BILL REQ. #:  S-0681.1 

Read first time 01/30/2003.   Referred to Committee on Financial Services, Insurance & Housing.

     AN ACT Relating to implied warranties under the condominium act; and amending RCW 64.34.410 and 64.34.450.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 64.34.410 and 2002 c 323 s 10 are each amended to read as follows:
     (1) A public offering statement shall contain the following information:
     (a) The name and address of the condominium;
     (b) The name and address of the declarant;
     (c) The name and address of the management company, if any;
     (d) The relationship of the management company to the declarant, if any;
     (e) A list of up to the five most recent condominium projects completed by the declarant or an affiliate of the declarant within the past five years, including the names of the condominiums, their addresses, and the number of existing units in each. For the purpose of this section, a condominium is "completed" when any one unit therein has been rented or sold;
     (f) The nature of the interest being offered for sale;
     (g) A brief description of the permitted uses and use restrictions pertaining to the units and the common elements;
     (h) A brief description of the restrictions, if any, on the renting or leasing of units by the declarant or other unit owners, together with the rights, if any, of the declarant to rent or lease at least a majority of units;
     (i) The number of existing units in the condominium and the maximum number of units that may be added to the condominium;
     (j) A list of the principal common amenities in the condominium which materially affect the value of the condominium and those that will or may be added to the condominium;
     (k) A list of the limited common elements assigned to the units being offered for sale;
     (l) The identification of any real property not in the condominium, the owner of which has access to any of the common elements, and a description of the terms of such access;
     (m) The identification of any real property not in the condominium to which unit owners have access and a description of the terms of such access;
     (n) The status of construction of the units and common elements, including estimated dates of completion if not completed;
     (o) The estimated current common expense liability for the units being offered;
     (p) An estimate of any payment with respect to the common expense liability for the units being offered which will be due at closing;
     (q) The estimated current amount and purpose of any fees not included in the common expenses and charged by the declarant or the association for the use of any of the common elements;
     (r) Any assessments which have been agreed to or are known to the declarant and which, if not paid, may constitute a lien against any units or common elements in favor of any governmental agency;
     (s) The identification of any parts of the condominium, other than the units, which any individual owner will have the responsibility for maintaining;
     (t) If the condominium involves a conversion condominium, the information required by RCW 64.34.415;
     (u) Whether timesharing is restricted or prohibited, and if restricted, a general description of such restrictions;
     (v) A list of all development rights reserved to the declarant and all special declarant rights reserved to the declarant, together with the dates such rights must terminate, and a copy of or reference by recording number to any recorded transfer of a special declarant right;
     (w) A description of any material differences in terms of furnishings, fixtures, finishes, and equipment between any model unit available to the purchaser at the time the agreement for sale is executed and the unit being offered;
     (x) Any liens on real property to be conveyed to the association required to be disclosed pursuant to RCW 64.34.435(2)(b);
     (y) A list of any physical hazards known to the declarant which particularly affect the condominium or the immediate vicinity in which the condominium is located and which are not readily ascertainable by the purchaser;
     (z) A brief description of any construction warranties to be provided to the purchaser;
     (aa) Any building code violation citations received by the declarant in connection with the condominium which have not been corrected;
     (bb) A statement of any unsatisfied judgments or pending suits against the association, a statement of the status of any pending suits material to the condominium of which the declarant has actual knowledge, and a statement of any litigation brought by an owners' association, unit owner, or governmental entity in which the declarant or any affiliate of the declarant has been a defendant, arising out of the construction, sale, or administration of any condominium within the previous five years, together with the results thereof, if known;
     (cc) Any rights of first refusal to lease or purchase any unit or any of the common elements;
     (dd) The extent to which the insurance provided by the association covers furnishings, fixtures, and equipment located in the unit;
     (ee) A notice which describes a purchaser's right to cancel the purchase agreement or extend the closing under RCW 64.34.420, including applicable time frames and procedures;
     (ff) Any reports or statements required by RCW 64.34.415 or 64.34.440(6)(a). RCW 64.34.415 shall apply to the public offering statement of a condominium in connection with which a final certificate of occupancy was issued more than sixty calendar months prior to the preparation of the public offering statement whether or not the condominium is a conversion condominium as defined in RCW 64.34.020(10);
     (gg) A list of the documents which the prospective purchaser is entitled to receive from the declarant before the rescission period commences;
     (hh) A notice which states in substantially the following form:

