| 1 | 1 | | |
|---|
| 2 | 2 | | |
|---|
| 3 | 3 | | |
|---|
| 4 | 4 | | |
|---|
| 5 | 5 | | 2025 -- S 0507 |
|---|
| 6 | 6 | | ======== |
|---|
| 7 | 7 | | LC001449 |
|---|
| 8 | 8 | | ======== |
|---|
| 9 | 9 | | S T A T E O F R H O D E I S L A N D |
|---|
| 10 | 10 | | IN GENERAL ASSEMBLY |
|---|
| 11 | 11 | | JANUARY SESSION, A.D. 2025 |
|---|
| 12 | 12 | | ____________ |
|---|
| 13 | 13 | | |
|---|
| 14 | 14 | | A N A C T |
|---|
| 15 | 15 | | RELATING TO PROPERTY -- CONDOMINIUM LAW |
|---|
| 16 | 16 | | Introduced By: Senators McKenney, Britto, LaMountain, Burke, and Appollonio |
|---|
| 17 | 17 | | Date Introduced: February 26, 2025 |
|---|
| 18 | 18 | | Referred To: Senate Housing & Municipal Government |
|---|
| 19 | 19 | | |
|---|
| 20 | 20 | | |
|---|
| 21 | 21 | | It is enacted by the General Assembly as follows: |
|---|
| 22 | 22 | | SECTION 1. Sections 34-36.1-1.02 and 34-36.1-3.13 of the General Laws in Chapter 34-1 |
|---|
| 23 | 23 | | 36.1 entitled "Condominium Law" are hereby amended to read as follows: 2 |
|---|
| 24 | 24 | | 34-36.1-1.02. Applicability. 3 |
|---|
| 25 | 25 | | (a)(1) This chapter applies to all condominiums created within this state after July 1, 1982, 4 |
|---|
| 26 | 26 | | except that any condominium created within this state prior to July 1, 1982, may voluntarily accept 5 |
|---|
| 27 | 27 | | the provisions of this chapter in lieu of the provisions under which it was originally organized. 6 |
|---|
| 28 | 28 | | Acceptance shall be evidenced by an agreement in writing executed by and in behalf of the 7 |
|---|
| 29 | 29 | | condominium association and by all of the owners of all of the individual condominium units within 8 |
|---|
| 30 | 30 | | the condominium, in which agreement it is clearly stated that they all accept the provisions of this 9 |
|---|
| 31 | 31 | | chapter in lieu of those in the statute under which the condominium was organized and wish to be 10 |
|---|
| 32 | 32 | | governed in the future by the provisions of this chapter. The agreement shall be recorded in the 11 |
|---|
| 33 | 33 | | land evidence records of each and every town or city where all or any part of the land in the 12 |
|---|
| 34 | 34 | | condominium concerned may be located and shall become effective when first so recorded. The 13 |
|---|
| 35 | 35 | | acceptance shall only apply to the governance of the condominium concerned as to all matters 14 |
|---|
| 36 | 36 | | which are prospective or executory in nature; and nothing herein shall be deemed to abrogate, 15 |
|---|
| 37 | 37 | | amend, limit, effect, or impair the continued effectiveness, legality, or validity of all actions 16 |
|---|
| 38 | 38 | | lawfully taken by or in behalf of the condominium prior to the effective date of the acceptance, 17 |
|---|
| 39 | 39 | | including, but without limitation, the condominium declaration and all amendments thereto, the by-18 |
|---|
| 40 | 40 | | laws of the condominium and/or of its association, all deeds, mortgages, leases, and any further 19 |
|---|
| 41 | 41 | | |
|---|
| 42 | 42 | | |
|---|
| 43 | 43 | | LC001449 - Page 2 of 7 |
|---|
| 44 | 44 | | documents affecting the titles or rights of unit owners, or of the condominium or the prior lawful 1 |
|---|
| 45 | 45 | | acts or deeds of any kind, of the condominium association, its officers, directors, or members. 2 |
|---|
| 46 | 46 | | (2) Sections 34-36.1-1.05 (separate titles and taxation), 34-36.1-1.06 (applicability of local 3 |
|---|
| 47 | 47 | | ordinances, regulations, and building codes), 34-36.1-1.07 (eminent domain), 34-36.1-2.03 4 |
|---|
| 48 | 48 | | (construction and validity of declaration and bylaws), 34-36.1-2.04 (description of units), 34-36.1-5 |
|---|
| 49 | 49 | | 3.02(a)(1) — (6) and (11) — (17) (powers of unit owners’ association), 34-36.1-3.06(c) — (d) 6 |
|---|
| 50 | 50 | | (bylaws), 34-36.1-3.11 (tort and contract liability), 34-36.1-3.13(d) and (k) (unit owner 7 |
|---|
