SENATE BILL REPORT

SB 5884

BYSenator Talmadge

Creating the Uniform Condominiums Act.

Senate Committee on Judiciary

Senate Hearing Date(s):February 19, 1987

Senate Staff:Carolyn J. Mayer (786-7418)

AS OF FEBRUARY 23, 1987

BACKGROUND:

It has been reported that the current law pertaining to condominiums is inadequate and outdated.  The Uniform Condominium Act is a comprehensive law with specific guidelines regarding the rights and responsibilities of condominium owners and developers, which may solve the problem.

SUMMARY:

A condominium is defined as real estate, portions of which are owned individually by separate unit owners, and portions of which are owned jointly by all.  Each unit together with its common interest is a separate parcel of real estate. 

Article I contains general provisions and definitions.  The Uniform Condominium Act is applicable to all condominiums created after the effective date.  Certain provisions apply to circumstances which arise in connection with condominiums created before the act, but do not invalidate any existing bylaws, declarations, plats or plans of those condominiums. 

Specific guidelines regarding the creation of a condominium, changes to it, and its termination are contained in Article II. Provisions are made for necessary documentation for each of these phases, with attention to the interests of both developers and consumers.  Allocation of separate and common element interests, specific guidelines as to boundaries of units and common areas, alteration and subdivision of units, easement rights, and exercise of development rights are some of the concerns specifically treated by the provisions of the article. 

Termination requires the agreement of at least 80 percent of the individual condominium owners.  The sale of real estate, protection of creditors, distribution of proceeds, and division of interests among the owners are provided for together with valuation of individual ownership interests in the project.

Article III deals with condominium management and operation of the unit owners' association.  Management of a condominium development descends from the development to the owners' association within a specifically stated time period in order to allow for developer flexibility and to protect owners' associations from undue developer control.

Broad management powers are granted to the unit owners' association which is governed by an elected executive board. The association is responsible for such things as upkeep and maintenance, adoption of budgets and bylaws, and for setting and collecting assessments.  The act provides for prompt payment of assessments to the unit owners' association by providing clarification of priorities between creditors.  While the act incorporates ordinary priorities based on recording and the time in which a lien is created, a limited priority over all other mortgage and lien interests exists for the statutory lien of the owners' association for unpaid assessments. 

Extensive consumer protection provisions are contained in Article IV based mainly upon disclosure and warranties.  It is specifically provided that a public offering statement containing the terms of sale and condition of the property be provided to prospective purchasers.  Information regarding the financial condition of the owners' association and restrictions or problems which might affect the development of the entire project or any units must be included.  Any reservation of development rights by the declarant must be disclosed.  If the building is a conversion project rather than new construction, substantial information on the condition of the building should be provided to prospective purchasers.

Both express warranties based on promises of the seller, and implied warranties of fitness are provided for.  Implied warranties may be disclaimed in writing, but no general disclaimer is effective for residential units.  Defects must be specifically disclaimed for residential use.  Protections for tenants in residential units of buildings which are to be converted to condominiums are included, such as the notice to be given tenants before they are required to vacate the property and their right to purchase for a period of 60 days after notice is given to them. 

Fiscal Note:      requested