In the Council of the District of Columbia s1

1 1 ______2 Councilmember Mary M. Cheh 3 4 5 6 7 A BILL 8 9 ______10 11 12 IN THE COUNCIL OF THE DISTRICT OF COLUMBIA 13 14 ______15 16 17Councilmember Mary M. Cheh introduced the following bill, which was referred to the 18 Committee on ______. 19 20To amend the Condominium Act of 1976 to include all condominiums created after adoption of 21 effective statute; to create a definition for electronic transmission and amend the 22 definition for unit owner in good standing; to adopt the business judgment rule to govern 23 decisions of condo boards; to allow for the relocation of unit boundaries unless prohibited 24 by the condominium instruments; to allow for the subdivision of units unless prohibited 25 by the condominium instruments; to provide that if an association provides notice of a 26 proposed amendment to the condominium instruments to the address of record of a 27 mortgagee and that mortgagee fails to respond within 60 days, such failure to respond 28 will be deemed to be a consent to the amendment; to require open meetings and authorize 29 electronic meetings; to clarify the association’s right to assess benefited members for 30 maintaining common elements; to allow the board to pledge as collateral for a loan or 31 otherwise assign the association’s assessment income; to amend requirements governing 32 insurance to require owners to purchase insurance, and to permits the association to 33 transfer responsibility for paying the deductible; to amend statutory lien requirements; to 34 require the association to maintain records and provide owners a right of inspection; to 35 allow for the issuance of a corporate surety bond or irrevocable letter of credit to secure a 36 deposit on a condominium unit; and to require declarants to record with the condominium 37 instruments an affidavit reflecting that a warranty bond has been posted. 38 39 BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 40act may be cited as the “Condominium Amendment Act of 2013”. 41 Sec. 2. The Condominium Act of 1976, effective March 29, 1977 (D.C. Law 1-89; D.C. 42Official Code § 42-1901.01 et seq.), is amended as follows:2 1 (a) Section 101 (D.C. Law 1-89; D.C. Code § 42-1901.01) is amended to read as 2follows: 3 “§ 42-1901.01. Applicability of chapter; corresponding terms; supersedure of prior law.4 “(a) This chapter shall apply to all condominiums created in the District of Columbia; 5provided, that, except as otherwise expressly provided in this chapter, any provision of this 6chapter that was adopted after the creation of any condominium, horizontal property regime or 7condominium project shall not invalidate any existing provision of the condominium instruments8thereof.”.9 (b) Section 102 (D.C. Law 1-89; D.C. Code § 42-1901.02) is amended as follows:10 (1) A new paragraph (12A) is added to read as follows:11 “(12A) “Electronic transmission” means any form of communication, not directly12involving the physical transmission of paper, that creates a record that:13 (A) May be retained, retrieved, and reviewed by a recipient of the 14communications; and15 (B) May be reproduced directly in paper form by a recipient through an 16automated process.”.17 (2) Paragraph (32) is amended to read as follows:18 “(32) “Unit owner in good standing,” unless otherwise provided in the governing 19documents, means a unit owner who is not delinquent for more than 30 days in the payment of 20any amount owed to the unit owners’ association, or a unit owner who has not been found by the 21unit owners’ association or its executive board to be in violation of the condominium instruments22or the rules of the unit owners’ association.”.23 (c) Section 209 (D.C. Law 1-89; D.C. Code § 42-1902.09) is amended by adding at the 24end the following:1 2 1 “The decisions and actions of the unit owners’ association and its executive board shall 2be reviewable by a court using the “business judgment” standard. A unit owners’ association 3shall have standing to sue in its own name for any claims or actions related to the common 4elements. Except as may be provided otherwise in the condominium instruments, the 5substantially prevailing party in any action brought by an unit owners’ association against a unit 6owner or by a unit owner against the unit owners’ association shall be entitled to recover 7reasonable attorneys’ fees and costs expended in the matter.”.8 (d) Section 225(a) (D.C. Law 1-89; D.C. Code § 42-1902.25(a)) is amended to read as 9follows:10 “(a)(1) Unless expressly prohibited by the condominium instruments, the boundaries 11between adjoining units may be relocated in accordance with:12 “(A) The provisions of this section; and 13 “(B) Any restrictions and limitations not otherwise unlawful which the 14condominium instruments may specify.15 “(2) The boundaries between adjoining units shall not be relocated if the 16condominium instruments expressly prohibit it.”.17 (e) Section 226(a) (D.C. Law 1-89; D.C. Code § 42-1902.26(a)) is amended to read as 18follows:19 “(a)(1) Unless expressly prohibited by the condominium instruments, units may 20be subdivided in accordance with:21 “(A) The provisions of this section and other applicable law; and22 “(B) Any restrictions and limitations not otherwise unlawful 23which the condominium instruments may specify.1 3 1 “(2) No unit shall be subdivided if the condominium instruments 2expressly prohibit it.”