share, with the other co -owners, in the common elements of the property as 23 |
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| 268 | 254 | | stated in the master deed . 24 |
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| 269 | 255 | | (2)(A) This share is equivalent to the percentage representing 25 |
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| 270 | 256 | | the value of the individual apartment with relation to the value of the whole 26 |
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| 271 | 257 | | property. 27 |
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| 272 | 258 | | (B) This percentage shall be computed by taking as a basis 28 |
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| 273 | 259 | | the value of the individual apartment in relation to the value of the 29 |
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| 274 | 260 | | property as a whole The master deed may provide different allocations of 30 |
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| 275 | 261 | | votes that are to be made to the apartments or units on particular matters 31 |
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| 276 | 262 | | specified in the master deed . 32 |
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| 277 | 263 | | (b) The percentage shall be expressed at the time the horizontal 33 |
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| 278 | 264 | | property regime is constituted, shall have a permanent character, and shall 34 |
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| 279 | 265 | | not be altered without the acquiescence of the co -owners representing all the 35 |
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| 285 | 269 | | 104(a)(12) due to a declarant's addition or withdrawal of an apartment or 1 |
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| 286 | 270 | | unit in the horizontal property regime according to the declarant's 2 |
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| 287 | 271 | | development rights. 3 |
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| 288 | 272 | | (c) The basic value, which shall be fixed for the sole purpose of this 4 |
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| 289 | 273 | | chapter and irrespective of the actual value, shall not prevent each co -owner 5 |
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| 290 | 274 | | from fixing a different circumstantial value to his or her apartment in all 6 |
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| 291 | 275 | | types of acts and contracts. 7 |
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| 292 | 276 | | 8 |
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| 293 | 277 | | SECTION 8. Arkansas Code § 18 -13-116 is amended to read as follows: 9 |
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| 294 | 278 | | 18-13-116. Liability for expenses and assessments. 10 |
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| 295 | 279 | | (a)(1) The co-owners of the apartments an apartment or unit are bound 11 |
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| 296 | 280 | | to contribute pro rata, in the percentages computed according to § 18 -13-112, 12 |
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| 297 | 281 | | pay according to the percentages established by a master deed toward: 13 |
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| 298 | 282 | | (A) the The expenses of administration and of maintenance 14 |
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| 299 | 283 | | and repair of the general common elements and , in the proper case, of the 15 |
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| 300 | 284 | | limited common elements of the building ,; and 16 |
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| 301 | 285 | | (B) toward any Any other expense lawfully agreed upon. 17 |
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| 302 | 286 | | (2)(A) However, the administrator, board of administration, or 18 |
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| 303 | 287 | | other form of administration of a horizontal property regime may establish 19 |
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| 304 | 288 | | additional assessments to be collected from any a co-owner who makes his or 20 |
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| 305 | 289 | | her apartment or unit available for rent or lease either directly or through 21 |
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| 306 | 290 | | an agent. 22 |
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| 307 | 291 | | (B) Such The additional assessments shall not exceed the 23 |
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| 308 | 292 | | amount reasonably calculated to cover expenses for additional security, wear 24 |
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| 309 | 293 | | and tear on buildings, additional trash pickup, and other additional costs 25 |
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| 310 | 294 | | occasioned by such units the apartment or unit being available for rent or 26 |
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| 311 | 295 | | lease. 27 |
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| 312 | 296 | | (b)(1) No A co-owner may shall not exempt himself or herself from 28 |
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| 313 | 297 | | contributing toward such the expenses under subdivision (a)(2)(A) of this 29 |
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| 314 | 298 | | section by waiver of the use or enjoyment of the common elements or by 30 |
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| 315 | 299 | | abandonment of the apartment or unit belonging to him or her. 31 |
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| 316 | 300 | | (2) Notwithstanding subdivision (b)(1) of this section, the 32 |
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| 317 | 301 | | declarant, from the date of the initial assessment until declarant control of 33 |
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| 318 | 302 | | the association terminates, or five (5) years from a declarant's first 34 |
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| 319 | 303 | | conveyance of a unit or apartment, whichever is earlier, shall periodically 35 |
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| 325 | 307 | | (A) An amount equal to all operational expenses of the 1 |
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| 326 | 308 | | association, less the operational expense portion of the assessments paid by 2 |
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| 327 | 309 | | an owner of an apartment or an owner of a unit other than the declarant; or 3 |
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| 328 | 310 | | (B) The common expenses allocated to each apartment or 4 |
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| 329 | 311 | | unit owned by the declarant. 5 |
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| 330 | 312 | | (3) Common expenses shall be assessed against all apartments and 6 |
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| 331 | 313 | | units conveyed, rented, or used as models or offices by the declarant, and 7 |
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| 332 | 314 | | all apartments or units owned by a declarant after termination of a 8 |
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| 333 | 315 | | declarant's control of the association or five (5) years from a declarant's 9 |
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| 334 | 316 | | first conveyance of an apartment or unit, whichever is earlier, according to 10 |
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| 335 | 317 | | the common expenses allocated to each apartment or unit. 11 |
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| 336 | 318 | | (4) A past due assessment or installment of an assessment may 12 |
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| 337 | 319 | | bear interest at a lawful rate established by the association. 13 |
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| 338 | 320 | | (c) Upon the sale or conveyance of an apartment or unit, all unpaid 14 |
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| 339 | 321 | | assessments against a co -owner for his or her pro rata share in the expenses 15 |
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| 340 | 322 | | to which subsection (a) of this section refers shall first be paid out of the 16 |
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| 341 | 323 | | sales price or by the acquirer in preference over any other assessments or 17 |
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| 342 | 324 | | charges of whatever nature except the following: 18 |
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| 343 | 325 | | (1) Assessments, liens, and charges for taxes past due and 19 |
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| 344 | 326 | | unpaid on the apartment or unit; and 20 |
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| 345 | 327 | | (2) Payments due under mortgage instruments of encumbrance duly 21 |
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| 346 | 328 | | recorded. 22 |
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| 347 | 329 | | (d) The purchaser of an apartment or unit shall be jointly and 23 |
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| 348 | 330 | | severally liable with the seller for the amounts owing by the latter seller 24 |
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| 349 | 331 | | under subsection (a) of this section up to the time of the conveyance, 25 |
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| 350 | 332 | | without prejudice to the purchaser's right to recover from the other party 26 |
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| 351 | 333 | | the amounts paid by him or her as the joint debtor. 27 |
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| 352 | 334 | | 28 |
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| 353 | 335 | | SECTION 9. DO NOT CODIFY. Applicability. 29 |
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| 354 | 336 | | (a) This act is applicable to a horizontal property regime organized 30 |
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| 355 | 337 | | on and after September 1, 2025. 31 |
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| 356 | 338 | | (b) A horizontal property regime organized before September 1, 2025, 32 |
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| 357 | 339 | | may elect to be subject to the provisions of this act by amending the master 33 |
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| 358 | 340 | | deed and filing the appropriate reorganization documents on and after 34 |
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| 359 | 341 | | September 1, 2025. 35 |
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