2014 -- S 3126

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LC006014

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO PROPERTY - LEASED LAND DWELLINGS

     

     Introduced By: Senator Michael J.McCaffrey

     Date Introduced: June 19, 2014

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 34-18.2-3 of the General Laws in Chapter 34-18.2 entitled "Leased

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Land Dwellings" is hereby amended to read as follows:

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     34-18.2-3. Transfer of leased land -- Right of first refusal. -- (a) In any instance in

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which a land owner landowner has been sent a certified letter from an incorporated home owners'

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homeowners' association indicating that the association has at least fifty-one percent (51%) of the

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home owners homeowners owning residential dwellings on the landowners' land as members and

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has articles of incorporation specifying all rights and powers, including the power to negotiate for

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and acquire land on behalf of the member homeowners, then, before leased land may be sold for

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any purpose and before it may be leased for any purpose that would result in a discontinuance, the

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owner shall notify the association by certified mail of any bona fide offer that the owner intends

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to accept, to buy the leased land or to lease it for a use that would result in a discontinuance. The

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owner shall also give notice by certified mail to the incorporated home owners' homeowners'

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association of any intention to sell or lease the land for a use which will result in a discontinuance

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within fourteen (14) days of any advertisement or other public notice by the owner or his agent

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that the land is for sale or the land upon which the residential dwelling is located is for lease.

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      (b) The notice to the home owners' homeowners' association shall include the price,

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calculated as a single lump sum amount which reflects the present value of any installment

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payments offered and of any promissory notes offered in lieu of cash payments or, in the case of

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an offer to rent the capitalized value of the annual rent, and the terms and conditions of the offer.

 

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Any incorporated home owners' homeowners' association entitled to notice under this section

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shall have the right to purchase, in the case of a third party bona fide offer to purchase, or to lease

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in the case of a third party bona fide offer to lease, the land, provided it meets the same price and

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the same terms and conditions of any offer of which it is entitled to notice under this section by

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executing a contract or purchase and sale or lease agreement with the owner within one hundred

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eighty (180) days of notice of the offer. No owner shall attempt to terminate the tenancy of any

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member of the incorporated home owners' homeowners' association except for nonpayment of

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rent for a period of one hundred and eighty (180) days following a notice of sale or lease under

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this section. No owner shall unreasonably refuse to enter into, or unreasonably delay the

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execution of a purchase and sale or lease agreement with a home owners' homeowners'

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association that has made a bona fide offer to meet the same price and the same terms and

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conditions of an offer for which notice is required to be given pursuant to this section. Failure of

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the incorporated home owners' homeowners' association to execute such a purchase and sale

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agreement or lease within the first one hundred eighty (180) day period shall serve to terminate

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the right of the association to purchase or lease the land. The time periods may be extended by

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agreement of the association and the owner. Nothing herein shall be construed to require an

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owner to provide financing to any association or to prohibit an owner from requiring an

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association which is offering to lease land to have within its possession a sum equivalent to the

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capitalized value of the proposed rent of the land and requiring that a portion of the sum, of an

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amount necessary to pay the rent on the land for a period of no greater that two (2) years, be kept

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in escrow for such purpose during the term of the lease. In the event that an incorporated home

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owners' homeowners' association accepts an offer under this section, the tenancy of the members

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of the association shall be extended on a month to month basis until the time set in the offer for

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closing on the offer.

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      (c) (1) When an owner has been properly notified under the terms of this section of the

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existence of an incorporated home owners' homeowners' association, the owner shall include in

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any purchase and sale agreement or lease agreement which would be subject to this section, a

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statement informing the purchaser or lessee of the home owners homeowners association's right

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of first refusal pursuant to this section.

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      (2) In addition, the home owners' homeowners' association shall record in the land

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evidence records of the city or town where the leased land is located, a copy of its articles of

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incorporation together with a statement setting forth its statutory right of first refusal to purchase

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or lease the land of the owner pursuant to this section.

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      (3) The right of first refusal created herein shall not be deemed to allow a homeowners'

 

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association to vary the terms of any offer made to an owner and to make a counteroffer to said

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owner. The homeowners' association shall have the right of first refusal only on the exact terms

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and conditions as set forth in the offer received by the owner; provided, however, that the home

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owners' homeowners' association shall not be required to meet any terms or conditions that would

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result in the removal of members of the association from the property which is the subject of the

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offer.

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      (4) The right of first refusal created herein shall inure to a home owners' homeowners'

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association for the time periods provided in this section, beginning on the date of notice to the

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home owners' homeowners' association. The effective period of the right of first refusal shall

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apply separately for each substantially different bona fide offer to purchase the land or to lease it

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for a purpose that would result in a discontinuance, and for each offer the same as an offer made

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more than three (3) months prior to the later offer; provided, however, that in the case of the same

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offer made by a prospective buyer who has previously made an offer for which notice to a home

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owners' homeowners' association was required by this section, the right of first refusal shall apply

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only if the subsequent offer is made more than six (6) months after the earlier offer. The right of

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first refusal shall not apply with respect to any offer received by the owner for which notice to a

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home owners' homeowners' association is not required pursuant to this section.

