UNIFORM COMMON INTEREST OWNERSHIP ACT DRAFTING COMMITTEE – DALLAS MEETING, FEB 3-5, 2006

RESOURCE MATERIALS

TAB PAGE

A Virginia § 55-510.Maintaining, Access to association records 2

B Virginia § 55-510.1. Meetings of the board of directors. 4

C Virginia § 55-514. Authority to levy special assessments 7

D Texas [draft] Sec. 83.170. Access To Association Records 8

E North Carolina Fines limitations [and many other subjects] Act

[2005 sessions law # 422] 9

F Maryland statutes on Electronic Notice, Electronic Voting 22

G Connecticut Sec. 33-1235 et seq. Corporate records 23

H New Jersey provision on Electronic Balloting [D Ramsey] 27

I Bob Diamond - Declaration provisions on Insurance 28

J Bob Diamond Declaration provision on Association

and New Technology 34

K Home Builder’s Notice And Cure Legislation 35

L Reporter’s Phoenix notes on Insurance issues in § 3-113 46

VIRGINIA STATUTES ON MAINTAINING AND ACCESS TO RECORDS

§ 55-510. Access to association records ****

A. The association shall keep detailed records of receipts and expenditures affecting the operation and administration of the association. All financial books and records shall be kept in accordance with generally accepted accounting practices.

B. Subject to the provisions of subsection C, all books and records kept by or on behalf of the association, including, but not limited to, the association's membership list and addresses, which shall not be used for purposes of pecuniary gain or commercial solicitation, and aggregate salary information of employees of the association, shall be available for examination and copying by a member in good standing or his authorized agent so long as the request is for a proper purpose related to his membership in the association. This right of examination shall exist without reference to the duration of membership and may be exercised (i) only during reasonable business hours or at a mutually convenient time and location and (ii) upon five days' written notice reasonably identifying the purpose for the request and the specific books and records of the association requested.

C. Books and records kept by or on behalf of an association may be withheld from inspection and copying to the extent that they concern:

1. Personnel matters relating to specific, identified persons or a person's medical records;

2. Contracts, leases, and other commercial transactions to purchase or provide goods or services, currently in or under negotiation;

3. Pending or probable litigation. Probable litigation means those instances where there has been a specific threat of litigation from a party or the legal counsel of a party;

4. Matters involving state or local administrative or other formal proceedings before a government tribunal for enforcement of the association documents or rules and regulations promulgated pursuant to § 55-513;

5. Communications with legal counsel which relates to subdivisions 1 through 4 or which is protected by the attorney-client privilege or the attorney work product doctrine;

6. Disclosure of information in violation of law;

7. Meeting minutes or other confidential records of an executive session of the board of directors held in accordance with subsection C of § 55-510.1;

8. Documentation, correspondence or management or board reports compiled for or on behalf of the association or the board by its agents or committees for consideration by the board in executive session; or

9. Individual unit owner or member files, other than those of the requesting lot owner, including any individual lot owner's or member's files kept by or on behalf of the association.

D. Prior to providing copies of any books and records to a member in good standing under this section, the association may impose and collect a charge, reflecting the reasonable costs of materials and labor, not to exceed the actual costs thereof.

VIRGINIA STATUTE ON MEETINGS OF THE BOARD OF DIRECTORS

§ 55-510.1. Meetings of the board of directors.

A. All meetings of the board of directors, including any subcommittee or other committee thereof, shall be open to all members of record. The board of directors shall not use work sessions or other informal gatherings of the board of directors to circumvent the open meeting requirements of this section. Minutes of the meetings of the board of directors shall be recorded and shall be available as provided in subsection B of § 55-510.

B. Notice of the time, date and place of each meeting of the board of directors or of any subcommittee or other committee thereof shall be published where it is reasonably calculated to be available to a majority of the lot owners.

A lot owner may make a request to be notified on a continual basis of any such meetings which request shall be made at least once a year in writing and include the lot owners' name, address, zip code, and any e-mail address as appropriate. Notice of the time, date, and place shall be sent to any lot owner requesting notice (i) by first-class mail or e-mail in the case of meetings of the board of directors or (ii) by e-mail in the case of meetings of any subcommittee or other committee of the board of directors.

Notice, reasonable under the circumstances, of special or emergency meetings shall be given contemporaneously with the notice provided members of the association's board of directors or any subcommittee or other committee thereof conducting the meeting.

Unless otherwise exempt as relating to an executive session pursuant to subsection C, at least one copy of all agenda packets and materials furnished to members of an association's board of directors or subcommittee or other committee thereof for a meeting shall be made available for inspection by the membership of the association at the same time such documents are furnished to the members of the board of directors or any subcommittee or committee thereof.