.3 (f) Section 227(g) (D.C. Law 1-89; D.C. Code § 42-1902.27(g)) is amended to read 4follows:5 “(g)(1) Except as provided in paragraph (4) of this subsection, if the condominium 6instruments contain a provision requiring any action on the part of the holder of a mortgage or 7deed of trust on a unit in order to amend the condominium instruments, that provision shall be 8deemed satisfied if the procedures under this subsection are satisfied.9 “(2) If the condominium instruments contain a provision described in paragraph 10(1) of this subsection, the unit owners’ association shall cause a copy of any proposed 11amendment to the condominium instruments to be delivered to the last known address of each 12holder of a mortgage or deed of trust entitled to notice. Absent notice of written instructions to 13the contrary, the association may reasonably rely upon the address of each holder as contained in14the recorded mortgage or deed of trust.15 “(3) If a holder of a mortgage or deed of trust that receives the proposed 16amendment fails to object, in writing, to the proposed amendment within 60 days from the date 17the proposed amendment is mailed or delivered to holder, the holder shall be deemed to have 18consented to the adoption of the amendment.”.19 (g) Section 303 (D.C. Law 1-89; D.C. Code § 42-1903.03) is amended to read as 20follows:21 “Sec. 303. Meetings; electronic notice.22 “(a) Meetings of the unit owners’ association shall be held in accordance with the 23provisions of the condominium instruments at least once each year after the formation of said 24association and shall be open to all unit owners of record in good standing. The bylaws shall 1 4 1specify an officer who shall, at least 21 days in advance of any annual or regularly scheduled 2meeting, and at least 7 days in advance of any other meeting, send to each unit owner notice of 3time, place, and purposes of such meeting. Notice shall be sent by United States mail to all unit 4owners of record at the address of their respective units and to one such other address as any of 5them may have designated in writing to such officer; or notice may be hand delivered by the 6officer, provided the officer certifies in writing that notice was delivered to the person of the unit 7owner; or notice may be sent by electronic means to any unit owner who requests delivery of 8notice in such manner and who waives notice by mail or hand delivery.9 “(b)(1) Except as otherwise provided in the condominium instruments, all meetings of 10the executive board shall be open for observation to all unit owners in good standing. Minutes 11shall be recorded and shall be available for examination and copying by unit owners in good 12standing. This right of examination may be exercised: 13 “(A) Only during reasonable business hours or at a mutually convenient 14time and location; and 15 “(B) Upon 5 days’ written notice identifying the specific minutes 16requested.17 “(2) Notice, including the time, date, and place of each executive board meeting, 18shall be furnished to any unit owner who requests such information and published in a location 19reasonably calculated to be seen by unit owners. Requests by a unit owner to be notified on a 20continual basis must be made at least once a year in writing and include the unit owner’s name, 21address, and zip code. Notice, reasonable under the circumstances, of special or emergency 22meetings shall be given contemporaneously with the notice provided to members of the 23executive board conducting the meeting.1 5 1 “(3) Unless otherwise exempt as relating to an executive session pursuant to 2subsection (5), at least one copy of the agenda furnished to members of the executive board for a 3meeting shall be made available for inspection by unit owners.4 “(4) Meetings of the executive board may be conducted or attended by telephone 5conference or video conference or similar electronic means. If a meeting is conducted by 6telephone conference, video conference, or similar electronic means, the equipment or system 7used must permit any executive board member in attendance to hear and be heard by, and to 8communicate what is said by all other executive board members participating in the meeting. 9 “(5) The executive board, upon a motion and an affirmative vote in an open 10meeting to assemble in executive session, may convene in executive session to consider 11personnel matters; consult with legal counsel; discuss and consider contracts, probable or 12pending litigation, and matters involving violations of the condominium instruments or rules and 13regulations promulgated pursuant thereto; discuss and consider the personal liability of unit 14owners to the unit owners’ association; or, discuss any other matter for which the executive 15board determines in good faith the need for confidentiality. The motion shall state specifically 16the purpose for the executive session. Reference to the motion and the stated purpose for the 17executive session shall be included in the minutes. The executive board shall restrict the 18consideration of matters during an executive session to those purposes specifically set forth 19herein. Any motion passed, or other formal action taken, in an executive session shall be 20recorded in the minutes of the open meeting, but this shall not require disclosure of any details 21that may be properly the subject of confidential consideration in an executive session. The 22action or actions authorized by any such motion shall be reflected in minutes available to unit 23owners in good standing. The requirements of this section shall not require the disclosure of 24information in violation of law.1 6 1 “(c) Subject to reasonable rules adopted by the executive board, the executive board shall2provide a designated period of time before or after each regularly scheduled meeting to allow 3unit owners an opportunity to comment on any matter relating to the unit owners’ association. 