PA 09-225—sHB 6672

Judiciary Committee

AN ACT CONCERNING AMENDMENTS TO THE UNIFORM COMMON INTEREST OWNERSHIP ACT

This act makes numerous unrelated changes and additions to the Connecticut Common Interest Ownership Act (CIOA).

The act establishes definitions for several terms used in CIOA and amends several other definitions. It specifies that certain cost-sharing and use-sharing arrangements do not create a common interest community. It applies certain provisions of CIOA to common interest communities created before January 1, 1984.

The act makes changes concerning the powers and duties of unit owners associations. For example, it authorizes them to (1) adopt and amend special assessments, invest association funds, and institute, defend, or intervene in arbitration or mediation; (2) assign future income when borrowing funds without explicit authorization in the declaration; and (3) suspend certain rights and privileges a unit owner enjoys if the owner fails to pay common charges.

It significantly changes the laws regarding meetings of unit owners and of the executive board. It creates new open meeting requirements for all executive board meetings, other than executive sessions, and meetings of any other committees that can act for the association. It gives unit owners the right to participate in board meetings; have access to the same materials that are distributed at executive board meetings, with certain exceptions; and receive notice of board meetings. It allows the board to meet by telephone or video conferencing as long as a unit owner's right of notice and participation continues. It requires that a quorum be present for each executive board vote rather than only at the beginning of the board meeting. It establishes as a default rule that unit owners may vote by absentee ballot and by written or electronic ballot, unless the declaration or bylaws provide otherwise. Thus it allows votes to be taken without a physical meeting of unit owners.

It makes several changes regarding insurance. For example, it requires (1) the association to carry fidelity insurance, (2) unit insurance coverage for common interest communities with units that have party walls, and (3) the insurance to cover improvements unless the executive board decides not to do so after giving unit owners notice and an opportunity to comment.

It extends the association's priority lien to include the association's reasonable attorney's fees and court costs. It establishes new limitations on the association's right to begin a foreclosure against unit owners. The act establishes more detailed requirements for retaining and sharing association records with unit owners. It requires that certain association records be withheld from inspection and copying and allows withholding certain other records.

The act creates certain requirements and procedures the executive board must follow to adopt rules and establishes certain requirements regarding the display of flags and political signs. It specifies how associations may provide notices to unit owners and makes notices the act requires effective when sent.

It authorizes unit owners present in person, by proxy, or by absentee ballot at any unit owners' meeting at which a quorum is present, to remove any elected executive board member or officer, with or without cause.

The act establishes revised rules and procedures for adopting budgets and provides for special assessments and emergency special assessments.

The act establishes certain requirements when an association wishes to institute a proceeding alleging a construction defect against a declarant or an employee, independent contractor, or other person directly or indirectly providing labor or materials to a declarant. It expands a declarant's liability for false or misleading statements in a public offering statement and requires disclosures of certain financial information in these statements.

The act requires dealers who offer a unit to a purchaser to deliver a public offering statement to the purchaser.

The act also makes numerous other changes to CIOA dealing with such things as electronic signatures, its scope and applicability, arrangements between associations and between an association and the owner of real estate that is not part of a common interest community, covenants to share costs or other obligations, the rule against perpetuities, leasehold common interest communities, common expenses in a planned communities, reallocation of interests after a unit is subdivided, easements for encroachment, declarant control of a master planned community's association, the organization of a unit owners association, payments of surplus funds, assessments, express warranties, and conveying a cooperative unit.

Finally the act makes numerous technical and conforming changes

EFFECTIVE DATE: July 1, 2010, except upon passage for certain provisions that relate to amendments to a declaration, association of unit owners' powers and duties, and the conveyance of a cooperative unit.

1 — DEFINITIONS

The act defines the terms “assessment,” “bylaws,” “record,” and “rule. ” It amends the definitions of “common interest community,” “person,” and “special declarant rights.

Assessment

“Assessment” means the sum the association of unit owners attributes to a unit for common expenses and which is due to the association.

Bylaws

“Bylaws” means the instruments, however named, that contain the procedures for conducting the association's affairs regardless of the form in which the association is organized, including any amendments to the instruments.

Record

“Record,” means information that is inscribed on a tangible medium or stored in an electronic or other medium and retrievable in perceivable form.

Rule

“Rule” means an association policy, guideline, restriction, procedure, or regulation, however denominated, that an association adopts pursuant to the act and (1) is not set forth in the declaration or bylaws and (2) governs the conduct of people or the use or appearance of property.

Common Interest Community

Prior law defined this term as real property described in a declaration with respect to which a person, by virtue of owning a unit, was obligated to pay for (1) real property taxes, (2) insurance premiums, (3) maintenance, or (4) improvement of any other real property other than that unit. The act specifies that such an arrangement is also a common interest community if the obligation is to pay for a share of services and expenses related to the common elements or any other property other than the unit.

It also specifies that a common interest community does not include:

1. an arrangement between associations for two or more common interest communities to share the costs;

2. an arrangement between an association and the owner of real estate that is not part of a common interest community; or

3. a covenant that requires the owners of separately owned real estate parcels to share costs or other obligations associated with a party wall, driveway, well, or other similar use.

Person

The act amends the definition of “person” to include a public corporation and an instrumentality. It eliminates the provision in prior law that in the case of a land trust, “person” means the beneficiary of the trust rather than the trust or trustee.

Special Declarant Rights

The act expands the definition by including the right to (1) control any construction, design review, or aesthetic standards committee or process; (2) attend meetings of the unit owners and, except during an executive session, the executive board; or (3) have access to the records of the association to the same extent as a unit owner.

2 — ELECTRONIC SIGNATURES

The act specifies that it, CIOA, and the portions of the act establishing new provisions in CIOA modify, limit, and supersede the federal Electronic Signatures in Global and National Commerce Act (15 USC 7001, et seq. ). The act specifies that neither CIOA nor its new provisions:

1. modify, limit, or supersede Section 101(c) of that act (15 USC 7001(c)) or

2. authorize electronic delivery of any of the notices described in Section 103(b) of that act (15 USC 7003(b), see BACKGROUND).

3 — SCOPE OF CIOA

By law, CIOA and all amendments to it apply to common interest communities created on or after January 1, 1984 and to any other common interest community subjected to it. The act specifies that common interest communities created before January 1, 1984 can subject themselves to amendments to CIOA by amending their declarations. Also, it specifies that an amendment to CIOA applies only to events and circumstances occurring on or after the amendment's effective date.

4 — COMMON INTEREST COMMUNITIES RESTRICTED TO NONRESIDENTIAL USE

By law, a common interest community containing a conversion building that contains only units restricted to nonresidential use is not subject to CIOA unless its declaration provides otherwise. The law allows the declaration of such a common interest community to provide that all of CIOA applies or only those provisions that:

1. deal with separate title and taxation (CGS 47-204);

2. prohibit zoning and other land use laws from preventing conversion of a building to common interest ownership (CGS 47-205), and

3. establish certain rules in the case of eminent domain (CGS 47-206).