Any member may record any portion of a meeting required to be open. The board of directors or subcommittee or other committee thereof conducting the meeting may adopt rules (i) governing the placement and use of equipment necessary for recording a meeting to prevent interference with the proceedings and (ii) requiring the member recording the meeting to provide notice that the meeting is being recorded.

If a meeting is conducted by telephone conference or video conference or similar electronic means, at least two members of the board of directors shall be physically present at the meeting place included in the notice. The audio equipment shall be sufficient for any member in attendance to hear what is said by any member of the board of directors participating in the meeting who is not physically present.

Voting by secret or written ballot in an open meeting shall be a violation of this chapter except for the election of officers.

C. The board of directors or any subcommittee or other committee thereof may convene in executive session to consider personnel matters; consult with legal counsel; discuss and consider contracts, pending or probable litigation and matters involving violations of the declaration or rules and regulations adopted pursuant thereto for which a member, his family members, tenants, guests or other invitees are responsible; or discuss and consider the personal liability of members to the association, upon the affirmative vote in an open meeting to assemble in executive session. The motion shall state specifically the purpose for the executive session. Reference to the motion and the stated purpose for the executive session shall be included in the minutes. The board of directors shall restrict the consideration of matters during such portions of meetings to only those purposes specifically exempted and stated in the motion. No contract, motion or other action adopted, passed or agreed to in executive session shall become effective unless the board of directors or subcommittee or other committee thereof, following the executive session, reconvenes in open meeting and takes a vote on such contract, motion or other action which shall have its substance reasonably identified in the open meeting. The requirements of this section shall not require the disclosure of information in violation of law.

D. Subject to reasonable rules adopted by the board of directors, the board of directors shall provide a designated period of time during a meeting to allow members an opportunity to comment on any matter relating to the association. During a meeting at which the agenda is limited to specific topics or at a special meeting, the board of directors may limit the comments of members to the topics listed on the meeting agenda.

(1999, c. 1029; 2000, c. 905; 2001, c. 715; 2003, c. 404; 2004, c. 333; 2005, c. 353.)

VIRGINIA STATUTE ON SPECIAL ASSESSMENTS

§ 55-514. Authority to levy special assessments.

A. In addition to all other assessments which are authorized in the declaration, the board of directors of an association shall have the power to levy a special assessment against its members if the purpose in so doing is found by the board to be in the best interests of the association and the proceeds of the assessment are used primarily for the maintenance and upkeep of the common area and such other areas of association responsibility expressly provided for in the declaration, including capital expenditures. A majority of votes cast, in person or by proxy, at a meeting of the membership convened in accordance with the provisions of the association's bylaws within sixty days of promulgation of the notice of the assessment shall rescind or reduce the special assessment. No director or officer of the association shall be liable for failure to perform his fiduciary duty if a special assessment for the funds necessary for the director or officer to perform his fiduciary duty is rescinded by the owners pursuant to this section, and the association shall indemnify such director or officer against any damage resulting from any claimed breach of fiduciary duty arising therefrom.

B. The failure of a member to pay the special assessment allowed by subsection A shall entitle the association to the lien provided by § 55-516 as well as any other rights afforded a creditor under law.

C. The failure of a member to pay the special assessment allowed by subsection A will provide the association with the right to deny the member access to any or all of the common areas. Notwithstanding the immediately preceding sentence, direct access to the member's lot over any road within the development which is a common area shall not be denied the member.

D

Sec. 83.170. ACCESS TO ASSOCIATION RECORDS

[taken from Texas PUD act, 83.170]

(a) An owner, on written request stating the purpose of the inspection, is entitled to examine and copy, in person or by agent, accountant, or attorney, by appointment, at the association's registered office or its principal office in this state, at a reasonable time, and for a proper purpose, the books and records of the association relevant to the stated purpose.

(b) The board may adopt a policy by which the association may limit the availability of, or decline to make available, the following records for inspection and photocopying by an owner or the owner's agent:

(1) any association file or record that is older than 4 years;

(2) personnel records of an association employee;

(3) records relating to the owner or resident of another lot;

(4) minutes of an executive session of the board;

(5) records pertaining to threatened or pending litigation; and

(6) records from the association's attorney marked "confidential," "privileged," or bearing some similar notation.

(c) An attorney's files and records relating to the association are not records of the association and are not subject to inspection by owners or production in a legal proceeding for examination by owners.

(d) The association may require an owner to pay a reasonable fee for copies of documents or records requested by the owner.

E

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2005

SESSION LAW 2005-422

HOUSE BILL 1541

AN ACT TO AMEND THE LAWS GOVERNING HOMEOWNER ASSOCIATIONS TO PROVIDE GREATER PROTECTIONS FOR HOMEOWNERS.

The General Assembly of North Carolina enacts:

SECTION 1. G.S. 47F‑3‑102(11) reads as rewritten:

"§ 47F‑3‑102. Powers of owners' association.

