Delaware General Assembly

Signed 7/2/09

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

5/28/09

M. Smith

Reps. Kovach, D. Short
Sen. Hall-Long

Rep. Ramone

AN ACT TO AMEND TITLE 25 OF THE DELAWARE CODE RELATING TO THE UNIT PROPERTY ACT.

Section 1 amends § 2201 to provide a reference to the appropriate section of the Delaware Uniform Common Interest Ownership Act, 25 Del. C. §§ 88-101, et seq., (“DUCIOA”) that serves as a roadmap for those provisions of DUCIOA that apply to existing condominiums that were formed under the Unit Property Act. Section 2 amends § 2202(18) to substitute as the definition of a “reserve study” under the Unit Property Act the current definition from DUCIOA for a reserve study, so that the two acts are consistent. Section 3 adds a new § 2202(19) that defines “fully funded” under the Unit Property Act in order to provide guidance to an association for satisfying its reserve requirements. The amendment uses the current definition from DUCIOA for a fully funded reserve so that the two acts are consistent. Section 4 adds a new § 2202(20) that defines a “nonresidential condominium”, which is a concept introduced in the amendments in Section 11 of this bill. Section 5 adds a new § 2202 (21) that defines “nonresidential purposes”, which is also used in the new definition of nonresidential condominium in Section 4 of this bill. Section 6 amends § 2211(1) to incorporate into the assessment requirements of the association for the condominium, assessments for the repair and replacement reserve that is fully funded as required by the amendments to the Unit Property Act. Section 7 amends § 2211(2) to add specific reference to the fully funded repair and replacement reserve as part of the assessments. Section 8 amends § 2219(5) to give guidance in those situations where because of the number of condominium units in a particular condominium it is impossible to make all of the percentage interests for each unit be equal and still add up to 100%. This amendment, which is taken from the corollary provision of DUCIOA, allows for minor variations due to rounding so that percentages can be equal, which is important for voting, without artificial manipulation, such as making one unit have either a higher or a lower percentage merely to add to 100%. Section 9 adds a new § 2244 that is taken from the comparable provisions of DUCIOA in order to give a formula for setting a minimum percentage of the annual budget to serve as the repair and replacement reserve. Section 10 adds a new § 2245 to the Unit Property Act to provide a formula for an existing condominium project, which will now be required to have a repair and replacement reserve, to come into compliance with the required reserve over time. The amendment provides a formula for how an association can achieve compliance over a certain number of years by requiring that certain levels of reserve be obtained that, once all budgeted annual payments toward the reserve are added over time, the amount of reserves indicated by the applicable reserve study will be achieved. If on July 1, 2009, the amount held by the condominium in its reserve is less than 25% of the level that is required for a fully funded reserve, the council of the condominium has 3 years to get to a point where, with future regular budgeted payments projected to be added to the reserve, the reserve will be sufficient for its purpose. If the amount held as of July 1, 2009 is more than 25% but less than 50% of the required amount, then the council has 2 years to achieve a fully funded reserve. If the amount held as of July 1, 2009 is 50% or more but less than 70%, then the council has 1 year to achieve a fully funded reserve. The intention is to give time to the council to get the necessary funds without overburdening the unit owners with special assessments for immediately funding to 100%. Section 11 adds a new § 2246 to the Unit Property Act to clarify that, consistent with DUCIOA, a nonresidential condominium is not required to have a repair and replacement reserve, and may elect to exempt itself from the requirement by electing to do so in its declaration or by the vote of a majority of the unit owners. Section 12 provides for an effective date of July 1, 2009, consistent with the effective date of DUCIOA.

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Takes effect upon being signed into law

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