Title 34
Property

Chapter 18.2
Leased Land Dwellings

§ 34-18.2-3. Transfer of leased land — Right of first refusal.

(a) In any instance in which a landowner has been sent a certified letter from an incorporated homeowners’ association indicating that the association has at least fifty-one percent (51%) of the homeowners owning residential dwellings on the landowners’ land as members and has articles of incorporation specifying all rights and powers, including the power to negotiate for and acquire land on behalf of the member homeowners, then, before leased land may be sold for any purpose and before it may be leased for any purpose that would result in a discontinuance, the owner shall notify the association by certified mail of any bona fide offer that the owner intends to accept, to buy the leased land or to lease it for a use that would result in a discontinuance. The owner shall also give notice by certified mail to the incorporated homeowners’ association of any intention to sell or lease the land for a use which will result in a discontinuance within fourteen (14) days of any advertisement or other public notice by the owner or his or her agent that the land is for sale or the land upon which the residential dwelling is located is for lease.

(b) The notice to the homeowners’ association shall include the price, calculated as a single lump sum amount which reflects the present value of any installment payments offered and of any promissory notes offered in lieu of cash payments or, in the case of an offer to rent the capitalized value of the annual rent, and the terms and conditions of the offer. Any incorporated homeowners’ association entitled to notice under this section shall have the right to purchase, in the case of a third party bona fide offer to purchase, or to lease in the case of a third party bona fide offer to lease, the land, provided it meets the same price and the same terms and conditions of any offer of which it is entitled to notice under this section by executing a contract or purchase and sale or lease agreement with the owner within one hundred eighty (180) days of notice of the offer. No owner shall attempt to terminate the tenancy of any member of the incorporated homeowners’ association except for nonpayment of rent for a period of one hundred and eighty (180) days following a notice of sale or lease under this section. No owner shall unreasonably refuse to enter into, or unreasonably delay the execution of a purchase and sale or lease agreement with a homeowners’ association that has made a bona fide offer to meet the same price and the same terms and conditions of an offer for which notice is required to be given pursuant to this section. Failure of the incorporated homeowners’ association to execute such a purchase and sale agreement or lease within the first one hundred eighty (180) day period shall serve to terminate the right of the association to purchase or lease the land. The time periods may be extended by agreement of the association and the owner. Nothing herein shall be construed to require an owner to provide financing to any association or to prohibit an owner from requiring an association which is offering to lease land to have within its possession a sum equivalent to the capitalized value of the proposed rent of the land and requiring that a portion of the sum, of an amount necessary to pay the rent on the land for a period of no greater that two (2) years, be kept in escrow for such purpose during the term of the lease. In the event that an incorporated homeowners’ association accepts an offer under this section, the tenancy of the members of the association shall be extended on a month to month basis until the time set in the offer for closing on the offer.

(c)(1) When an owner has been properly notified under the terms of this section of the existence of an incorporated homeowners’ association, the owner shall include in any purchase and sale agreement or lease agreement which would be subject to this section, a statement informing the purchaser or lessee of the homeowners association’s right of first refusal pursuant to this section.

(2) In addition, the homeowners’ association shall record in the land evidence records of the city or town where the leased land is located, a copy of its articles of incorporation together with a statement setting forth its statutory right of first refusal to purchase or lease the land of the owner pursuant to this section.

(3) The right of first refusal created herein shall not be deemed to allow a homeowners’ association to vary the terms of any offer made to an owner and to make a counteroffer to said owner. The homeowners’ association shall have the right of first refusal only on the exact terms and conditions as set forth in the offer received by the owner; provided, however, that the homeowners’ association shall not be required to meet any terms or conditions that would result in the removal of members of the association from the property which is the subject of the offer.

(4) The right of first refusal created herein shall inure to a homeowners’ association for the time periods provided in this section, beginning on the date of notice to the homeowners’ association. The effective period of the right of first refusal shall apply separately for each substantially different bona fide offer to purchase the land or to lease it for a purpose that would result in a discontinuance, and for each offer the same as an offer made more than three (3) months prior to the later offer; provided, however, that in the case of the same offer made by a prospective buyer who has previously made an offer for which notice to a homeowners’ association was required by this section, the right of first refusal shall apply only if the subsequent offer is made more than six (6) months after the earlier offer. The right of first refusal shall not apply with respect to any offer received by the owner for which notice to a homeowners’ association is not required pursuant to this section.

(5) No right of first refusal shall apply to a government taking by eminent domain or negotiated purchase, a forced sale pursuant to a foreclosure, transfer by gift, devise or operation of law, or a sale to a person who would be included within the table of descent and distribution if there were to be a death intestate of a landowner.

(d) In any instance in which the incorporated homeowners’ association of leased land is not the successful purchaser or lessee of the land, the seller or lessor of the land shall prove compliance with this section by filing an affidavit of compliance in the official land evidence records of the city or town where the property is located within seven (7) days of the sale or lease of the land.

(e) No landowner shall attempt to increase any rental amount due regarding leased land from the time of his or her receipt of any bona fide offer to purchase or to lease for a purpose which would result in a discontinuance, until the expiration of the time period during which a homeowners’ association may exercise its right of first refusal or until the time set in the offer for closing on the offer.

(f) In the event that an owner terminates the tenancies of all of the members of the incorporated association, the right of first refusal created by this section shall inure to the benefit of the former membership of the association for a period of one year after the termination of the tenancies, or until the houses which they occupied are removed or destroyed, whichever first occurs, with the former members having the same rights and obligations as existed prior to the terminations.

(g) The landowner shall tender a written lease incorporating the terms and conditions of the tenancy to all tenants and prospective tenants. The lease shall not be inconsistent with the provisions of this chapter.

(h) A covenant of good faith and fair dealing shall be deemed to be incorporated into the terms and conditions of all tenancies between a homeowner and landowner involving a residential dwelling which is located on leased land, as well as the negotiation process associated therewith.