Unless the articles of incorporation or the declaration expressly provides to the contrary, the association may:

…

(11) Impose reasonable charges for late payment of ~~assessments~~ assessments, not to exceed the greater of twenty dollars ($20.00) per month or ten percent (10%) of any assessment installment unpaid and, after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer;

…."

SECTION 2. G.S. 47F‑3‑103(b) reads as rewritten:

"(b) The executive board may not act unilaterally on behalf of the association to amend the declaration (G.S. 47F‑2‑117), to terminate the planned community (G.S. 47F‑2‑118), or to elect members of the executive board or determine the qualifications, powers and duties, or terms of office of executive board members ~~(G.S. 47F‑3‑103(f)),~~(G.S. 47F‑3‑103(e)), but the executive board may unilaterally fill vacancies in its membership for the unexpired portion of any term. Notwithstanding any provision of the declaration or bylaws to the contrary, the lot owners, by a majority vote of all persons present and entitled to vote at any meeting of the lot owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant."

SECTION 3. G.S. 47F‑3‑103 is amended by adding a new subsection to read:

"(f) The association shall publish the names and addresses of all officers and board members of the association within 30 days of their election."

SECTION 4. G.S. 47F‑3‑107.1 reads as rewritten:

"§ 47F‑3‑107.1. Procedures for fines and suspension of planned community privileges or services.

Unless a specific procedure for the imposition of fines or suspension of planned community privileges or services is provided for in the declaration, a hearing shall be held before the executive board or an adjudicatory panel appointed by the executive board to determine if any lot owner should be fined or if planned community privileges or services should be suspended pursuant to the powers granted to the association in G.S. 47F‑3‑102(11) and (12). Any adjudicatory panel appointed by the executive board shall be composed of members of the association who are not officers of the association or members of the executive board. ~~If the executive board fails to appoint an adjudicatory panel to hear such matters, hearings under this section shall be held before the executive board.~~ The lot owner charged shall be given notice of the charge, opportunity to be heard and to present evidence, and notice of the decision. If it is decided that a fine should be imposed, a fine not to exceed one hundred ~~fifty~~ dollars ~~($150.00)~~ ($100.00) may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs. Such fines shall be shall be assessments secured by liens under G.S. 47F‑3‑116. If it is decided that a suspension of planned community privileges or services should be imposed, the suspension may be continued without further hearing until the violation or delinquency is cured. The lot owner may appeal the decision of an adjudicatory panel to the full executive board by delivering written notice of appeal to the executive board within 15 days after the date of the decision. The executive board may affirm, vacate, or modify the prior decision of the adjudicatory body."

SECTION 5. G.S. 47F‑3‑108 reads as rewritten:

"§ 47F‑3‑108. Meetings.

(a) A meeting of the association shall be held at least once each year. Special meetings of the association may be called by the president, a majority of the executive board, or by lot owners having ten percent (10%), or any lower percentage specified in the bylaws, of the votes in the association. Not less than 10 nor more than 60 days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand‑delivered or sent prepaid by United States mail to the mailing address of each lot or to any other mailing address designated in writing by the lot owner, or sent by electronic means, including by electronic mail over the Internet, to an electronic mailing address designated in writing by the lot owner. The notice of any meeting shall state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer.

(b) Meetings of the executive board shall be held as provided in the bylaws. At regular intervals, the executive board meeting shall provide lot owners an opportunity to attend a portion of an executive board meeting and to speak to the executive board about their issues or concerns. The executive board may place reasonable restrictions on the number of persons who speak on each side of an issue and may place reasonable time restrictions on persons who speak.

(c) Except as otherwise provided in the bylaws, meetings of the association and the executive board shall be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised."

SECTION 6. G.S. 47F‑3‑116 reads as rewritten:

"§ 47F‑3‑116. Lien for assessments.

(a) Any assessment levied against a lot remaining unpaid for a period of 30 days or longer shall constitute a lien on that lot when a claim of lien is filed of record in the office of the clerk of superior court of the county in which the lot is located in the manner provided herein. Unless the declaration otherwise provides, fees, charges, late charges, and other charges imposed pursuant to G.S. 47F‑3‑102, 47F‑3‑107, 47F‑3‑107.1, and 47F‑3‑115 are enforceable as assessments under this section. ~~The~~ Except as provided in subsections (a1) and (a2) of this section, the association may foreclose the claim of lien in like manner as a mortgage on real estate under power of sale under Article 2A of Chapter 45 of the General Statutes. Unless the declaration otherwise provides, fees, charges, late charges, fines, interest, and other charges imposed pursuant to G.S. 47F‑3‑102, 47F‑3‑107, 47F‑3‑107.1, and 47F‑3‑115 are enforceable as assessments under this section.

