2015 -- H 5429

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PROPERTY -- CONDOMINIUM DISPUTE RESOLUTION

     Introduced By: Representative Arthur J. Corvese

     Date Introduced: February 12, 2015

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by

adding thereto the following chapter:

CHAPTER 36.2

CONDOMINIUM DISPUTE RESOLUTION

     34-36.2-1. Definitions. -- (a) As used in this chapter, the term "dispute" means a

disagreement between two (2) or more parties that involves:

     (1) The authority of the board of directors, under this chapter or association documents,

to:

     (i) Require any owner to take any action, or not to take any action, involving that owner's

unit or the appurtenances thereto; or

     (ii) Alter or add to a common area or element.

     (2) The failure of a governing body, when required by chapter 36.1 of title 34 or an

association document, to:

     (i) Properly conduct elections;

     (ii) Give adequate notice of meetings or other actions;

     (iii) Properly conduct meetings; or

     (iv) Allow inspection of books and records.

     (b) "Dispute" does not include any disagreement that primarily involves: title to any unit

or common element; the interpretation or enforcement of any warranty; the levy of a fee or

assessment, or the collection of an assessment levied against a party; the eviction or other

removal of a tenant from a unit; alleged breaches of fiduciary duty by one or more directors; or

claims for damages to a unit based upon the alleged failure of the association to maintain the

common elements or condominium property.

     34-36.2-2. Mandatory arbitration and/or mediation of condominium disputes. -- (a)

Prior to the institution of court litigation, any party to a condominium dispute shall petition the

department of business regulation for arbitration. The petition must be accompanied by a filing

fee in the amount of fifty dollars ($50.00). Filing fees collected under this section shall be used to

defray the expenses of this alternative dispute resolution program to be administered by the

department.

     (1) The petition must recite, and have attached thereto, supporting proof that the

petitioner gave the respondents:

     (i) Advance written notice of the specific nature of the dispute;

     (ii) A demand for relief, and a reasonable opportunity to comply or to provide the relief;

and

     (iii) Notice of the intention to file an arbitration petition or other legal action in the

absence of a resolution of the dispute.

     (b) Failure to include the allegations or proof of compliance with these prerequisites

requires dismissal of the petition without prejudice.

     (c)(1) Upon receipt, the petition shall be promptly reviewed by the department of

business regulation to determine the existence of a condominium dispute as defined by § 34-36.2-

1.

     (2) Upon determination by the department that a dispute exists and that the petition

substantially meets the requirements of this section and any other applicable department

regulations, a copy of the petition shall forthwith be served by the department upon all

respondents.

     (d) Any party may request that the arbitrator refer the matter to mediation. Arbitrators, on

their own initiative, may refer a dispute to mediation at any time.

     (e) The department of business regulation shall employ attorneys to act as arbitrators and

mediators to help administer this chapter. The department may also certify attorneys, who are not

employed by the department, to act as arbitrators and mediators to conduct the arbitration

hearings and mediation sessions. No person may be employed by the department as an arbitrator

or mediator unless he or she is a member in good standing of the Rhode Island bar; provided,

however, that the director of the department of business regulation is also authorized to enter into

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agreements with area accredited law schools to employ law students of suitable accomplishment

to conduct arbitrations and mediations.

     (f) To help resolve a condominium dispute, arbitrators and mediators shall be assigned by

the department, after consultation with the parties.

     (g) The department of business regulation shall promulgate rules and regulations to aid in

the administration of this chapter.

     34-36.2-3. Arbitration proceedings. – (a) All arbitrations shall be conducted according

to rules and regulations promulgated by the department of business regulation. The filing of a

petition for arbitration shall toll the applicable statute of limitations.

     (b) At the request of any party to the arbitration, the arbitrator shall issue subpoenas for

the attendance of witnesses and the production of books, records, documents, and other evidence.

Any party on whose behalf a subpoena is issued may apply to the court for orders compelling

such attendance and production. Subpoenas shall be served and shall be enforceable in the

manner provided by the Rhode Island Superior Court Rules of Civil Procedure. Discovery may,

in the discretion of the arbitrator, be permitted as provided by the Rhode Island Superior Court

Rules of Civil Procedure. Rules adopted by the department of business regulation may authorize

reasonable sanctions, except contempt, for a violation of the department's arbitration procedural

rules or for the failure of a party to comply with an arbitrator's non-final order.