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      (5) No right of first refusal shall apply to a government taking by eminent domain or

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negotiated purchase, a forced sale pursuant to a foreclosure, transfer by gift, devise or operation

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of law, or a sale to a person who would be included within the table of descent and distribution if

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there were to be a death intestate of a land owner landowner.

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      (d) In any instance in which the incorporated home owners' homeowners' association of

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leased land is not the successful purchaser or lessee of the land, the seller or lessor of the land

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shall prove compliance with this section by filing an affidavit of compliance in the official land

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evidence records of the city or town where the property is located within seven (7) days of the

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sale or lease of the land.

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      (e) No land owner landowner shall attempt to increase any rental amount due regarding

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leased land from the time of his or her receipt of any bona fide offer to purchase or to lease for a

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purpose which would result in a discontinuance, until the expiration of the time period during

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which a home owners' homeowners' association may exercise its right of first refusal or until the

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time set in the offer for closing on the offer.

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      (f) In the event that an owner terminates the tenancies of all of the members of the

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incorporated association, the right of first refusal created by this section shall inure to the benefit

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of the former membership of the association for a period of one year after the termination of the

 

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tenancies, or until the houses which they occupied are removed or destroyed, whichever first

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occurs, with the former members having the same rights and obligations as existed prior to the

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terminations.

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     (g) The landowner shall tender a written lease incorporating the terms and conditions of

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the tenancy to all tenants and prospective tenants. The lease shall not be inconsistent with the

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provisions of this chapter.

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     (h) A covenant of good faith and fair dealing shall be deemed to be incorporated into the

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terms and conditions of all tenancies between a homeowner and landowner involving a residential

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dwelling which is located on leased land, as well as the negotiation process associated therewith.

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     SECTION 2. Chapter 34-18.2 of the General Laws entitled "Leased Land Dwellings" is

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hereby amended by adding thereto the following sections:

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     34-18.2-4. Termination of lease. -- (a) A landowner desiring to terminate a tenancy with

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a homeowner based on the discontinuation of the use of the leased land as leased land (and not for

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cause) shall provide the affected homeowner(s) with at least fifteen (15) months' notice thereof.

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     (b) In the event of a termination of a tenancy (or a failure to renew a tenancy) with a

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homeowner without cause as provided in subsection (a) of this section, or in the event of a

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termination (or a failure to renew a tenancy) for cause, the landowner shall take reasonable steps

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to take control of any residential dwelling remaining on the leased land following said

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termination, and shall, upon at least ninety (90) days of said advertising sell the dwelling pursuant

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to commercially reasonable terms. The proceeds of such sale shall be applied as follows:

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     (1) First, to satisfy any federal, state or local liens on the dwelling;

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     (2) Second, to cover the fair and reasonable costs incurred by the landowner to secure the

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dwelling and accomplish its sale;

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     (3) Third, to satisfy any arrearages for unpaid rent or other costs remaining due under the

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tenancy;

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     (4) Fourth, to satisfy any mortgage or other liens on the property; then

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     (5) The balance shall be remitted to the homeowner.

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     (c) During the aforesaid ninety (90) day notice period, the homeowner may avert the

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advertising and sale of the dwelling by the landowner as aforesaid, by satisfying any arrearages

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for unpaid rent or other costs remaining due under the tenancy, and causing the dwelling to be

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removed from the formerly leased land, by sale or otherwise.

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     34-18.2-5. Rent increases for leased land. – (a) A landowner, as defined in § 34-18.2-2,

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shall give the homeowner sixty (60) days' written notice prior to any lot rent increase. The written

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notice shall set forth the current rent, the proposed rent, and the date upon which the increase

 

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shall take effect.

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     (b) If a homeowner or a homeowners' association, having, the power and authority to

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negotiate rental terms on behalf of member homeowners, believes that the rent increase is

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"excessive" as defined in this section, the homeowner or authorized homeowners' association may

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submit the matter to binding arbitration pursuant to chapter 3 of title 10. In the event the parties

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are unable to agree upon an arbitrator, an arbitrator shall be appointed in the manner set forth in

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chapter 3, of title 10. The costs and expenses of the arbitrator shall be borne equally by the

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landowner and the homeowner or authorized homeowners' association.

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     (c) An "excessive" rent increase, for purposes of this section, is an increase which

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unreasonably exceeds the fair rental value of the property based on market conditions at the time.

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     (d) The arbitrator shall promptly hear the dispute and render a decision based on the

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"excessive" rent increase standard as set forth in this section.

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     (e) No lot rent increase shall go into effect until the earlier of:

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     (1) Completion of the binding arbitration process; or

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     (2) Ninety (90) days after the written notice given under subsection (a) of this section.

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     (f) This section shall not apply to chapter 31 of title 44 of the Rhode Island general laws.

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     34-18-2.6. Leased land exempt. – The provisions of §§ 34-18-2.4 and 34-18-2.5 of this

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chapter shall not apply to any landowner who holds a recreation facility license under chapter 21

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of title 23, or a trailer park or campground license issued by the municipality in which it is

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located on leased land which is leased to at least ninety percent (90%) of the homeowners on a

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seasonal basis.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY - LEASED LAND DWELLINGS

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     This act would establish a procedure for compensation of a homeowner for removal or

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destruction of their residential property on leased land, and an arbitration procedure for disputes

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over compensation to be paid, and for excessive rent increases.

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     This act would take effect upon passage.

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