(a1) An association may not foreclose an association assessment lien under Article 2A of Chapter 45 of the General Statutes if the debt securing the lien consists solely of fines imposed by the association, interest on unpaid fines, or attorneys' fees incurred by the association solely associated with fines imposed by the association. The association, however, may enforce the lien by judicial foreclosure as provided in Article 29A of Chapter 1 of the General Statutes.

(a2) An association shall not levy, charge, or attempt to collect a service, collection, consulting, or administration fee from any lot owner unless the fee is expressly allowed in the declaration. Any lien securing a debt consisting solely of these fees may only be enforced by judicial foreclosure as provided in Article 29A of Chapter 1 of the General Statutes.

(b) The lien under this section is prior to all liens and encumbrances on a lot except (i) liens and encumbrances (specifically including, but not limited to, a mortgage or deed of trust on the lot) recorded before the docketing of the claim of lien in the office of the clerk of superior court, and (ii) liens for real estate taxes and other governmental assessments and charges against the lot. This subsection does not affect the priority of mechanics' or materialmen's liens.

(c) A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three years after the docketing of the claim of lien in the office of the clerk of superior court.

(d) This section does not prohibit other actions to recover the sums for which subsection (a) of this section creates a lien or prohibit an association taking a deed in lieu of foreclosure.

(e) A judgment, decree, or order in any action brought under this section shall include costs and reasonable attorneys' fees for the prevailing party. If the lot owner does not contest the collection of debt and enforcement of a lien after the expiration of the 15‑day period following notice as required in subsection (e1) of this section, then reasonable attorneys' fees shall not exceed one thousand two hundred dollars ($1,200), not including costs or expenses incurred. The collection of debt and enforcement of a lien remain uncontested as long as the lot owner does not dispute, contest, or raise any objection, defense, offset, or counterclaim as to the amount or validity of the debt and lien asserted or the association's right to collect the debt and enforce the lien as provided in this section. The attorneys' fee limitation in this subsection shall not apply to judicial foreclosures or to proceedings authorized under subsection (d) of this section or G.S. 47F‑3‑120.

(e1) A lot owner may not be required to pay attorneys' fees and court costs until the lot owner is notified in writing of the association's intent to seek payment of attorneys' fees and court costs. The notice must be sent by first‑class mail to the property address and, if different, to the mailing address for the lot owner in the association's records. The notice shall set out the outstanding balance due as of the date of the notice and state that the lot owner has 15 days from the mailing of the notice by first‑class mail to pay the outstanding balance without the attorneys' fees and court costs. If the lot owner pays the outstanding balance within this period, then the lot owner shall have no obligation to pay attorneys' fees and court costs. The notice shall also inform the lot owner of the opportunity to contact a representative of the association to discuss a payment schedule for the outstanding balance as provided in subsection (e2) of this section and shall provide the name and telephone number of the representative.

(e2) The association, acting through its executive board and in the board's sole discretion, may agree to allow payment of an outstanding balance in installments. Neither the association nor the lot owner is obligated to offer or accept any proposed installment schedule. Reasonable administrative fees and costs for accepting and processing installments may be added to the outstanding balance and included in an installment payment schedule. Reasonable attorneys' fees may be added to the outstanding balance and included in an installment schedule only after the lot owner has been given notice as required in subsection (e1) of this section.

(f) Where the holder of a first mortgage or first deed of trust of record, or other purchaser of a lot obtains title to the lot as a result of foreclosure of a first mortgage or first deed of trust, such purchaser and its heirs, successors, and assigns, shall not be liable for the assessments against such lot which became due prior to the acquisition of title to such lot by such purchaser. Such unpaid assessments shall be deemed to be common expenses collectible from all the lot owners including such purchaser, its heirs, successors, and assigns.

(g) A claim of lien shall set forth the name and address of the association, the name of the record owner of the lot at the time the claim of lien is filed, a description of the lot, and the amount of the lien claimed."

SECTION 7. G.S. 47F‑3‑118 reads as rewritten:

"§ 47F‑3‑118. Association records.

(a) The association shall keep financial records sufficiently detailed to enable the association to comply with this Chapter. All financial and other ~~records~~ records, including records of meetings of the association and executive board, shall be made reasonably available for examination by any lot owner and the lot owner's authorized ~~agents.~~agents as required in the bylaws and Chapter 55A of the General Statutes. If the bylaws do not specify particular records to be maintained, the association shall keep accurate records of all cash receipts and expenditures and all assets and liabilities. In addition to any specific information that is required by the bylaws to be assembled and reported to the lot owners at specified times, the association shall make an annual income and expense statement and balance sheet available to all lot owners at no charge and within 75 days after the close of the fiscal year to which the information relates. Notwithstanding the bylaws, a more extensive compilation, review, or audit of the association's books and records for the current or immediately preceding fiscal year may be required by a vote of the majority of the executive board or by the affirmative vote of a majority of the lot owners present and voting in person or by proxy at any annual meeting or any special meeting duly called for that purpose.