     STATUTORY WARRANTIES:
     Pursuant to RCW 64.34.445(2), the declarant warrants as follows:
     (1) A unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting, reasonable wear and tear and damage by casualty or condemnation excepted; and
     (2) A unit and the common elements in the condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by the declarant or dealer will be:
     (a) Free from defective materials; and
     (b) Constructed in accordance with sound engineering and construction standards, and in a workmanlike manner in compliance with all laws then applicable to such improvements. Notwithstanding anything contained in this statement to the contrary, these warranties may not be varied, altered, or waived. However, the declarant may disclaim liability for specific defects or specific failures to comply with applicable law, known by the declarant or the dealer to be in existence at the time of the purchase and listed as required by (ii) of this subsection.
     (ii) A notice which states in substantially the following form:

     ITEMS EXCLUDED FROM WARRANTY:
     The following specific defects or failures to comply with applicable law are currently known by the declarant or the dealer to be in existence at the time of your purchase. As such, the declarant provides no warranty as to the following items and buyer acknowledges that no statutory warranty exists as to the following defects:
     1. . . . . . . . . .
     2. . . . . . . . . .

     (jj) A purchaser may not rely on any representation or express warranty unless it is contained in the public offering statement or made in writing signed by the declarant or by any person identified in the public offering statement as the declarant's agent;
     (((ii))) (kk) A notice which states: This public offering statement is only a summary of some of the significant aspects of purchasing a unit in this condominium and the condominium documents are complex, contain other important information, and create binding legal obligations. You should consider seeking the assistance of legal counsel;
     (((jj))) (ll) Any other information and cross-references which the declarant believes will be helpful in describing the condominium to the recipients of the public offering statement, all of which may be included or not included at the option of the declarant;
     (((kk))) (mm) A notice that addresses compliance or noncompliance with the housing for older persons act of 1995, P.L. 104-76, as enacted on December 28, 1995; and
     (((ll))) (nn) A notice that is substantially in the form required by RCW 64.50.050.
     (2) The public offering statement shall include copies of each of the following documents: The declaration, the survey map and plans, the articles of incorporation of the association, bylaws of the association, rules and regulations, if any, current or proposed budget for the association, and the balance sheet of the association current within ninety days if assessments have been collected for ninety days or more.
     If any of the foregoing documents listed in this subsection are not available because they have not been executed, adopted, or recorded, drafts of such documents shall be provided with the public offering statement, and, before closing the sale of a unit, the purchaser shall be given copies of any material changes between the draft of the proposed documents and the final documents.
     (3) The disclosures required by subsection (1)(g), (k), (s), (u), (v), and (cc) of this section shall also contain a reference to specific sections in the condominium documents which further explain the information disclosed.
     (4) The disclosures required by subsection (1)(ee), (((hh), (ii), and (ll))) (jj), (kk), and (nn) of this section shall be located at the top of the first page of the public offering statement and be typed or printed in ten-point bold face type size.
     (5) A declarant shall promptly amend the public offering statement to reflect any material change in the information required by this section.

Sec. 2   RCW 64.34.450 and 1989 c 43 s 4-113 are each amended to read as follows:
     (1) Except as limited by subsection (2) of this section, implied warranties of quality:
     (a) May be excluded or modified by written agreement of the parties; and
     (b) Are excluded by written expression of disclaimer, such as "as is," "with all faults," or other language which in common understanding calls the buyer's attention to the exclusion of warranties.
     (2) With respect to a purchaser of a unit that may be occupied for residential use, no general disclaimer of implied warranties of quality is effective, but a declarant and any dealer may disclaim liability ((in an instrument signed by the purchaser for a specified defect or specified failure to comply with applicable law, if the defect or failure entered into and became a part of the basis of the bargain)) if, the dealer or declarant fully discloses a specific defect or specific failure to comply with applicable law, known by the declarant or dealer to be in existence at the time of the purchase, in the public offering statement pursuant to RCW 64.34.410(1)(ii).