The act creates a third option by allowing the declaration to provide that only Part I and Part II of CIOA apply. Part I of CIOA contains general and applicability provisions; Part II contains provisions dealing with the creation, alteration, and termination of common interest communities.

5 — APPLICABILITY TO PRE-EXISTING COMMON INTEREST COMMUNITIES

Certain CIOA provisions automatically apply to common interest communities created in Connecticut before January 1, 1984, but only with respect to events and circumstances that occur after December 31, 1983 (CGS 47-216). The acts makes the following additional CIOA provisions also automatically apply to these older common interest communities:

1. CGS 47-221, which makes certain determinations regarding unit boundaries unless the declaration provides otherwise;

2. CGS 47-236(b), which requires court challenges to the validity of an amendment the association adopts be brought within one year after the amendment is recorded;

3. CGS 47-236(i), which specifies that if any provision in a declaration requires a security interest holder in a unit to consent as a condition of amending the declaration, the holder is deemed to have consented if the association does not receive a written refusal to consent within 45 days after it delivers notice of the proposed amendment or mails it by certified mail with return receipt (the association may rely on the last-recorded security interest in the chain of title in notifying the interest holder);

4. CGS 47-237, as amended by the act, which concerns legal proceedings to terminate the common interest community if substantially all of the units have been destroyed or are uninhabitable;

5. CGS 47-250, which deals with requirements for unit owner association meetings;

6. CGS 47-255, which deals with selling or mortgaging common elements; and

7. CGS 47-257, which deals with assessments against unit owners for damages they cause.

Prior law applied CIOA definitions to common interest communities not governed by CIOA “to the extent necessary in interpreting any of the provisions of CIOA that the law makes automatically apply to common interest communities established before CIOA became law. ” The act instead makes this quoted language apply to each of the CIOA provisions that automatically apply instead of just to the definitions. It is not clear what effect, if any, this change makes.

8 — ARRANGEMENTS BETWEEN ASSOCIATIONS AND WITH OTHER PROPERTY OWNERS

The act specifies that an arrangement between the associations for two or more common interest communities to share the costs of real estate taxes, insurance premiums, services, maintenance, improvements of real estate, or other activities does not create a separate common interest community.

It also specifies that such an arrangement between an association and the owner of real estate that is not part of a common interest community does not create a separate common interest community. But it requires that (1) assessments against the units in the common interest community required by the arrangement must be included in the common interest community's periodic budget and (2) the arrangement must be disclosed in all public offering statements and resale certificates required by CIOA.

9 — COVENANT TO SHARE COSTS OR OTHER OBLIGATIONS

The act specifies that a covenant that requires the owners of 12 or fewer separately owned real estate parcels to share costs or other obligations associated with a party wall, driveway, well, septic system, or other similar use does not create a common interest community unless the declaration otherwise provides.

10 — RULE AGAINST PERPETUITIES

Under prior law, the rule against perpetuities did not apply to defeat any provision of the declaration, bylaws, rules, or regulations the association adopted. The act eliminates regulations from this list. The act eliminates an association's authority to adopt regulations (see below, 20).

11 — LEASEHOLD COMMON INTEREST COMMUNITIES

The act specifies that any lease whose expiration or termination may terminate the common interest community or reduce its size is not subject to the landlord and tenant laws.

12 — COMMON EXPENSES IN A PLANNED COMMUNITY

The act requires that in a planned community created after January 1, 1984, the common expenses of the association and the votes in the association are allocated equally among the units unless the declaration provides for a different allocation permitted by CIOA.

13 — SUBDIVISION OF A UNIT-METHOD OF REALLOCATING INTERESTS

By law, if the declaration explicitly allows it, a unit may be subdivided into two or more units and the association must prepare and record an amendment reflecting this change. Under prior law, the amendment had to reallocate the interests formerly allocated to the subdivided unit to the new units in any reasonable manner the owner of the subdivided unit prescribed. The act also allows it to be reallocated on any other basis the declaration requires.

14 — EASEMENT FOR ACCESS AND USE OF COMMON ELEMENTS

Under prior law, subject to certain limitations, unit owners in a planned community had an easement (1) in the common elements to access their units and (2) to use the common elements and all real property that had to become common elements for all other purposes.

The act makes the easement to use the common elements for any other purpose than to access their unit subject to the planned community's declaration and rules. It also restricts the right to (1) any appropriate purpose and (2) common elements that are not limited common elements. It expands the easement to use the common elements to unit owners in condominiums and cooperatives. (see BACKGROUND)

15 & 16 — AMENDMENTS TO DECLARATION

The acts makes certain changes relating to (1) exceptions to the unanimous consent requirement for unit owners and (2) amendments affecting the priority of a security owner's interests effective upon passage and apply to a common interest community created before, on, or after January 1, 1984.

Exception to the Unanimous Consent Requirement

The law requires unanimous consent of the unit owners for an amendment that would create or increase special declarant rights or the number of units, or change the boundaries of any unit or the allocated interests of a unit, except to the extent CIOA expressly permits or requires it. The act creates an exception to this unanimous consent requirement for the exercise of development rights. It specifies that these requirements and the exception apply to all common interest communities, not just those created on or after January 1, 1984.

Amendments Affecting the Priority of a Security Holder's Interest

Under prior law, if CIOA or the declaration of any common interest community required the consent of a person holding a security interest in a unit as a condition to the effectiveness of any amendment to the declaration, that consent was deemed granted if no written refusal to consent was received by the association within 45 days after the association delivered notice of the proposed amendment to the interest holder or mailed it to the holder by certified mail, return receipt requested. The act also applies this (1) if the requirement is contained in the association's bylaws, and (2) to common interest communities created before January 1, 1984. Also it specifies that the refusal must be in a record instead of in writing.

The act creates an exception to this provision by requiring actual consent in a record for an amendment that affects the priority of a holder's security interest or the ability of that holder to foreclose its security interest if the declaration requires that consent as a condition to the amendment's effectiveness. This exception does not apply to amendments affecting the priority of the association's lien or its ability to foreclose this lien.

Percentage of Votes Required to Amend Declaration

Under prior law, with certain exceptions, the declaration could be amended only by vote or agreement of owners of units to which at least 67% of the votes in the association were allocated, or any larger majority the declaration specified. The act specifies that (1) the declaration may establish a smaller percentage, but not less than a majority, and (2) that percentage may be for all amendments or just specific subjects of amendment. (The law continues to provide that the declaration may specify a smaller number only if all of the units are restricted exclusively to nonresidential use. )

The act allows a declaration to provide that all or specific subjects of amendment may be approved by the owners of units having more than a majority of a specified group of units that would be affected by the amendment, rather than all of the units in the common interest community.