(b) The association, upon written request, shall furnish to a lot owner or the lot owner's authorized agents a statement setting forth the amount of unpaid assessments and other charges against a lot. The statement shall be furnished within 10 business days after receipt of the request and is binding on the association, the executive board, and every lot owner.

(c) In addition to the limitations of Article 8 of Chapter 55A of the General Statutes, no financial payments, including payments made in the form of goods and services, may be made to any officer or member of the association's executive board or to a business, business associate, or relative of an officer or member of the executive board, except as expressly provided for in the bylaws or in payments for services or expenses paid on behalf of the association which are approved in advance by the executive board."

SECTION 8. Article 3 of Chapter 47F of the General Statutes is amended by adding the following new section to read:

"§ 47F‑3‑121. American and State flags and political sign displays.

Notwithstanding any provision in any declaration of covenants, no restriction on the use of land shall be construed to:

(1) Regulate or prohibit the display of the flag of the United States or North Carolina, of a size no greater than four feet by six feet, which is displayed in accordance with or in a manner consistent with the patriotic customs set forth in 4 U.S.C. §§ 5‑10, as amended, governing the display and use of the flag of the United States unless:

a. For restrictions registered prior to October 1, 2005, the restriction specifically uses the following terms:

1. Flag of the United States of America;

2. American flag;

3. United States flag; or

4. North Carolina flag.

b. For restrictions registered on or after October 1, 2005, the restriction shall be written on the first page of the instrument or conveyance in print that is in boldface type, capital letters, and no smaller than the largest print used elsewhere in the instrument or conveyance. The restriction shall be construed to regulate or prohibit the display of the United States or North Carolina flag only if the restriction specifically states: 'THIS DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF THE FLAG OF THE UNITED STATES OF AMERICA OR STATE OF NORTH CAROLINA'.

This subdivision shall apply to owners of property who display the flag of the United States or North Carolina on property owned exclusively by them and does not apply to common areas, easements, rights‑of‑way, or other areas owned by others.

(2) Regulate or prohibit the indoor or outdoor display of a political sign by an association member on property owned exclusively by the member, unless:

a. For restrictions registered prior to October 1, 2005, the restriction specifically uses the term 'political signs'.

b. For restrictions registered on or after October 1, 2005, the restriction shall be written on the first page of the instrument or conveyance in print that is in boldface type, capital letters, and no smaller than the largest print used elsewhere in the instrument or conveyance. The restriction shall be construed to regulate or prohibit the display of political signs only if the restriction specifically states: 'THIS DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF THE POLITICAL SIGNS'.

Even when display of a political sign is permitted under this subdivision, an association (i) may prohibit the display of political signs earlier than 45 days before the day of the election and later than seven days after an election day, and (ii) may regulate the size and number of political signs that may be placed on a member's property if the association's regulation is no more restrictive than any applicable city, town, or county ordinance that regulates the size and number of political signs on residential property. If the local government in which the property is located does not regulate the size and number of political signs on residential property, the association shall permit at least one political sign with the maximum dimensions of 24 inches by 24 inches on a member's property. For the purposes of this subdivision, 'political sign' means a sign that attempts to influence the outcome of an election, including supporting or opposing an issue on the election ballot. This subdivision shall apply to owners of property who display political signs on property owned exclusively by them and does not apply to common areas, easements, rights‑of‑way, or other areas owned by others."

SECTION 9. G.S. 47F‑1‑102 reads as rewritten:

"§ 47F‑1‑102. Applicability.

(a) This Chapter applies to all planned communities created within this State on or after January 1, 1999, except as otherwise provided in this section.

(b) This Chapter does not apply to a planned community created within this State on or after January 1, 1999:

(1) Which contains no more than 20 lots (including all lots which may be added or created by the exercise of development rights) unless the declaration provides or is amended to provide that this Chapter does apply to that planned community; or

(2) In which all lots are restricted exclusively to nonresidential purposes, unless the declaration provides or is amended to provide that this Chapter does apply to that planned community.

