Delaware General Assembly

Signed 10/31/08

The General Assembly has ended, the current status is the final status.

6/4/08

Amick

Sen. Sokola, Marshall
Reps. Valihura, D. Short

Sen. Peterson

AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO PROPERTY; AND PROVIDING FOR A DELAWARE UNIFORM COMMON INTEREST OWNERSHIP ACT.

The proposed bill is a revised version of the bill that was introduced in the last session and has been modified based on comments received at a workshop, public hearings and drafts circulated to the Counties and other parties. The bill establishes a DELAWARE UNIFORM COMMON INTEREST OWNERSHIP ACT (DUCIOA) which is closely patterned after the UNIFORM COMMON INTEREST OWNERSHIP ACT (UCIOA) developed by the National Conference Of Commissioners On Uniform State Laws, including revisions to UCIOA currently under consideration. The impetus behind revising the current law governing condominiums, time shares, cooperatives and planned communities derives from issues not addressed by current Delaware Law. These types of property ownership fit into a category referred to as a "common interest community." Existing law makes it relatively easy for a property owner or developer with little or no oversight to establish a common interest community, but fails to provide a framework with the flexibility for finding equitable solutions to the issues which arise when the uninitiated are thrust together in an unfamiliar social setting created by a common real estate investment. The bill incorporates, where feasible, the ongoing operations of existing common interest communities, but excludes any requirement that they change existing documents or impact fundamental rights under those documents. An existing community may elect, subject to the requirements of its existing documents, to amend those documents to comply with any requirements of this bill. However, in addition to complying with the requirements imposed by existing documents, any amendments to the existing documents must comply with the new requirements as to threshold issues such as notice and recording. And many of the procedures for better governance of communities apply to all pre-existing communities. Examples of items not addressed in the existing body of law, which are addressed in the DUCIOA, include: (i) the situation which often occurs when the developer of a planned community encounters unexpected financial conditions and seeks to change the nature of the community to the detriment of existing unit owners; (ii) the need for the developer to fully reveal all aspects of the planned community, including rights “hidden” in the documents which permit the developer, his assigns or an entity foreclosing on the property to change the community by adding or subtracting additional units or changing the character of the community; (iii) protection for the community when a developer or unit owner fails to pay their proper share of the community common expenses; (iv) a procedure by which the community may address changing circumstances which require it to acquire additional property, dispose of property or negotiate with a developer who is unable to meet its obligations; (v) a solution to the problem of how purchasers in a common interest community may protect themselves when a developer fails to meet its obligations and has incurred financial reverses unrelated to the community which take preference to the obligation to the community; (vi) the requirement that formal promises made by a developer regarding the common elements or amenities of the community rise to the same legal status as formal commitments made in conjunction with the purchase of real property; (vii) the impact of sweetheart agreements put in place by the developer which extend beyond the developer’s control of the community; and (viii) the problem when the community has not made any provision for reserves for the repair and replacement of systems or buildings. It is not intended that the DUCIOA will supplant the requirements of any County as to its planning and development function. However, it does extend to all State residents uniform protection to all participants in the planned community process. As a function of the drafting process of the earlier version of this bill by the Bar association, copies of various drafts were sent to all County attorneys and members of their legal departments dealing with land use. As indicated above, the UCIOA on which the DUCIOA is based was adopted at the 1982 Annual Meeting of the National Conference of Commissioners on Uniform State Laws. It combines, in a single comprehensive law, prior uniform laws in this area: the Uniform Condominium Act (1980), the Uniform Planned Community Act (1980), and the Model Real Estate Cooperative Act (1981). The UCIOA, one of its components or substantially similar laws exist in some 20 states. In addition, the UCIOA has influenced the laws and courts regarding common interest communities in all states. The bill does not track optional Section 5 of the UCIOA regarding registration and its concomitant bureaucracy. However, the bill does require any entity seeking to sell units in a common interest community to prepare a public offering statement which will bind the author. Early on, there was some minor concern regarding this requirement, but it was included for three reasons. First, the tenor of the times dictates more parity based on information between the buyer and seller of real property and the requirement is comparable in concept to the requirements of the Buyer Property Protection Act (6 Del. C. § 2572 et. seq. ). Second, most of the required information would be provided by any responsible realtor or developer in the normal course of business. Third, there is a significant advantage to the implementation and interpretation of the statute if it is as "uniform" as feasible based on the circumstances in Delaware.

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Takes effect upon being signed into law

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