4During a meeting at which the agenda is limited to specific topics, or at a special meeting, the 5executive board may limit the comments of unit owners to the topics listed on the meeting 6agenda.7 “(d) The executive board may take action without a meeting by written resolution having8the unanimous written consent of the members of the executive board. A copy of such resolution9shall be attached to the minutes of the executive board meeting following its adoption.10 “(e)(1) Notwithstanding any language contained in the condominium instruments, the 11unit owners association may provide notice of a meeting or deliver information to a unit owner 12by electronic transmission if:13 “(A) The executive board gives the unit owners’ association the authority14to provide notice of a meeting or deliver information by electronic transmission;15 “(B) The unit owner gives the unit owners’ association prior written 16authorization to provide notice of a meeting or deliver information by electronic transmission; 17and18 “(C) An officer or agent of the unit owners’ association certifies in 19writing that the unit owners’ association has provided notice of a meeting or delivered material 20or information as authorized by the unit owner.21 “(2) Notice or delivery by electronic transmission shall be considered ineffective 22if:23 “(A) The unit owners’ association is unable to deliver 2 consecutive 24notices; and1 7 1 “(B) The inability to deliver the electronic transmission becomes known 2to the person responsible for the sending of the electronic transmission.3 “(3) The inadvertent failure to deliver notice by electronic transmission does not 4invalidate any meeting or other action.”.5 (h) Section 305 (D.C. Law 1-89; D.C. Code § 42-1903.05) is amended by adding a new 6subsection (g) to read as follows:7 “(g)(1) Notwithstanding any language contained in the condominium instruments, the 8executive board may authorize unit owners to submit votes or proxies by electronic transmission 9if the electronic transmission contains information that verifies that the vote or proxy is 10authorized by the unit owner or the unit owner’s proxy.11 “(2) If the condominium instruments require voting by secret ballot and the 12anonymity of voting by electronic transmission cannot be guaranteed, voting by electronic 13transmission shall be permitted if unit owners have the option of casting printed secret ballots.14 “(3) The inadvertent failure to submit votes or proxies by electronic transmission 15does not invalidate any meeting or other action.”.16 (i) Section 307(a) (D.C. Law 1-89; D.C. Code § 42-1903.07(a)) is amended to read as 17follows:18 “(a)(1) Except to the extent otherwise provided by the condominium instruments, all 19powers and responsibilities with regard to maintenance, repair, renovation, restoration, and 20replacement of the condominium shall belong to: 21 “(A) The unit owners' association in the case of the common elements; 22and 23 “(B) The individual unit owner in the case of any unit or any part thereof. 1 8 1 “(2) Each unit owner shall afford to the other unit owners and to the unit owners' 2association and to any agents or employees of either such access through such unit owner's unit 3as may be reasonably necessary to enable them to exercise and discharge their respective powers 4and responsibilities. To the extent that damage is inflicted on the common elements or any unit 5through which access is taken, the unit owner causing the same, or the unit owners' association if6it caused the same, shall be liable for the prompt repair thereof. Notwithstanding any provision 7of this section or any provisions of the condominium instruments, the unit owners’ association 8may elect to maintain, repair or replace specified unit components, or limited common element 9components for which individual unit owners are responsible, using common expense funds, if 10failure to perform the maintenance, repair or replacement could have a material adverse effect on11the common elements, the health, safety, or welfare of the unit owners, or the income and/or the 12common expenses of the unit owners’ association. The maintenance, repair or replacement may 13be at the expense of the unit owners’ association or, in the reasonable judgment of the executive 14board, if a limited number of units are affected, at the expense of the unit owners affected. Such 15an expense will be considered for all purposes an assessment against any unit to which such 16limited common element appertains.”