     (c) The arbitration decision shall be presented to the parties in writing. An arbitration

decision is final in those disputes in which the parties have agreed to be bound. An arbitration

decision is also final if a complaint for a trial de novo is not filed within thirty (30) days in the

Superior Court in the county in which the condominium is located. If such appellate judicial

proceedings are initiated, the final decision of the arbitrator shall be admissible in evidence in the

trial de novo.

     (d) After the thirty (30) day appeal period has expired, any party to an arbitrators'

proceeding may seek to confirm the award pursuant to § 10-3-11.

     34-36.2-4. Mediation sessions. – (a) The purpose of mediation, as provided for by this

chapter, is to present the parties with an opportunity to resolve their underlying dispute in good

faith, with a minimum expenditure of time and resources.

     (b) If a case is referred to mediation, all parties shall attend a mediation conference,

scheduled by the mediator. If any party fails to attend a duly noticed mediation conference,

without the permission of the arbitrator or mediator, the arbitrator shall impose sanctions against

the party, including the striking of any pleadings filed, the entry of an order of dismissal or

default if appropriate, and the award of costs and attorneys' fees incurred by the other parties.

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Unless otherwise agreed to by the parties or as provided by order of the arbitrator, a party is

deemed to have appeared at a mediation conference, by the physical presence of the party or its

representative, having full authority to settle without further consultation, provided that an

association may comply by having one or more representatives present with full authority to

negotiate a settlement and recommend that the board of administration ratify and approve such a

settlement within five (5) days from the date of the mediation conference.

     (c) Mediation proceedings must generally be conducted in accordance with the

department's rules and regulations. They are privileged and confidential to the same extent as

court-ordered mediation. Persons who are not parties to the dispute are not allowed to attend the

mediation conference without the consent of all parties, with the exception of counsel for the

parties and corporate representatives designated to appear for a party. If the mediator declares an

impasse after a mediation conference(s) have been held, then the matter shall be returned to

arbitration for resolution. If both parties do not agree to continue with arbitration, the arbitrators

shall enter an order of dismissal, and either party may within twenty (20) days of the order, file a

complaint in the Superior court in the county in which the condominium is located.

     SECTION 2. Section 42-14-2 of the General Laws in Chapter 42-14 entitled "Department

of Business Regulation" is hereby amended to read as follows:

     42-14-2. Functions of department. -- (a) It shall be the function of the department of

business regulation:

      (1) To regulate and control banking and insurance, foreign surety companies, sale of

securities, building and loan associations, fraternal benefit and beneficiary societies;

      (2) To regulate and control the manufacture, transportation, possession, and sale of

alcoholic beverages;

      (3) To license and regulate the manufacture and sale of articles of bedding, upholstered

furniture, and filling materials.; and

     (4) To supervise, administer, and regulate the resolution of condominium disputes

pursuant to the provisions of chapter 36.2 of title 34.

      (b) Whenever any hearing is required or permitted to be held pursuant to law or

regulation of the department of business regulation, and whenever no statutory provision exists

providing that notice be given to interested parties prior to the hearing, no such hearing shall be

held without notice in writing being given at least ten (10) days prior to such hearing to all

interested parties. For purposes of this section, an "interested party" shall be deemed to include

the party subject to regulation hereunder, the Rhode Island consumers' council, and any party

entitled to appear at the hearing. Notice to the party that will be subject to regulation, the Rhode

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Island consumers' council [Repealed] and any party who has made known his or her intention to

appear at the hearing shall be sufficient if it be in writing and mailed, first class mail, to the party

at his or her regular business address. Notice to the general public shall be sufficient hereunder if

it be by publication in a newspaper of general circulation in the municipality affected by the

regulation.

     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 -- CONDOMINIUM DISPUTE RESOLUTION

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     This act would establish an arbitration and mediation process to resolve certain

condominium disputes, to be administered by the department of business regulation.

     This act would take effect upon passage.

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