| 51 | 51 | | responsibility for master policy deductibles), 34-36.1-3.16 (lien for assessments), 34-36.1-3.18 8 |
|---|
| 52 | 52 | | (association records), 34-36.1-4.09 (resale of units), and 34-36.1-4.17 (effect of violation on rights 9 |
|---|
| 53 | 53 | | of action; attorney’s fees), § 34-36.1-3.20 (enforcement of declaration, bylaws and rules), and 34-10 |
|---|
| 54 | 54 | | 36.1-1.03 (definitions), to the extent necessary in construing any of those sections, apply to all 11 |
|---|
| 55 | 55 | | condominiums created in this state before July 1, 1982; but those sections apply only with respect 12 |
|---|
| 56 | 56 | | to events and circumstances occurring after July 1, 1982, and do not invalidate existing provisions 13 |
|---|
| 57 | 57 | | of the declaration, bylaws, plats, or plans of those condominiums. 14 |
|---|
| 58 | 58 | | (3) A condominium created as an additional phase by amendment of a condominium 15 |
|---|
| 59 | 59 | | created prior to July 1, 1982, if the original declaration contemplated the amendment, shall be 16 |
|---|
| 60 | 60 | | deemed to be a condominium created prior to July 1, 1982; provided, however, the provisions of 17 |
|---|
| 61 | 61 | | subdivision (a)(2) shall apply as defined therein. 18 |
|---|
| 62 | 62 | | (4) Section 34-36.1-3.21 (foreclosure of condominium lien) applies, with respect to all 19 |
|---|
| 63 | 63 | | condominiums created in this state prior to June 19, 1991, only with respect to events and 20 |
|---|
| 64 | 64 | | circumstances occurring after June 18, 1991, does not invalidate existing provisions of the 21 |
|---|
| 65 | 65 | | declarations, bylaws, plats, or plans of those condominiums, and applies in all respects to all 22 |
|---|
| 66 | 66 | | condominiums created in this state after June 18, 1991. 23 |
|---|
| 67 | 67 | | (b) The provisions of the Condominium Ownership Act, chapter 36 of this title, do not 24 |
|---|
| 68 | 68 | | apply to condominiums created after July 1, 1982, and do not invalidate any amendment to the 25 |
|---|
| 69 | 69 | | declaration, bylaws, plats, and plans of any condominium created before July 1, 1982, if the 26 |
|---|
| 70 | 70 | | amendment would be permitted by this chapter. The amendment must be adopted in conformity 27 |
|---|
| 71 | 71 | | with the procedures and requirements specified by those instruments and by chapter 36 of this title. 28 |
|---|
| 72 | 72 | | If the amendment grants to any person any rights, powers, or privileges permitted by this chapter, 29 |
|---|
| 73 | 73 | | all correlative obligations, liabilities, and restrictions in this chapter also apply to that person. 30 |
|---|
| 74 | 74 | | (c) This chapter does not apply to condominiums or units located outside this state, but the 31 |
|---|
| 75 | 75 | | public offering statement provisions (§§ 34-36.1-4.02 — 34-36.1-4.07) apply to all contracts for 32 |
|---|
| 76 | 76 | | the disposition thereof signed in this state by any party unless exempt under § 34-36.1-4.01(b). 33 |
|---|
| 77 | 77 | | 34-36.1-3.13. Insurance. 34 |
|---|
| 78 | 78 | | |
|---|
| 79 | 79 | | |
|---|
| 80 | 80 | | LC001449 - Page 3 of 7 |
|---|
| 81 | 81 | | (a) Commencing not later than the time of the first conveyance of a unit to a person other 1 |
|---|
| 82 | 82 | | than a declarant, the association shall maintain, to the extent reasonably available: 2 |
|---|
| 83 | 83 | | (1) Property insurance on the common elements insuring against all risks of direct, physical 3 |
|---|
| 84 | 84 | | loss commonly insured against or, in the case of a conversion building, against fire and extended 4 |
|---|
| 85 | 85 | | coverage perils. The total amount of insurance after application of any deductibles shall be not less 5 |
|---|
| 86 | 86 | | than eighty percent (80%) of the actual cash value of the insured property at the time the insurance 6 |
|---|
| 87 | 87 | | is purchased and at each renewal date, exclusive of land, excavations, foundations, and other items 7 |
|---|
| 88 | 88 | | normally excluded from property policies; and 8 |