.17 (j) Section 308(a) (D.C. Law 1-89; D.C. Code § 42-1903.08(a)) is amended as follows:18 (1) Paragraph (14) is amended to read as follows:19 “(14) Power to assign the unit owners' association's right to further income, 20including the right to future income or the right to receive common expense assessments, unless 21expressly prohibited by the condominium instruments;”.22 (2) Paragraph (17) is amended by striking “.” at the end of the sentence and 23inserting “; and” in its place.24 (3) A new paragraph (18) is added to read as follows:1 9 1 “(18) Power to restrict the leasing of residential units. Unless expressly 2prohibited by the condominium instruments, this power may be exercised by the executive board3of the unit owners’ association at a meeting properly noticed under this Chapter by the adoption 4of restrictions deemed reasonable in the business judgment of the executive board.”.5 (k) Section 310 (D.C. Law 1-89; D.C. Code § 42-1903.10) is amended as follows:6 (1) Subsection (b) is amended by striking the phrase “Commencing not later” and7inserting “Unless the condominium instruments expressly provide otherwise, commencing not 8later” in its place.9 (2) A new subsection (d-1) is added to read as follows:10 “(d-1) To the extent reasonably available, each unit owner shall purchase 11condominium owner’s insurance coverage with dwelling (whether residential or commercial) 12property coverage at a minimum of $10,000.00 and condominium owner personal liability 13insurance coverage at a minimum of $300,000.00 or such other amount as may be determined by14the executive board.”15 (3) Subsection (e) is amended as by striking paragraph (5).16 (4) Subsection (j) is amended by inserting the following at the end of the 17paragraph: “Unless the condominium instruments provide otherwise, if the cause of any damage 18to or destruction of any portion of the condominium originates from the common elements, the 19association’s property insurance deductible is a common expense. If the Bylaws do not indicate 20who shall be responsible for payment of any such deductible amount, if the cause of any damage 21to or destruction of any portion of the condominium originates from a unit, the owner of the unit 22where the cause of the damage or destruction originated is responsible for the association’s 23property insurance deductible not to exceed $5,000.00. If the owner is responsible for the 24association’s property insurance deductible or an uncovered loss up to $5,000.00, such amount 1 10 1shall be an assessment against the owner’s unit. Nothing herein is intended to nor shall it be 2construed to limit the rights of an Association to pursue its subrogation rights, if any, against a 3unit owner in whose unit the cause of the property or personal liability damage or destruction 4originated.”5 (l) Section 313 (D.C. Law 1-89; D.C. Code § 42-1903.13) is amended as follows:6 (1) Subsection (a) is amended as follows:7 (A) The lead in language to subsection (a) is amended to read as follows:8 “(a) Any assessment levied against a condominium unit in accordance 9with the provisions of this chapter and any lawful provision of the condominium instruments, 10along with any applicable interest, late fees, expenses and legal fees actually incurred, costs of 11collection and any other amounts payable by a unit owner under the condominium instruments 12shall, from the time such amount becomes due and payable, constitute a lien in favor of the unit 13owners’ association on the condominium unit to which the assessment or other unpaid amount 14pertains. If an assessment is payable in installments, the full amount of the assessment shall be a 15lien from the time the first installment becomes due and payable.”.16 (B) Paragraph (2) is amended by striking the phrase “to enforce the lien. 17The provisions of” and inserting the phrase “to enforce the lien or recordation of a memorandum 18of lien against the title to the unit by the unit owners’ association. The provisions of” in its place.19 (2) Subsection (c) is amended as follows:20 (A) Paragraph (1) is amended by striking the phrase “past due, unless the 21condominium instruments provide otherwise. Any language” and inserting “past due. By 22accepting a deed to a condominium unit, the owner thereof shall be irrevocably deemed to have 23appointed the chief executive officer of the unit owners’ association as trustee for the purpose of 24exercising the power of sale provided for herein. Any language” in its place.1 11 1 (B) Paragraph (3) is amended to read as follows: 2 “(3) The power of sale may be exercised by the chief executive officer of 3the unit owners’ association, as trustee, upon the direction of the executive board, on behalf of 4the unit owners’ association, and the chief executive officer of the unit owners’ association shall 5have the authority as trustee to deed a unit sold at a foreclosure sale by the unit owners’ 6association to the purchaser at the sale. The recitals in the deed shall be prima facie evidence of 7the truth of the statement made in the deed and conclusive evidence in favor of bona fide 8purchasers for value.”.9 (3) Paragraph (f)(1) is amended by striking the phrase “for costs and attorneys’ 10fees.” and inserting the phrase “for reasonable costs and attorneys’ fees actually incurred by the 11unit owners’ association.” in its place. 