By law, an amendment to the declaration may prohibit or materially restrict the permitted uses or occupancy of a unit or the number or other qualifications of people who may occupy units by vote or agreement of owners of units to which at least 80% of the votes in the association are allocated, or any larger percentage specified in the declaration. The act allows the declaration to permit an amendment to do so that is approved by a vote of unit owners with at least 80% of the votes of a specified group of units that the amendment would affect instead of by all the votes in the association. By law, an amendment must provide reasonable protection for a use or occupancy permitted at the time it was adopted.

Special Declarant Rights

By law, the time limits the declaration specifies for exercising reserved development rights may be extended, the number of units may be increased, and new development rights or other special declarant rights may be created by amendment if people entitled to cast at least 80% of the votes in the association, including 80% of the votes allocated to units not owned by the declarant, agree to that action. The amendment must identify the association or other persons who hold any new rights that are created.

The act extends this requirement to extending the time to exercise special declarant rights. (see BACKGROUND)

Notice of Proposed Amendment

Under prior law, written notice of the proposed amendment to the declaration had to be delivered to anyone holding development rights or security interests in those rights. The amendment was effective 30 days after it was recorded and notice was delivered unless any of the parties entitled to notice recorded a written objection within 30 days, in which case the amendment was void, or unless all of those entitled to notice consented in writing when the amendment was recorded. The act allows the notice, objection, and consent to be in a record, instead of in writing.

Procedure to Deem Approval

By law, if the declaration of a common interest community, whether created before or after January 1, 1984, contains a provision requiring that amendments relating to the use of units, the relocation of boundaries between units and common elements, or the extension or creation of development rights may be adopted only by the vote or agreement of owners of units to which more than 80% of the votes in the association are allocated, such a proposed amendment is deemed approved under certain circumstances.

An amendment is deemed approved if:

1. owners of units to which more than 80% of the votes in the association are allocated vote for or agree to the proposed amendment;

2. no unit owner votes against the proposed amendment; and

3. notice of the proposed amendment is delivered to the unit owners holding votes in the association that have not voted on or agreed to the proposed amendment and no written objection of the proposed amendment is received by the association within 30 days after the association delivers notice; or

4. owners of units to which more than 80% of the votes in the association are allocated vote for or agree to the proposed amendment but at least one unit owner objects to the proposed amendment and, pursuant to an action brought by the association in Superior Court against all objecting unit owners, the court finds that the objecting owner or owners does not have a unique minority interest, different in kind from the interests of the other unit owners, that the voting requirement of the declaration was intended to protect.

The act expands this approval process to include any amendment, not just those specified above, except amendments that (1) create or increase special declarant rights, (2) increase the number of units, or (3) change the boundaries of any unit or the allocated interests of a unit, which require unanimous consent of the unit owners.

The act also applies this approval process to requirements contained in bylaws requiring the approval of 80% or more of votes for the adoption of amendments. It requires that any objection to the amendment be in a record instead of written.

17 — TERMINATION OF A COMMON INTEREST COMMUNITY

Under prior law, other than eminent domain or foreclosure of an entire cooperative by a security instrument that has priority over the declaration, a common interest community could be terminated by the unit owners having at least 80% of the votes or any larger percentage the declaration specifies. The act also requires any other approvals the declaration requires for termination.

It creates an additional exception to the 80% or more voting requirement by authorizing the executive board or any other interested person to start an action in Superior Court seeking to terminate the common interest community if substantially all the units have been destroyed, abandoned, or are uninhabitable and the available methods the act specifies for giving notice of a unit owner's meeting to consider termination will not likely result in receipt of the notice.

The act authorizes the court, in such an action, to issue whatever orders it considers appropriate, including appointing a receiver. After a hearing, the court may terminate the common interest community or reduce its size and may issue any other order it considers to be in the best interest of the unit owners and persons holding an interest in the common interest community.

The law authorizes a declaration to specify a smaller percentage vote for termination, if all of the units are restricted exclusively to nonresidential uses. The act limits this smaller percentage to no less than a majority of the votes in the association.

18 — DECLARANT CONTROL-MASTER PLANNED COMMUNITY

By law, the declaration for a common interest community may state that it is a master planned community if the declarant has reserved the development right to create at least 500 units that may be used for residential purposes and owns or controls more than 500 acres on which the units may be built.

Under the act, the period of declarant control of a master planned community's association terminates when the declarant voluntarily surrenders all rights to control the association's activities in a recorded instrument and after giving notice in a record to all unit owners.

19 — ORGANIZATION OF UNIT OWNERS ASSOCIATIONS AND EXECUTIVE BOARDS

The law requires that a unit owners' association must be organized no later than the date the first unit in the common interest community is conveyed. The act requires the association to have an executive board.

20 — ASSOCIATION POWERS AND DUTIES

These changes are effective from passage and applicable to common interest communities created before, on, or after January 1, 1984.

The act requires, instead of allows, the unit owner's association to adopt bylaws and budgets. It eliminates an association's authority to adopt regulations. It authorizes an association to adopt and amend special assessments; invest association funds; and institute, defend, or intervene in arbitration or mediation.

Prior law allowed an association to assign its rights to future income, including the right to receive common expense assessments, to the extent the declaration explicitly authorized it to do. The act instead allows it to do so without any authorization in the declaration as long as the common interest community complies with the act's requirements regarding disclosure and the unit owners' opportunity to submit comments.

The act also authorizes an association to suspend any right or privilege of a unit owner that fails to pay an assessment. But it specifies that an association may not:

1. deny a unit owner or other occupant access to the owner's unit or its limited common elements;

2. suspend a unit owner's right to vote or participate in association meetings;

3. prevent a unit owner from seeking election as a director or officer of the association; or

4. withhold services the association provides to a unit or a unit owner if this would endanger anyone's health, safety or property.

21 — ASSOCIATION POWERS AND DUTIES

The act makes the following changes effective July 1, 2010.

By law, the declaration may not limit the association's power to deal with the declarant that are more restrictive than the limitations it imposes on the association's power to deal with other persons. The act prohibits a declaration from limiting the power of the association to institute litigation, arbitration, mediation, or administrative proceedings against any person, except the association must comply with the act's notice requirements, if applicable, before instituting any lawsuit or other proceeding in connection with construction defects.

The act specifies that these limitations on an association's authority do not apply to its authority to require, by regulation, that disputes between the executive board and unit owners or between two or more unit owners regarding the common interest community must be submitted to nonbinding alternative dispute resolution as described in the regulation as a prerequisite to beginning a judicial proceeding.