|---|
| 89 | 89 | | (2) Liability insurance, including medical payments insurance, in an amount determined 9 |
|---|
| 90 | 90 | | by the executive board, but not less than any amount specified in the declaration, covering all 10 |
|---|
| 91 | 91 | | occurrences commonly insured against for death, bodily injury, and property damage arising out 11 |
|---|
| 92 | 92 | | of, or in connection with, the use, ownership, or maintenance of the common elements and any 12 |
|---|
| 93 | 93 | | property owned or leased by the association. 13 |
|---|
| 94 | 94 | | (b) In the case of a building containing units having horizontal boundaries described in the 14 |
|---|
| 95 | 95 | | declaration, the insurance maintained under subdivision (a)(1), to the extent reasonably available, 15 |
|---|
| 96 | 96 | | shall include the units, but need not include improvements and betterments installed by unit owners. 16 |
|---|
| 97 | 97 | | (c) If the insurance described in subsections (a) and (b) is not reasonably available, the 17 |
|---|
| 98 | 98 | | association promptly shall cause notice of that fact to be hand delivered or sent prepaid by United 18 |
|---|
| 99 | 99 | | States mail to all unit owners. The declaration may require the association to carry any other 19 |
|---|
| 100 | 100 | | insurance, and the association in any event may carry any other insurance it deems appropriate to 20 |
|---|
| 101 | 101 | | protect the association or the unit owners. 21 |
|---|
| 102 | 102 | | (d) Insurance policies carried pursuant to subsection (a) must provide that: 22 |
|---|
| 103 | 103 | | (1) Each unit owner is an insured person under the policy with respect to liability arising 23 |
|---|
| 104 | 104 | | out of the owner’s interest in the common elements or membership in the association; 24 |
|---|
| 105 | 105 | | (2) The insurer waives its right to subrogation under the policy against any unit owner or 25 |
|---|
| 106 | 106 | | member of the owner’s household; 26 |
|---|
| 107 | 107 | | (3) No act or omission by any unit owner, unless acting within the scope of his or her 27 |
|---|
| 108 | 108 | | authority on behalf of the association, will void the policy or be a condition to recovery under the 28 |
|---|
| 109 | 109 | | policy; and 29 |
|---|
| 110 | 110 | | (4) If, at the time of a loss under the policy, there is other insurance in the name of a unit 30 |
|---|
| 111 | 111 | | owner covering the same risk covered by the policy, the association’s policy provides primary 31 |
|---|
| 112 | 112 | | insurance. Provided, however, a unit owner’s insurance policy shall become the primary insurance 32 |
|---|
| 113 | 113 | | policy with respect to any amount of loss to their unit covered by the association’s policy but not 33 |
|---|
| 114 | 114 | | payable under the association’s policy because of the application of the deductible. If a unit owner 34 |
|---|
| 115 | 115 | | |
|---|
| 116 | 116 | | |
|---|
| 117 | 117 | | LC001449 - Page 4 of 7 |
|---|
| 118 | 118 | | fails to comply with obligations pursuant to subsection (k) of this section, the unit owner shall have 1 |
|---|
| 119 | 119 | | the obligation for expenses related to the owner’s unit after a unit loss in the amount of the 2 |
|---|
| 120 | 120 | | deductible of the association property insurance applicable to the unit. The association shall provide 3 |
|---|
| 121 | 121 | | written notice to the unit owners setting forth the amount of deductible for the association property 4 |
|---|
| 122 | 122 | | insurance for their units at least thirty (30) days after notice to the association by the insurance 5 |
|---|
| 123 | 123 | | carrier of any change in the association property insurance deductible. The notice shall include a 6 |
|---|
| 124 | 124 | | statement asserting the unit owner’s legal obligation to notify its mortgagee of the change in any 7 |
|---|
| 125 | 125 | | deductible. 8 |
|---|
| 126 | 126 | | (e) Any loss covered by the property policy under subdivision (a)(1) and subsection (b) 9 |
