2017 -- H 5693

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LC001887

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO PROPERTY -- CONDOMINIUM LAW--CREATION, ALTERATION, AND

TERMINATION OF CONDOMINIUMS

     Introduced By: Representative Kenneth A. Marshall

     Date Introduced: March 01, 2017

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 34-36.1-2.18 of the General Laws in Chapter 34-36.1 entitled

"Condominium Law" is hereby amended to read as follows:

     34-36.1-2.18. Termination of a condominium.

     (a) Except in the case of a taking of all the units by eminent domain § 34-36.1-1.07, a

condominium may be terminated only by agreement of unit owners of units to which at least

eighty percent (80%) ninety percent (90%) of the votes in the association are allocated, or any

larger percentage the declaration specifies. The declaration may specify a smaller percentage only

if all of the units in the condominium are restricted exclusively to nonresidential uses.

     (b) An agreement to terminate must be evidenced by the execution of a termination

agreement, or ratifications thereof, in the same manner as a deed, by the requisite number of unit

owners. The termination agreement must specify a date after which the agreement will be void

unless it is recorded before that date. A termination agreement and all ratifications thereof must

be recorded in every municipality in which a portion of the condominium is situated, and is

effective only upon recordation.

     (c) In the case of a condominium containing only units having horizontal boundaries

described in the declaration, a termination agreement may provide that all the common elements

and units of the condominium shall be sold following termination. If, pursuant to the agreement,

any real estate in the condominium is to be sold following termination, the termination agreement

must set forth the minimum terms of the sale.

     (d) In the case of a condominium containing any units not having horizontal boundaries

described in the declaration, a termination agreement may provide for sale of the common

elements, but may not require that the units be sold following termination, unless the declaration

as originally recorded provided otherwise or unless all the unit owners consent to the sale.

     (e) The association, on behalf of the unit owners, may contract for the sale of real estate

in the condominium, but the contract is not binding on the unit owners until approved pursuant to

subsections (a) and (b). If any real estate in the condominium is to be sold following termination,

title to that real estate, upon termination, vests in the association as trustee for the holders of all

interests in the units. Thereafter, the association has all powers necessary and appropriate to effect

the sale. Until the sale has been concluded and the proceeds thereof distributed, the association

continues in existence with all powers it had before termination. Proceeds of the sale must be

distributed to unit owners and lien holders as their interests may appear, in proportion to the

respective interests of unit owners as provided in subsection (h). Unless otherwise specified in the

termination agreement, as long as the association holds title to the real estate, each unit owner and

his or her successors in interest have an exclusive right to occupancy of the portion of the real

estate that formerly constituted his or her unit. During the period of that occupancy, each unit

owner and his or her successors in interest remain liable for all assessments and other obligations

imposed on unit owners by this chapter or the declaration.

     (f) If the real estate constituting the condominium is not to be sold following termination,

title to the common elements and, in a condominium containing only units having horizontal

boundaries described in the declaration, title to all the real estate in the condominium, vests in the

unit owners upon termination as tenants in common in proportion to their respective interests as

provided in subsection (h), and liens on the units shift accordingly. While the tenancy in common

exists, each unit owner and his or her successors in interest have an exclusive right to occupancy

of the portion of the real estate that formerly constituted his or her unit.

     (g) Following termination of the condominium, the proceeds of any sale of real estate,

together with the assets of the association, are held by the association as trustee for unit owners

and holders of liens on the units as their interests may appear. Following termination, creditors of

the association holding liens on the units, which were recorded prior to termination, may enforce

those liens in the same manner as any lien holder. All other creditors of the association shall be

treated as if they had perfected liens on the units immediately prior to termination.

     (h) The respective interests of unit owners referred to in subsections (e), (f), and (g) are as

follows:

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     (1) Except as provided in subdivision (h)(2), the respective interests of unit owners are

the fair market values of their units, limited common elements, and common elements interests

immediately before the termination, as determined by one or more independent appraisers

selected by the association. The decision of the independent appraisers shall be distributed to the

unit owners and becomes final unless disapproved within thirty (30) days after distribution by

unit owners of units to which a majority of the votes in the association are allocated. The

proportion of any unit owner's interest to that of all unit owners is determined by dividing the fair

market value of that unit owner's unit and common element interest by the total fair market values

of all the units and common elements.

     (2) If any unit or any limited common element is destroyed to the extent that an appraisal

of the fair market value thereof prior to destruction cannot be made, the interests of all unit

owners are their respective common element interests immediately before the termination.

     (i) Except as provided in subsection (j), foreclosure or enforcement of a lien or

encumbrance against the entire condominium does not of itself terminate the condominium, and

foreclosure or enforcement of a lien or encumbrance against a portion of the condominium, other

than withdrawable real estate, does not withdraw that portion from the condominium. Foreclosure

or enforcement of a lien or encumbrance against withdrawable real estate does not of itself

withdraw that real estate from the condominium, but the person taking title thereto has the right to

require from the association, upon request, an amendment excluding the real estate from the

condominium.

     (j) If a lien or encumbrance against a portion of the real estate comprising the

condominium has priority over the declaration, and the lien or encumbrance has not been partially

released, the parties foreclosing the lien or encumbrance may upon foreclosure, record an

instrument excluding the real estate subject to that lien or encumbrance from the condominium.

     SECTION 2. This act shall take effect upon passage.

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LC001887

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY -- CONDOMINIUM LAW--CREATION, ALTERATION, AND

TERMINATION OF CONDOMINIUMS

***

     This act would increase the percentage of unit owners needed to consent to the

termination of a condominium from eighty percent (80%) to ninety percent (90%).

     This act would take effect upon passage.

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