The act requires the executive board to promptly provide notice to the unit owners of any legal proceeding in which the association is a party other than a proceeding to enforce rules for recovering unpaid assessments or other sums due the association, or defending the association's lien on a unit in a foreclosure initiated by a third party.

Rules and Regulations that Affect the Use or Occupancy of Units

Unless otherwise permitted by the declaration or CIOA, prior law prohibited an association from adopting rules and regulations that affected the use or occupancy of units restricted to residential purposes that:

1. prevented any use of a unit which violates the declaration;

2. regulated any occupancy of a unit that violates the declaration or adversely affects the use and enjoyment of other units or the common elements by other unit owners; or

3. restricted the leasing of residential units to the extent those rules are reasonably designed to meet first mortgage underwriting requirements of institutional lenders who regularly purchase or insure first mortgages on units in common interest communities, and certain notice and recording requirements were met.

This act eliminates this authority but grants similar authority in 34.

Enforcement Action

The act authorizes the association's executive board to determine whether to take enforcement action by exercising the association's power to impose sanctions or begin an action for a violation of the declaration, bylaws, and rules, including whether to compromise any claim for unpaid assessments or other claim made by or against it. But the act specifies that the executive board does not have a duty to take enforcement action if it determines that, under the facts and circumstances presented:

1. the association's legal position does not justify taking any or further enforcement action;

2. the covenant, restriction, or rule being enforced is, or is likely to be construed as, inconsistent with law;

3. although a violation may exist or may have occurred, it is not so material as to be objectionable to a reasonable person or to justify expending the association's resources; or

4. it is not in the association's best interests to pursue an enforcement action.

The act specifies that the executive board's decision not to pursue enforcement under one set of circumstances does not prevent it from taking enforcement action under another set of circumstances, except that the executive board may not be arbitrary or capricious in taking enforcement action.

The act requires the board to establish a reasonable method for unit owners to communicate among themselves and with the board on association matters.

22 — EXECUTIVE BOARD MEMBERS AND OFFICERS

The act specifies that executive board members and officers are subject to the state prohibitions against conflicts of interests governing directors of corporations. By law, association officers and executive board members must exercise the degree of care and loyalty required by a trustee. The act specifies that they owe this duty to the association and that it applies regardless of the form in which the association is organized.

By law, the board may fill vacancies in its membership for the unexpired portion of any term. The act instead authorizes the board to do so for the unexpired portion of the term or, if earlier, until the next regularly scheduled election of executive board members.

Election of Board Officers

Under prior law, the executive board elected board officers. The act instead requires this unless the declaration or bylaws provide for unit owners to elect officers.

Appointment of Specified Positions on Executive Board

The act authorizes a declaration to provide for:

1. the appointment of specified positions on the executive board by either a governmental subdivision or agency or federally tax exempt, nonstock charitable corporation, during or after the period of declarant control; and,

2. a method for filling vacancies in such specified positions, other than by election by the unit owners.

But after the period of declarant control, the act specifies that appointed members (1) may not comprise more than one-third of the board, and (2) have no greater authority than any other board member.

23 — TERMINATION OF CONTRACTS AND LEASES

By law, the unit owners' association, after the period of declarant control ends, may cancel a variety of contracts between the association and the declarant or other persons without penalty. The act adds maintenance and operations to the types of contracts that are subject to cancellation.

24 — BYLAWS

The act requires that an association's bylaws:

1. contain any provision necessary to satisfy requirements in CIOA or the declaration concerning meetings, voting, quorums, and other association activities and

2. provide for any matter required by state law other than CIOA, which is not inconsistent with CIOA, to appear in the bylaws of organizations of the same type as the association.

By law, subject to the provisions of the declaration, the bylaws may provide for any other matters the association deems necessary and appropriate. The act specifies that these can include matters that could be adopted as rules. It makes this authority to adopt bylaws that provide for any other matters subject to CIOA.

25 — MEETINGS

Association Meetings

By law, the association must meet at least once a year. The act requires that an association hold an annual meeting at a time, date, and place specified in the bylaws.

Under the act, if the association does not notify unit owners of a special meeting within 30 days after the requisite number or percentage of unit owners request the secretary to do so, the requesting members may directly notify all the unit owners of the meeting. The act specifies that only matters described in the meeting notice may be considered at a special meeting.

The act requires an association to notify unit owners of the time, date, and place of each annual and special unit owners meeting. As under prior law, the notice must be between 10 and 60 days before the meeting date.

Requirements for Board and Committee Meetings

The act requires unit owners be given a reasonable opportunity at any meeting to comment regarding any matter affecting the common interest community or the association. It permits the declaration or bylaws to allow meetings of unit owners to be conducted by telephone, video, or other conferencing process if this process satisfies the act's requirements concerning such types of meetings (see below).

The act imposes the following requirements for meetings of the executive board and association committees authorized to act for the association:

1. meetings must be open to the unit owners and their representatives except during executive sessions;

2. the executive board and committees may hold an executive session only during a regular or special meeting of the board or a committee;

3. no final vote or action may be taken during an executive session;

4. an executive session may be held only to:

a. consult with the association's attorney concerning legal matters;

b. discuss existing or potential litigation or mediation, arbitration, or administrative proceedings;

c. discuss labor or personnel matters;

d. discuss contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage; or

e. prevent public knowledge of the matter to be discussed if the executive board or committee determines that public knowledge would violate anyone's privacy;

5. a gathering of board members at which the board members do not conduct association business is not an executive board meeting;

6. the board and its members may not use incidental or social gatherings of board members or any other method to evade the act's open meeting requirements;

7. during and after the period of declarant control, the board must meet at least twice a year at the common interest community or at a place convenient to the community;

8. after the period of declarant control ends, all other executive board meetings must be held at the common interest community or at a place convenient to the community unless the unit owners amend the bylaws to vary the location of those meetings;

9. at each executive board meeting, the executive board must provide a reasonable opportunity for unit owners to comment regarding any matter affecting the common interest community and the association;

10. unless the meeting is included in a schedule given to the unit owners or is called to deal with an emergency, the secretary or other officer specified in the bylaws must give notice of each executive board meeting to each board member and to the unit owners, and the notice must be at least 10 days before the meeting and state the time, date, place, and agenda;

11. copies of any materials distributed to the executive board before the meeting must be made reasonably available to unit owners, except that the board need not make available copies of unapproved minutes or materials that are to be considered in executive session;

12. unless the declaration or bylaws otherwise provide, the executive board may meet by telephone, video, or other conferencing process if (a) the meeting notice states the conferencing process to be used and informs unit owners how they may participate in the conference directly or by meeting at a central location or conference connection and (b) the process provides all unit owners the opportunity to hear or perceive the discussion and offer comments; and

13. instead of meeting, the executive board may act by unanimous consent as documented in a record authenticated by all its members, and the secretary must promptly give notice to all unit owners of any action taken by unanimous consent.