|---|
| 127 | 127 | | must be adjusted with the association, but the insurance proceeds for that loss are payable to any 10 |
|---|
| 128 | 128 | | insurance trustee designated for that purpose, or otherwise to the association, and not to any 11 |
|---|
| 129 | 129 | | mortgagee or beneficiary under a deed of trust. The insurance trustee or the association shall hold 12 |
|---|
| 130 | 130 | | any insurance proceeds in trust for unit owners and lien holders as their interests may appear. 13 |
|---|
| 131 | 131 | | Subject to the provisions of subsection (h), the proceeds must be disbursed first for the repair or 14 |
|---|
| 132 | 132 | | restoration of the damaged property, and unit owners and lien holders are not entitled to receive 15 |
|---|
| 133 | 133 | | payment of any portion of the proceeds unless there is a surplus of proceeds after the property has 16 |
|---|
| 134 | 134 | | been completed, repaired or restored, or the condominium is terminated. 17 |
|---|
| 135 | 135 | | (f) An insurance policy issued to the association does not prevent a unit owner from 18 |
|---|
| 136 | 136 | | obtaining insurance for his or her own benefit. 19 |
|---|
| 137 | 137 | | (g) An insurer that has issued an insurance policy under this section shall issue certificates 20 |
|---|
| 138 | 138 | | or memoranda of insurance to the association and, upon written request, to any unit owner, 21 |
|---|
| 139 | 139 | | mortgagee, or beneficiary under a deed of trust. The insurer issuing the policy may not cancel or 22 |
|---|
| 140 | 140 | | refuse to renew it until thirty (30) days after notice of the proposed cancellation or nonrenewal has 23 |
|---|
| 141 | 141 | | been mailed to the association, each unit owner, and each mortgagee or beneficiary under a deed 24 |
|---|
| 142 | 142 | | of trust to whom a certificate or memorandum of insurance has been issued at their respective last 25 |
|---|
| 143 | 143 | | known addresses. 26 |
|---|
| 144 | 144 | | (h) Any portion of the condominium for which insurance is required under this section that 27 |
|---|
| 145 | 145 | | is damaged or destroyed shall be repaired or replaced promptly by the association unless: (1) The 28 |
|---|
| 146 | 146 | | condominium is terminated; (2) Repair or replacement would be illegal under any state or local 29 |
|---|
| 147 | 147 | | health or safety statute or ordinance; or (3) Eighty percent (80%) of the unit owners, including 30 |
|---|
| 148 | 148 | | every owner of a unit or assigned, limited common element that will not be rebuilt, vote not to 31 |
|---|
| 149 | 149 | | rebuild unless insurance proceeds are adequate to rebuild. The cost of repair or replacement in 32 |
|---|
| 150 | 150 | | excess of insurance proceeds, after the application of the association’s policy deductible, is a 33 |
|---|
| 151 | 151 | | common expense, unless the declaration provides or bylaws provide otherwise. If the entire 34 |
|---|
| 152 | 152 | | |
|---|
| 153 | 153 | | |
|---|
| 154 | 154 | | LC001449 - Page 5 of 7 |
|---|
| 155 | 155 | | condominium is not repaired or replaced, (1) The insurance proceeds attributable to the damaged 1 |
|---|
| 156 | 156 | | common elements must be used to restore the damaged area to a condition compatible with the 2 |
|---|
| 157 | 157 | | remainder of the condominium; (2) The insurance proceeds attributable to units and limited 3 |
|---|
| 158 | 158 | | common elements that are not rebuilt must be distributed to the owners of those units and the 4 |
|---|
| 159 | 159 | | owners of the units to which those limited common elements were allocated, or to lienholders, as 5 |
|---|
| 160 | 160 | | their interests may appear; and (3) The remainder of the proceeds must be distributed to all the unit 6 |
|---|
| 161 | 161 | | owners or lienholders, as their interests may appear, in proportion to the common element interests 7 |
|---|
| 162 | 162 | | of all the units. If the unit owners vote not to rebuild any unit, that unit’s allocated interests are 8 |