(c) Notwithstanding the provisions of subsection (a) of this section, G.S. 47F‑3‑102(1) through (6) and (11) through (17) (Powers of owners' association), G.S. 47F‑3‑103(f) (Executive board members and officers), G.S. 47F‑3‑107(a), (b), and (c) (Upkeep of planned community; responsibility and assessments for damages), G.S. 47F‑3‑107.1 (Procedures for fines and suspension of planned community privileges or services), G.S. 47F‑3‑108 (Meetings), G.S. 47F‑3‑115 (Assessments for common expenses), ~~and~~ G.S. 47F‑3‑116 (Lien for assessments), G.S. 47F‑3‑118 (Association records), and G.S. 47C‑3‑121 (American and State flags and political sign displays) apply to all planned communities created in this State before January 1, 1999, unless the articles of incorporation or the declaration expressly provides to the contrary. These sections apply only with respect to events and circumstances occurring on or after January 1, 1999, and do not invalidate existing provisions of the declaration, bylaws, or plats and plans of those planned communities. G.S. 47F‑1‑103 (Definitions) also applies to all planned communities created in this State before January 1, 1999, to the extent necessary in construing any of the preceding sections.

(d) Notwithstanding the provisions of subsections (a) and (c) of this section, any planned community created prior to January 1, 1999, may elect to make the provisions of this Chapter applicable to it by amending its declaration to provide that this Chapter shall apply to that planned community. The amendment may be made by affirmative vote or written agreement signed by lot owners of lots to which at least sixty‑seven percent (67%) of the votes in the association are allocated or any smaller majority the declaration specifies. To the extent the procedures and requirements for amendment in the declaration conflict with the provisions of this subsection, this subsection shall control with respect to any amendment to provide that this Chapter applies to that planned community.

(e) This Chapter does not apply to planned communities or lots located outside this State."

SECTION 10. G.S. 47C‑3‑102(a)(11) reads as rewritten:

"§ 47C‑3‑102. Powers of unit owners' association.

(a) Unless the declaration expressly provides to the contrary, the association, even if unincorporated, may:

…

(11) Impose charges for late payment of ~~assessments~~ assessments, not to exceed the greater of twenty dollars ($20.00) per month or ten percent (10%) of any assessment installment unpaid and, after notice and an opportunity to be heard, suspend privileges or services provided by the association (except rights of access to lots) during any period that assessments or other amounts due and owing to the association remain unpaid for a period of 30 days or longer, and levy reasonable fines not to exceed one hundred ~~fifty~~dollars ~~($150.00)~~($100.00) (G.S. 47C‑3‑107.1) for violations of the declaration, bylaws, and rules and regulations of the association;".

SECTION 11. G.S. 47C‑3‑102(a)(14) reads as rewritten:

"(14) Assign its right to future income, including the right to receive common expense ~~assessments, but only to the extent the declaration expressly so provides;~~assessments."

SECTION 12. G.S. 47C‑3‑103(b) reads as rewritten:

"(b) The executive board may not act on behalf of the association to amend the declaration (G.S. 47C‑2‑117), to terminate the condominium (G.S. 47C‑2‑118), or to elect members of the executive board or determine the qualifications, powers and duties, or terms of office of executive board members ~~(G.S. 47C‑3‑103(f)),~~(G.S. 47C‑3‑103(e) and (f)), but the executive board may fill vacancies in its membership for the unexpired portion of any term. Notwithstanding any provision of the declaration or bylaws to the contrary, the unit owners, by at least sixty‑seven percent (67%) vote of all persons present and entitled to vote at any meeting of the unit owners at which a quorum is present, may remove any member of the executive board with or without cause, other than members appointed by the declarant."

SECTION 13. G.S. 47C‑3‑103 is amended by adding a new subsection to read:

"(g) The association shall publish the names and addresses of all officers and board members of the association within 30 days of the election."

SECTION 14. G.S. 47C‑3‑107.1 reads as rewritten:

"§ 47C‑3‑107.1. ~~Charges for late payments, fines.~~Procedures for fines and suspension of condominium privileges or services.

The bylaws of the association may provide for a hearing before an adjudicatory panel to determine if a unit owner should be fined not to exceed one hundred fifty dollars ($150.00) for a violation of the declaration, bylaws or rules and regulations of the association. Such panel shall accord to the party charged with the violation notice of the charge, opportunity to be heard and to present evidence, and notice of the decision. Such a fine shall be an assessment secured by lien under G.S. 47C‑3‑116. Unless a specific procedure for the imposition of fines or suspension of condominium privileges or services is provided for in the declaration, a hearing shall be held before the executive board or an adjudicatory panel appointed by the executive board to determine if any unit owner should be fined or if condominium privileges or services should be suspended pursuant to the powers granted to the association in G.S. 47C‑3‑102(11). Any adjudicatory panel appointed by the executive board shall be composed of members of the association who are not officers of the association or members of the executive board. The unit owner charged shall be given notice of the charge, opportunity to be heard and to present evidence, and notice of the decision. If it is decided that a fine should be imposed, a fine not to exceed one hundred dollars ($100.00) may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs. Such fines shall be assessments secured by liens under G.S. 47C‑3‑116. If it is decided that a suspension of condominium privileges or services should be imposed, the suspension may be continued without further hearing until the violation or delinquency is cured. A unit owner may appeal a decision of an adjudicatory panel to the full executive board by delivering written notice of appeal to the executive board within 15 days after the date of the decision. The executive board may affirm, vacate, or modify the prior decision of the adjudicatory body."