The act specifies that even if an executive board action does not comply with these requirements, it is valid unless a court sets it aside. The act requires a challenge to the validity of an executive board action for non-compliance to be brought within 60 days after the minutes of the meeting at which the action was taken are approved or the record of that action is distributed to unit owners, whichever is later.

The act requires that association meetings be conducted according to the most recent addition of Roberts' Rules of Order Newly Revised unless:

1. the declaration, bylaws, or other law otherwise provides, or

2. two-thirds of the votes allocated to owners present at the meeting are cast to suspend those rules.

26 — ASSOCIATION AND EXECUTIVE BOARD MEETING QUORUMS

Association Meetings

The act modifies quorum requirements for association meetings. Under the act, unless the bylaws provided otherwise, a quorum is present at any association meeting if persons entitled to cast 20% of the votes in the association, instead of 20% of the votes that may be cast for election of the executive board, are present in person or by proxy at the beginning of the meeting.

Executive Board Meetings

Under prior law, unless the bylaws specified a larger percentage, a quorum was deemed present throughout any meeting of the executive board if persons entitled to cast 50% of the votes on that board were present at the beginning of the meeting. Under the act, unless the bylaws specify a larger number, a quorum of is present for purposes of determining the validity of any action taken at an executive board meeting only if a majority of the votes on that board are present when a vote regarding that action is taken. If a quorum is present at that time, the affirmative vote of a majority of board members present is sufficient unless the declaration or bylaws require a greater percentage.

27 — VOTING, PROXIES, AND BALLOTS

The act authorizes unit owners, unless prohibited or limited by the declaration or bylaws, to vote at a meeting in person; by proxy; or, when a vote is conducted without a meeting, by electronic or paper ballot. It specifies that, unless a greater number or fraction of the votes in the association is required by CIOA, other law, or the declaration, a majority of the votes cast is the decision of the unit owners.

The act defines “fraction or percentage,” with respect to the unit owners or the votes in the association, as the stated fraction or percentage of owners of units to which at least the stated percentage or fraction of all the votes in the association are allocated, unless the provisions of CIOA or this act provides that the “fraction or percentage” refers to a different group of unit owners or votes.

The law establishes certain rights concerning proxy voting:

1. votes allocated to a unit can be cast pursuant to a proxy duly executed by a unit owner;

2. if a unit is owned by more than one person, each unit owner may vote or register protest to the other owners of the unit voting through a duly executed proxy;

3. a unit owner may revoke a proxy only by actual notice of revocation to the person presiding over an association meeting;

4. a proxy is void if it is not dated or purports to be revocable without notice; and

5. a proxy terminates one year after its date, unless it specifies a shorter term.

In addition, the act specifies that a proxy may be either directional or not directional.

The act specifies that these rights apply unless the declaration or bylaws provide otherwise. It prohibits a person from casting votes representing more than 15% of the votes in the association pursuant to undirected proxies, unless the declaration or bylaws provide otherwise.

Voting without a Meeting

The act allows an association to conduct a vote without a meeting, unless the declaration or bylaws prohibit or limit it. For voting without a meeting, the act requires:

1. the association to notify the unit owners that the vote will be taken by ballot;

2. the association to deliver a paper or electronic ballot to every unit owner entitled to vote; and

3. the ballot to state each proposed action or office to be filled and provide an opportunity to vote for or against the action or the candidate.

The act requires the association, when it delivers the ballots, to also:

1. indicate the number of responses needed to meet the quorum requirements;

2. state the percentage of votes necessary to approve each matter other than election of directors;

3. specify the time and date by which a ballot must be delivered to the association to be counted, which must be at least three days after the date the association delivers the ballot; and

4. describe the time, date, and manner by which unit owners wishing to deliver information to all unit owners regarding the subject of the vote may do so.

A ballot is not revoked after delivery to the association by death, disability, or attempted revocation unless the declaration or bylaws provide otherwise.

Approval by ballot is valid only if the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action.

Under prior law, no votes allocated to a unit owned by the association could be cast. The act instead requires that votes allocated to a unit owned by the association must be cast in any vote of the unit owners in the same proportion as the votes cast on the matter by other unit owners.

28 — SELLING OR MORTGAGING COMMON ELEMENTS

The law allows the common elements of a condominium to be conveyed or subjected to a security interest free of the lien on the undivided interests in the common elements held by all the mortgagees of the units if 80% of the mortgagees consent to the sale or encumbrance. The act requires the consent to be in a record instead of in writing.

29 — INSURANCE

The law allows the association to maintain, to the extent reasonably available, certain types of insurance policies. The act specifies that these policies may be subject to reasonable deductibles.

The act requires the association to carry fidelity insurance. This type of insurance protects the association from loss of money, securities, or inventories resulting from crime. Common fidelity insurance claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire transfer fraud, counterfeiting, and similar criminal acts.

Prior law required associations also to insure units in buildings that were part of a cooperative or that contained units having horizontal boundaries described in the declaration, but it specified that the insurance did not have to include improvements the unit owners installed. The act instead requires associations to insure the units in any common interest community that contains either horizontal or vertical boundaries that comprise or are located within common walls between units. The act also requires that the insurance on such units include coverage for improvements unit owners installed unless the declaration limits the association's authority to do so or the executive board decides, after giving notice and an opportunity for unit owners to comment, not to insure them.

For common interest communities containing more than 12 units, the act requires that, unless the association insures all improvements and betterments, it must:

1. prepare and maintain a schedule of the standard fixtures, improvements, and betterments in the units, including any standard wall, floor, and ceiling coverings covered by the association's insurance policy;

2. provide the schedule at least annually to the unit owners to enable them to coordinate their homeowners insurance coverage with the association's insurance policy; and

3. include the schedule in the resale certificate required by law.

Under prior law, if the insurance the law required the association to carry was not reasonably available, the association had to promptly notify all unit owners by hand delivery or prepaid U. S. mail. The act instead requires the association to promptly notify unit owners by those means or by:

1. commercially reasonable delivery service to the mailing address of each unit;

2. electronic means, if the unit owner has given the association an electronic address; or

3. any other method reasonably calculated to provide notice to the unit owner.

By law, an insurance trustee or the association must hold any insurance proceeds in trust for the association, unit owners, and lien holders. The act requires that the proceeds must be disbursed first for the repair or replacement instead of the repair and restoration, of the damaged property.

The law requires an insurer that has issued an insurance policy the law requires an association to provide to issue certificates or memoranda of insurance to the association and, on request, to any unit owner or holder of a security interest. The act requires the request be made in a record instead of in writing.

The act also makes certain technical and conforming changes.