|---|
| 163 | 163 | | automatically reallocated upon the vote as if the unit had been condemned under § 34-36.1-1.07(a) 9 |
|---|
| 164 | 164 | | and the association promptly shall prepare, execute, and record an amendment to the declaration 10 |
|---|
| 165 | 165 | | reflecting the reallocations. Notwithstanding the provisions of this subsection, § 34-36.1-2.18 11 |
|---|
| 166 | 166 | | governs the distribution of insurance proceeds if the condominium is terminated. 12 |
|---|
| 167 | 167 | | (i) In the event a unit owner sustains damage to the owner’s unit as a result of an event that 13 |
|---|
| 168 | 168 | | is covered under the insurance coverage purchased in accordance with this section, then upon 14 |
|---|
| 169 | 169 | | written request to the condominium association, the unit owner shall be entitled to a written copy 15 |
|---|
| 170 | 170 | | from the condominium association of the insurance company damage appraisal or any damage 16 |
|---|
| 171 | 171 | | appraisal in regard to damage to the owner’s unit, within fourteen (14) calendar days of the date of 17 |
|---|
| 172 | 172 | | the unit owner’s request, or within fourteen (14) days of the association’s receipt of the damage 18 |
|---|
| 173 | 173 | | appraisal, whichever is later. If coverage for the damage to a unit is denied for any reason or is 19 |
|---|
| 174 | 174 | | deemed to be valued below the policy deductible, then the unit owner shall also be entitled to 20 |
|---|
| 175 | 175 | | receive, from the association, a copy of the letter detailing the determination. 21 |
|---|
| 176 | 176 | | (j) The provisions of this section may be varied or waived in the case of a condominium 22 |
|---|
| 177 | 177 | | all of whose units are restricted to nonresidential use. 23 |
|---|
| 178 | 178 | | (k) If the association maintains property insurance on the units, unit owners shall maintain, 24 |
|---|
| 179 | 179 | | to the extent reasonably available, the following insurance: 25 |
|---|
| 180 | 180 | | (1) Property insurance for improvements and betterments installed in their units after the 26 |
|---|
| 181 | 181 | | first conveyances of the units to persons other than a declarant, if the association does not maintain 27 |
|---|
| 182 | 182 | | such coverage. 28 |
|---|
| 183 | 183 | | (2) Insurance for any amount of loss covered by the association property insurance policy 29 |
|---|
| 184 | 184 | | but not payable under the association property insurance policy because of the application of the 30 |
|---|
| 185 | 185 | | deductible. There shall be no obligation on an association to apply common expenses related to a 31 |
|---|
| 186 | 186 | | unit after a unit loss if the unit owner fails to comply with this section. 32 |
|---|
| 187 | 187 | | |
|---|
| 188 | 188 | | |
|---|
| 189 | 189 | | LC001449 - Page 6 of 7 |
|---|
| 190 | 190 | | SECTION 2. This act shall take effect upon passage. 1 |
|---|
| 191 | 191 | | ======== |
|---|
| 192 | 192 | | LC001449 |
|---|
| 193 | 193 | | ======== |
|---|
| 194 | 194 | | |
|---|
| 195 | 195 | | |
|---|
| 196 | 196 | | LC001449 - Page 7 of 7 |
|---|
| 197 | 197 | | EXPLANATION |
|---|
| 198 | 198 | | BY THE LEGISLATIVE COUNCIL |
|---|
| 199 | 199 | | OF |
|---|
| 200 | 200 | | A N A C T |
|---|
| 201 | 201 | | RELATING TO PROPERTY -- CONDOMINIUM LAW |
|---|
| 202 | 202 | | *** |
|---|
| 203 | 203 | | This act would require associations to provide unit owners within thirty (30) days notice 1 |
|---|
| 204 | 204 | | of any increase in the deductible application to the association’s policy ensuring that unit owners 2 |
|---|
| 205 | 205 | | will have coverage relating to their responsibility for the master policy deductible application to 3 |
|---|
| 206 | 206 | | their unit. 4 |
|---|
| 207 | 207 | | This act would take effect upon passage. 5 |
|---|
| 208 | 208 | | ======== |
|---|
| 209 | 209 | | LC001449 |
|---|
| 210 | 210 | | ======== |
|---|
| 211 | 211 | | |
|---|