SECTION 15. G.S. 47C‑3‑108 reads as rewritten:

"§ 47C‑3‑108. Meetings.

(a) A meeting of the association shall be held at least once each year. Special meetings of the association may be called by the president, a majority of the executive board, or by unit owners having twenty percent (20%) or any lower percentage specified in the bylaws of the votes in the association. Not less than 10 nor more than 50 days in advance of any meeting, the secretary or other officer specified in the bylaws shall cause notice to be hand‑delivered or sent prepaid by United States mail to the mailing address of each unit or to any other mailing address designated in writing by the unit owner, or sent by electronic means, including by electronic mail over the Internet, to an electronic mailing address designated in writing by the unit owner. The notice of any meeting must state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove a director or officer.

(b) Meetings of the executive board shall be held as provided in the bylaws. At regular intervals, the executive board meeting shall provide unit owners an opportunity to attend a portion of an executive board meeting and to speak to the executive board about their issues and concerns. The executive board may place reasonable restrictions on the number of persons who speak on each side of an issue and may place reasonable time restrictions on persons who speak.

(c) Except as otherwise provided for in the bylaws, meetings of the association and executive board shall be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised."

SECTION 16. G.S. 47C‑3‑116 reads as rewritten:

"§ 47C‑3‑116. Lien for assessments.

(a) Any assessment levied against a unit remaining unpaid for a period of 30 days or longer shall constitute a lien on that unit when a claim of lien is filed of record in the office of the clerk of superior court of the county in which the unit is located in the manner provided ~~therefor by Article 8 of Chapter 44 of the General Statutes.~~herein. Unless the declaration otherwise provides, fees, charges, late charges and other charges imposed pursuant to G.S. 47C‑3‑102, 47C‑3‑107, 47C‑3‑107.1, and 47C‑3‑115 are enforceable as assessments under this section. Except as provided in subsections (a1) and (a2) of this section, ~~The~~ the association's lien may be foreclosed in like manner as a mortgage on real estate under power of sale under Article 2A of Chapter 45 of the General Statutes. Unless the declaration otherwise provides, fees, charges, late charges, fines, and interest charged pursuant to G.S. 47C‑3‑102(10), (11), and (12), G.S. 47C‑3‑107(d) and 47C‑3‑107.1, are enforceable as assessments under this section.

(a2) An association shall not levy, charge, or attempt to collect a service, collection, consulting, or administration fee from any unit owner unless the fee is expressly allowed in the declaration. Any lien secured by debt consisting solely of these fees may only be enforced by judicial foreclosure as provided in Article 29A of Chapter 1 of the General Statutes.

(b) The lien under this section is prior to all other liens and encumbrances on a unit except (i) liens and encumbrances (specifically including, but not limited to, a mortgage or deed of trust on the unit) recorded before the docketing of the lien in the office of the clerk of superior court, and (ii) liens for real estate taxes and other governmental assessments or charges against the unit. This subsection does not affect the priority of mechanics' or materialmen's liens.

(c) A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within three years after the docketing thereof in the office of the clerk of superior court.

(d) This section does not prohibit actions to recover sums for which subsection (a) creates a lien or prohibit an association taking a deed in lieu of foreclosure.

(e) A judgment, decree, or order in any action brought under this section ~~must~~ shall include costs and reasonable attorneys' fees for the prevailing party. If the unit owner does not contest the collection of debt and enforcement of a lien after the expiration of the 15‑day period following notice as required in subsection (e1) of this section, then reasonable attorneys' fees shall not exceed one thousand two hundred dollars ($1,200), not including costs or expenses incurred. The collection of debt and enforcement of a lien remain uncontested as long as the unit owner does not dispute, contest, or raise any objection, defense, offset, or counterclaim as to the amount or validity of the debt and lien asserted or the association's right to collect the debt and enforce the lien as provided in this section. The attorneys' fee limitation in this subsection shall not apply to judicial foreclosures or proceedings authorized under subsection (d) of this section or G.S. 47F‑4‑117.

(e1) A unit owner may not be required to pay attorneys' fees and court costs until the unit owner is notified in writing of the association's intent to seek payment of attorneys' fees and court costs. The notice must be sent by first‑class mail to the property address and, if different, to the mailing address for the unit owner in the association's records. The notice shall set out the outstanding balance due as of the date of the notice and state that the unit owner has 15 days from the mailing of the notice by first‑class mail to pay the outstanding balance without the attorneys' fees and court costs. If the unit owner pays the outstanding balance within this period, then the unit owner shall have no obligation to pay attorneys' fees and court costs. The notice shall also inform the unit owner of the opportunity to contact a representative of the association to discuss a payment schedule for the outstanding balance as provided in subsection (e2) of this section and shall provide the name and telephone number of the representative.