30 — SURPLUS FUNDS

By law, unless otherwise provided in the declaration, any surplus funds of the association remaining after payment of, or provision for, common expenses and any prepayment of reserves must be paid to the unit owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments. The act specifies that the surplus must be paid annually.

31 — ASSESSMENTS

Under prior law, if any common expense was caused by the misconduct of any unit owner, the association could, after notice and hearing, assess that expense exclusively against the owner's unit. The act instead authorizes the association to assess the portion of the common expense above any insurance proceeds the association received, whether or not that portion results from the application of a deductible, against that owner's unit. The act expands this authority to include damages caused by:

1. the unit owner's gross negligence or failure to comply with a written maintenance standard the association adopts, or

2. the willful misconduct, gross negligence, or failure to comply with a written maintenance standard of any unit owner's tenant or the owner's or tenant's guest or invitee.

32 — LIENS FOR ASSESSMENTS

By law, the association has a priority lien on a unit for any assessment on it or fines imposed over first and second mortgages to the extent of six months of common charges. The act expands this to include reasonable attorneys' fees and costs and any other sum due the association under the declaration; CIOA; or an administrative, arbitration, mediation, or judicial decision.

Limitations on Foreclosure by an Association

The act prohibits an association from starting a foreclosure action or a lien on a unit unless:

1. the unit owner, when the action starts, owes at least an amount equal to two months of common expense assessments based on the periodic budget last adopted by the association;

2. the association had has made a demand for payment in a record; and

3. the executive board votes to commence a foreclosure action specifically against that unit or has adopted a standard policy that provides for foreclosure against that unit.

The act requires that every aspect of a foreclosure, sale, or other disposition, including the method, advertising, time, date, place, and terms, must be commercially reasonable.

By law, the association at the request of a unit owner must furnish a statement in a recordable form stating the amount of unpaid assessments against the unit. The act requires that the request be made in a record, instead of in writing. Under the act, a lien for unpaid assessments is extinguished unless proceedings to enforce it are instituted within three, instead of two, years after the full amount of the assessment becomes due.

33 — DISCLOSING ASSOCIATION RECORDS

The act establishes more detailed requirements for retaining and sharing association records with unit owners. Prior law required an association to keep financial records sufficiently detailed to enable the association to comply with CIOA's resale notice requirements. It also required the executive board and the association's managing agent to make reasonably available all accounting, financial, and other association books and records, including executive board minutes and voting records for any unit owner, or the owner's authorized agent, upon request, to examine and copy.

Required Records

The act requires an association to keep:

1. detailed records of receipts and expenditures affecting its operation and administration and other appropriate accounting records;

2. minutes of all meetings of its unit owners and executive board other than executive sessions and a record of all actions taken by (a) the unit owners or executive board without a meeting, and (b) a committee in place of the executive board on the association's behalf;

3. the names of unit owners in a form that permits preparation of a list of their names and the addresses at which the association communicates with them, in alphabetical order showing the number of votes each owner is entitled to cast;

4. its original or restated organizational documents, if required by law other than CIOA, bylaws and all amendments to them, and all rules currently in effect;

5. all association financial statements and tax returns for the past three years;

6. the names and addresses of its current executive board members and officers;

7. its most recent annual report delivered to the secretary of the state, if any;

8. financial and other records sufficiently detailed to enable the association to comply with CIOA's resale disclosure requirements;

9. copies of current contracts to which it is a party;

10. records of executive board or committee actions to approve or deny any requests for design or architectural approval from unit owners; and

11. ballots, proxies, and other records related to voting by unit owners for one year after the action they relate to.

Examination and Copying

Subject to the exceptions specified below, the act makes all records an association retains available for examination and copying by unit owners or their authorized agents (1) during reasonable business hours or at a mutually convenient time and location and (2) upon five days' notice in a record reasonably identifying the specific records requested.

Protected Records

The act requires that association records be withheld from inspection and copying to the extent that they concern:

1. personnel, salary, and medical records relating to specific individuals, unless waived by those individuals, or

2. information the disclosure of which would violate any law other than CIOA (or sections eight, nine, or 34 to 38 of the act).

The act allows association records to be withheld from inspection and copying to the extent that they concern:

1. contracts, leases, and other commercial transactions to purchase or provide goods or services, that are currently being negotiated;

2. existing or potential litigation or mediation, arbitration, or administrative proceedings;

3. existing or potential matters involving federal, state, or local administrative or other formal proceedings before a governmental tribunal for enforcement of the declaration, bylaws, or rules;

4. communications with the association's attorney that are otherwise protected by the attorney-client privilege or the attorney work-product doctrine;

5. records of an executive session of the executive board; or

6. individual unit files other than those of the requesting owner.

The act specifies that unit owners have the right to receive copies by photocopying or other means, including electronic transmission if available, upon request. But an association does not have to compile or synthesize information. Information the association provides may not be used for commercial purposes.

Fees

The act allows an association to charge a reasonable fee for providing copies of any records and supervising the unit owner's inspection.

34 — RULES

The act requires the executive board, at least 10 days before adopting, amending, or repealing any rule, to give all unit owners, notice of:

1. its intention to adopt, amend, or repeal a rule and provide the text of the rule or the proposed change and

2. the date on which the executive board will act after considering comments from unit owners.

Following adoption, amendment, or repeal of a rule, the act requires the association to notify the unit owners of the action and provide a copy of any new or revised rule.

Subject to the declaration's provisions, the act authorizes an association to adopt rules to establish and enforce construction and design criteria and aesthetic standards. If an association adopts such rules, it must adopt procedures for enforcing those standards and approving construction applications, including a reasonable time within which it must act after an application is submitted and the consequences of its failure to act.

The act specifies that an association's internal business operating procedures do not have to be adopted as rules.

Flag Display and Election Signs

The act requires a rule regulating display of the United States flag to be consistent with federal law. It bars the association from prohibiting display on a unit or a limited common element adjoining a unit of the Connecticut flag or signs regarding candidates for public or association office or ballot questions, but it allows the association to adopt rules governing the time, place, size, number, and manner of those displays.

Assembly

The act gives unit owners the right to assemble peacefully on the common elements to consider matters related to the common interest community, but it authorizes the association to adopt rules governing the time, place, and manner of those assemblies.

Behavior in Units

The act authorizes an association to adopt rules that affect the use of or behavior in units that may be used for residential purposes to:

1. implement a provision of the declaration;

2. regulate any behavior or occupancy that violates the declaration or adversely affects the use and enjoyment of other units or the common elements by other unit owners; or

3. restrict the leasing of residential units to the extent the rules are reasonably designed to meet underwriting requirements of institutional lenders that regularly make first mortgages on units or purchase such mortgages.