12 (m) Section 314 (D.C. Law 1-89; D.C. Code § 42-1903.14) is amended to read as 13follows:14 “Sec. 314. Books, minutes and records; inspection.15 “(a) The unit owners’ association, or, acting on behalf of the unit owners’ association, 16the declarant, the managing agent, or other person specified in the bylaws, shall keep detailed 17records of the receipts and expenditures affecting the operation and administration of the 18condominium and specifying the association’s expenses related to the common elements and any19other expenses incurred by or on behalf of the association.20 “(b) Subject to the provisions of subsection (c) hereof, all books and records kept by or 21on behalf of the unit owners’ association, including, but not limited to, the unit owners’ 22association membership list, mailing addresses of unit owners, and financial records, including 23aggregate salary information of the unit owners’ association employees, shall be available in the 24District of Columbia, or within 50 miles from the District of Columbia, for examination and 1 12 1copying by a unit owner in good standing or such unit owner’s authorized agent so long as the 2request is for a proper purpose related to the unit owner’s membership in the unit owners’ 3association, and not for pecuniary gain, commercial solicitation or other purpose unrelated to the 4unit owner’s membership in the unit owners association. This right of examination may be 5exercised only during reasonable hours on business days. The books shall be subject to an 6independent audit upon the request of unit owners of units to which 33 1/3 % of the votes in the 7unit owners’ association appertain or a lower percentage as may be specified.8 “(c) Books and records kept by or on behalf of a unit owners’ association may be 9withheld from examination or copying by unit owners and their agents to the extent that they are 10drafts not yet incorporated into the unit owners’ association’s books and records or if such books 11and records concern:12 “(1) Personnel matters relating to specific, identified persons or a person’s 13medical records;14 “(2) Contracts, leases, and other commercial transactions to purchase or provide 15goods or services, currently in or under negotiation;16 “(3) Pending or probable litigation. Probable litigation means those instances 17where there has been a specific threat of litigation from a party or the legal counsel of a party;18 “(4) Matters involving state or local administrative or other formal proceedings 19before a government tribunal for enforcement of the condominium instruments or rules and 20regulations promulgated by the executive board;21 “(5) Communications with legal counsel;22 “(6) Disclosure of information in violation of law;23 “(7) Minutes or other records of an executive session of the executive board;1 13 1 “(8) Documentation, correspondence or management or reports compiled for or 2on behalf of the unit owners’ association or the executive board by its agents or committees for 3consideration by the executive board in executive session; or4 “(9) Individual unit owner or member files, other than those of the requesting 5unit owner, including any individual unit owner’s files kept by or on behalf of the unit owners’ 6association.7 “(d) The unit owners’ association may impose and collect a fee, reflecting the actual 8costs of materials and labor, for providing such access, prior to providing copies of any books 9and records.”.10 (n) Section 316 (D.C. Law 1-89; D.C. Code § 42-1903.16) is amended as follows:11 (1) Paragraph (e)(1) is amended by striking the phrase “sales price of comparable12units in the condominium. The bond, letter of credit” and inserting the phrase “sales price of 13comparable units in the condominium. An affidavit signed by the declarant affirming the amount14of the bond, letter of credit or other security satisfactory posted with the Mayor shall be recorded 15as an exhibit to the condominium declaration. The bond, letter of credit or other form of security16shall be automatically renewed for a period of not less than 2 years. The bond, letter of credit” in 17its place.18 (2) By striking paragraph (g)(1).19 (o) Section 411(a)(2) (D.C. Law 1-89; D.C. Code § 42-1904.11(a)(2)) is amended to 20read as follows:21 “(2) A statement of any capital expenditures approved by the unit owner’s association 22planned at the time of the conveyance which are not reflected in the current operating budget 23disclosed under subparagraph (4) of this paragraph;”.24 Sec. 3. Fiscal impact statement1 14 1 The Council adopts the fiscal impact statement of the Budget Director as the fiscal impact2statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved 3December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(3)).4 Sec. 4. Effective date5 This act shall take effect following approval by the Mayor (or in the event of veto by the 6Mayor, action by the Council to override the veto), a 30-day period of Congressional review as 7provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 824, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of 9Columbia Register.1 15

In the Council of the District of Columbia s1

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