35 — NOTICE TO UNIT OWNERS

The act requires an association to deliver any notice CIOA or the act requires to any mailing or electronic mail address a unit owner designates. It allows the association to also deliver notices by:

1. hand delivery to each unit owner;

2. hand delivery, United States mail postage paid, or commercially reasonable delivery service to the mailing address of each unit;

3. electronic means, if the unit owner has given the association an electronic address; or

4. any other method reasonably calculated to notify the unit owner.

The act specifies that

1. notices the act requires are effective when sent and

2. the ineffectiveness of a good faith effort to deliver notice by an authorized means does not invalidate action taken at or without a meeting.

36 — REMOVAL OF OFFICERS AND DIRECTORS

Under prior law, notwithstanding any provision of the declaration or bylaws to the contrary, the unit owners, by a two-thirds vote of all persons present and entitled to vote at any unit owners' association meeting at which a quorum was present, could remove any executive board member with or without cause, other than a member the declarant appointed.

The act instead authorizes unit owners present in person, by proxy, or by absentee ballot at any unit owners meeting at which a quorum is present, to remove any executive board member and any officer elected by the unit owners, with or without cause, by a majority of the votes cast. However, the act specifies that

1. a member appointed by the declarant may not be removed by a unit owner vote during the period of declarant control;

2. a member appointed by persons other than the declarant during or after the period of declarant control may be removed only by the appointing party; and

3. the unit owners may not consider whether to remove a board member or officer elected by the unit owners at a unit owners meeting unless that subject was listed in the meeting's notice or in the notice of vote by ballot.

The act requires any member or officer considered for removal to be given a reasonable opportunity to speak before the vote is taken. If the vote is taken by ballot without a meeting, the act requires that the person being considered for removal be given a reasonable opportunity to deliver information to unit owners.

37 — EXECUTIVE BOARD AND ASSOCIATION BUDGETS AND ASSESSMENTS

The act requires the executive board, at least annually, to adopt a proposed budget for the common interest community for consideration by the unit owners. By law, within 30 days after adopting a proposed budget, the executive board must provide to all the unit owners a summary of the budget. The act requires that this summary include any reserves and a statement of the basis on which any reserves are calculated and funded. Under prior law, the board had to set a date for a unit owner's meeting to consider ratification within 14 to 30 days after hand delivering or mailing the summary. The act instead requires the board to simultaneously set a unit owner's meeting date, or vote by ballot, within 10 to 60 days after providing the summary to the unit owners.

By law, unless at that meeting a majority of all unit owners or any larger number specified in the declaration rejects the budget, the budget is ratified, whether or not a quorum is present. If a proposed budget is rejected, the budget last ratified by the unit owners continues until unit owners ratify a subsequent budget.

Special Assessment

The act authorizes the executive board to propose a special assessment at any time. It requires that within 30 days after adopting a proposed special assessment, the executive board must provide to all unit owners a summary of the assessment. Unless the declaration or bylaws provide otherwise, if the special assessment, together with all other special and emergency assessments the board proposed in the same calendar year, do not exceed 15% of the association's last adopted budget for that calendar year, the special assessment is effective without unit owner approval. Otherwise, within 10 to 60 days after providing a summary, the board must set a date for the unit owners to decide whether to approve either at unit owner's meeting or by ballot without a meeting.

The assessment is approved unless at a meeting or in the balloting, a majority of all unit owners, or any larger number the declaration specifies, votes to reject it. The absence of a quorum at the meeting or participating in the vote by ballot does not affect the rejection or approval of the budget.

Emergency Special Assessments

The act allows a special assessment to become effective immediately if the executive board determines by a two-thirds vote that it is necessary to respond to an emergency and notice of the emergency assessment is provided promptly to all unit owners. The act requires that the board spend emergency assessment receipts only for the purposes described in its vote.

Loan Agreements

By law, notwithstanding any provision of the declaration or bylaws to the contrary, at least 14 days before entering into any loan agreement on the association's behalf, the executive board must:

1. disclose to all unit owners the loan's amount, terms, and estimated effect on any common expense assessment, and

2. afford the unit owners a reasonable opportunity to submit comments to the executive board regarding the loan.

The act requires the disclosure and comments to be in a record instead of in writing.

It also requires that, unless prohibited or otherwise limited in the declaration, if the executive board proposes to enter into a loan agreement on the association's behalf and to assign its right to future income as security for the loan then, owners of units to which at least a majority of the votes in the association are allocated, or any larger percentage stated in the declaration, must vote in favor of or agree to such assignment.

38 — LITIGATION INVOLVING THE DECLARANT

The act applies the following requirements to an association's authority to institute and maintain a proceeding alleging a construction defect against a declarant or an employee, independent contractor or other person directly or indirectly providing labor or materials to a declarant. These apply whether the proceeding involves litigation, mediation, arbitration, or administrative action.

Under the first requirement, before the association institutes a proceeding, it must provide notice in a record of its claims to the declarant and those that the association seeks to hold liable for the claimed defects. The text of the notice may be in any form reasonably calculated to give notice of the general nature of the association's claims, including a list of the claimed defects. The act allows the notice to be delivered by any method of service and may be addressed to any person if the method of service used provides actual notice or would be sufficient to give notice.

The second requirement bars the association from instituting a proceeding against a person for at least 45-days after it sends notice of its claim. During this 45 day period, the declarant and any other person notified may give the association a plan to repair or otherwise remedy the construction defects described in the notice. The association may institute a proceeding only if it does not receive a timely remediation plan or does not accept the terms of any submitted plan.

If the association receives one or more timely remediation plans, the executive board must consider them promptly and notify the affirmed parties persons whether the plan is acceptable as presented, acceptable with stated conditions, or not accepted.

If the association accepts a remediation plan or if a person agrees to stated conditions to an otherwise acceptable plan, the parties must agree on a period for implementing the plan. The association may not institute a proceeding while the plan is being diligently implemented.

Any statute of limitation affecting the association's right of action against a declarant or other person is tolled during the initial 45-day period and any period in which a party has commenced and is diligently pursuing the remediation plan.

The act authorizes the association, after the 45-day period expires, whether or not the association agrees to any remediation plan, to institute a proceeding against a person to which notice was directed that (1) fails to submit a timely remediation plan, (2) submits an unacceptable plan, or (3) fails to diligently implement the plan. It also allows a unit owner to institute such a proceeding with respect to his or her unit and any limited common elements assigned to that unit, regardless of any association action.

The act specifies that it does not preclude the association from making repairs necessary to mitigate damages or to correct any defect that poses a significant and immediate health or safety risk.

The act authorizes the executive board to determine whether and when it may institute a proceeding. It prohibits a declaration from requiring a vote by any number or percent of unit owners as a condition to institution of a proceeding.

The act specifies that it does not prevent an association from seeking equitable relief, a remedy in aid of arbitration, or a prejudgment remedy at any time without giving the notice the act requires or waiting 45 days after a notice was given.

Any limitations the act imposes on the association's authority to institute litigation do not apply if the time for terminating any period of declarant control occurs and:

1. the declarant has failed to relinquish control as required by law;

2. a majority of the executive board has not yet been elected by unit owners, and

3. the declarant has not yet delivered to the association all property of the unit owners and the association held by or controlled by the declarant, including certain documents and records required by law.

39 — DUTY TO DELIVER A PUBLIC OFFERING STATEMENT

The law generally requires that a declarant, before offering any interest in a unit to the public, prepare a public offering statement (POS) conforming to the requirements of law. A declarant may transfer responsibility for preparing of all or a part of the POS to a successor declarant but must provide any information necessary to prepare it.

The law requires a declarant or successor declarant who offers a unit to a purchaser to deliver a POS in the manner required by law. The act imposes this same requirement on a dealer who offers a unit to a purchaser. The law defines a “dealer” as someone who owns either six or more units, or 50% or more of all the units, in a common interest community.

Prior law made a declarant or successor declarant liable to anyone claiming an interest in the common interest community for any portion of a POS that he or she prepared that contains (1) any false or misleading statement or (2) for any omission of a material fact. But prior law shielded a declarant from liability for false and misleading statements or omissions if he or she did not prepare any of the POS, unless he or she had actual knowledge of the statement or omission or, in the exercise of reasonable care, should have known of the statement or omission. This act eliminates this shield and makes the declarant liable for any false misleading statements and omissions in a POS he or she delivers.

40 — PUBLIC OFFERING STATEMENT–GENERAL PROVISIONS AND REQUIREMENTS

The act requires that a POS describe any arrangement between (1) the associations for two or more common interest communities to share certain costs and (2) an association and the owner of real estate that is not part of a common interest community to share certain costs as the act specifies.

41 — RESALE CERTIFICATE

By law, a unit owner must provide a purchaser with a certificate containing specified information before selling the unit. This certificate is commonly referred to as a “resale certificate.

Prior law required the certificate to include a statement of any unsatisfied judgments against the association and the existence of any pending suits in which the association was a defendant. The act instead requires the certificate to include the existence of any pending administrative proceedings and suits in which the association is a party, including foreclosures but excluding other collection matters.

The law also requires the certificate to include a statement of the insurance coverage provided for the benefit of unit owners. The act specifies that this statement include any schedule of standard fixtures, improvements and betterments in the units covered by the association's insurance.

The act requires the certificate also to include:

1. a statement disclosing the number of units whose owners are at least 60 days' delinquent in paying their common charges;

2. a statement disclosing the number of foreclosure actions the association has brought during the past 12 months and the number of such actions pending on a specified date within 60 days of the certificate's date; and

3. any established maintenance standards the association has adopted.

Under prior law, the association had to furnish a certificate containing the information required by law within 10 business days after receiving a written request from a unit owner and payment of a fee the association established that reflected the actual printing, photocopying, and related costs, up to $125. The act:

1. allows the request to be in a record instead of requiring it to be written;

2. eliminates the requirement that the fee reflect the association's actual costs; and

3. authorizes the association to charge an additional fee of five cents a page for each document copy the association provides or a flat fee of $10 for an electronic version.

42 — EXPRESS WARRANTIES OF QUALITY

By law, any model or description of the physical characteristics of the common interest community, including plans and specifications of or for improvements, create an express warranty that the common interest community would substantially conform to the model or description. The act creates an exception if the model or description clearly discloses that it is only proposed or is subject to change.

43 — CAUSE OF ACTION FOR VIOLATING CIOA

Under prior law, if a declarant or any other person subject to CIOA willfully failed to comply with any of its provisions or any provision of the declaration or bylaws, any person or class of persons adversely affected could sue for appropriate relief and relieve punitive damages. The act eliminates the court's ability to award punitive damages and specifies that a declarant, unit owner's association, unit owner, or any other person subject to CIOA can sue to enforce a right granted by CIOA, the declaration, or bylaws. The act authorizes the court to award reasonable costs instead of court costs.

By law, parties to a dispute arising under CIOA, the declaration, or the bylaws may agree to resolve the dispute by binding or nonbinding alternative dispute resolution. Prior law required that the agreement be in writing. The act instead requires that the agreement by in a record authenticated by the parties.

44 — CONVEYANCE OF A UNIT IN A COOPERATIVE

By law, a conveyance of a unit owner's interest in a cooperative created before or after January 1, 1984 is accomplished by delivering to the purchaser an instrument, executed in the same manner as a deed, conveying the seller's interest in the unit. The act applies this also to a conveyance of a cooperative created on January 1, 1984.

EFFECTIVE DATE: upon passage

BACKGROUND

Condominium

“Condominium” means a common interest community in which portions of the real property are designated for separate ownership and the remainder of the real property is designated for common ownership solely by the owners of those portions. A common interest community is not a condominium unless the undivided interests in the common elements are vested in the unit owners.

Cooperative

Cooperative” means a common interest community in which the real property is owned by an association, each of whose members is entitled by virtue of his or her ownership interest in the association to exclusive possession of a unit.

Planned Community

A “planned community” is a common interest community that is not a condominium or a cooperative. A condominium or cooperative may be part of a planned community.

Common Elements

“Common elements” means (1) in the case of a condominium or cooperative, all portions of the common interest community other than the unit and (2) in a planned community, any real property within it owned or leased by the association, other than a unit. It also means in all common interest communities, any other interests in real property for the benefit of unit owners that are subject to the declaration.

Special Declarant Rights

“Special declarant rights” means rights reserved for the benefit of a declarant to:

1. complete improvements indicated on surveys and plans filed with the declaration or, in a cooperative, to complete improvements described in the public offering statement;

2. exercise any development right;

3. maintain sales and management offices, signs advertising the common interest community, and models;

4. use easements through the common elements to make improvements within the common interest community or within real property that may be added to the common interest community;

5. make the common interest community subject to a master association;

6. merge or consolidate two common interest communities with the same form of ownership; or

7. appoint or remove any officer of the association or any master association or any executive board member during any period of declarant control.

Federal Electronic Signatures in Global and National Commerce Act, 15 USC 7001, et seq.

Congress enacted the Electronic Signatures in Global and National Commerce Act in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.

The act (15 U. S. C. 7002), allows a state statute, regulation, or other rule of law to modify, limit, or supersede its provisions ( 7001) only if the state action satisfies certain requirements and makes specific reference to the federal act.

15 USC 7001(c) provides that if state law requires that information relating to a transaction in or affecting interstate or foreign commerce be provided or made available to a consumer in writing the use of an electronic record to provide or make such information available satisfies the requirement that information be in writing only under certain circumstances.

OLR Tracking: GC: CR: SS: DF