(e2) The association, acting through its executive board and in the board's sole discretion, may agree to allow payment of an outstanding balance in installments. Neither the association nor the unit owner is obligated to offer or accept any proposed installment schedule. Reasonable administrative fees and costs for accepting and processing installments may be added to the outstanding balance and included in an installment payment schedule. Reasonable attorneys' fees may be added to the outstanding balance and included in an installment schedule only after the unit owner has been given notice as required in subsection (e1) of this section.

(f) Where the holder of a first mortgage or first deed of trust of record, or other purchaser of a unit, obtains title to the unit as a result of foreclosure of a first mortgage or first deed of trust, such purchaser, and its heirs, successors and assigns, shall not be liable for the assessments against such unit which became due prior to acquisition of title to such unit by such purchaser. Such unpaid assessments shall be deemed to be common expenses collectible from all the unit owners including such purchaser, and its heirs, successors and assigns.

SECTION 17. G.S. 47C‑3‑118 reads as rewritten:

"§ 47C‑3‑118. Association records.

(a) The association shall keep financial records sufficiently detailed to enable the association to comply with this chapter. All financial and other ~~records~~ records, including records of meetings of the association and executive board, shall be made reasonably available for examination by any unit owner and the unit owner's ~~his~~ authorized ~~agents.~~agents as required by the bylaws and by Chapter 55A of the General Statutes if the association is a nonprofit corporation. If the bylaws do not specify particular records to be maintained, the association shall keep accurate records of all cash receipts and expenditures and all assets and liabilities. In addition to any specific information that is required by the bylaws to be assembled and reported to the unit owners at specified times, the association shall make an annual income and expense statement and balance sheet available to all unit owners at no charge and within 75 days after the close of the fiscal year to which the information relates. Notwithstanding the bylaws, a more extensive compilation, review, or audit of the association's books and records for the current or immediately preceding fiscal year may be required by a vote of the majority of the executive board or by the affirmative vote of a majority of the unit owners present and voting in person or by proxy at any annual meeting or any special meeting duly called for that purpose.

(b) The association, upon written request, shall furnish a unit owner or the unit owner's authorized agents a statement setting forth the amount of unpaid assessments and other charges against a unit. The statement shall be furnished within 10 business days after receipt of the request and is binding on the association, the executive board, and every unit owner.

SECTION 18. Article 3 of Chapter 47C of the General Statutes is amended by adding the following new section to read:

"§ 47C‑3‑121. American and State flags and political sign displays.

Notwithstanding any provision in any declaration of covenants, no restriction on the use of land shall be construed to:

a. For restrictions registered prior to October 1, 2005, the restriction specifically uses the following terms:

1. Flag of the United States of America;

2. American flag;

3. United States flag; or

4. North Carolina flag.

(2) Regulate or prohibit the indoor or outdoor display of a political sign by an association member on that member's property owned exclusively by the member, unless:

a. For restrictions registered prior to October 1, 2005, the restriction specifically uses the term 'political signs'.

b. For restrictions registered on or after October 1, 2005, the restriction shall be written on the first page of the instrument or conveyance in print that is in boldface type, capital letters, and no smaller than the largest print used elsewhere in the instrument or conveyance. The restriction shall be construed to regulate or prohibit the display of political signs only if the restriction specifically states: 'THIS DOCUMENT REGULATES OR PROHIBITS THE DISPLAY OF THE POLITICAL SIGNS'.

SECTION 19. G.S. 47C‑1‑102 reads as rewritten:

"§ 47C‑1‑102. Applicability.

(a) This Chapter applies to all condominiums created within this State after October 1, 1986. G.S. 47C‑1‑105 (Separate Titles and Taxation), 47C‑1‑106 (Applicability of Local Ordinances, Regulations, and Building Codes), 47C‑1‑107 (Eminent Domain), 47C‑2‑103 (Construction and Validity of Declaration and Bylaws), 47C‑2‑104 (Description of Units), 47C‑2‑121 (Merger or Consolidation of Condominiums), 47C‑3‑102(a)(1) through (6) and (11) through (16)(Powers of Unit Owners' Association), 47C‑3‑103 (Executive board members and officers), 47C‑3‑107.1 ~~(Charges for Late Payment, Fines~~(Procedures for fines and suspension of condominium privileges or services), 47C‑3‑108 (Meetings), 47C‑3‑111 (Tort and Contract Liability), 47C‑3‑112 (Conveyance or Encumbrance of Common Elements), 47C‑3‑116 (Lien for Assessments), 47C‑3‑118 (Association Records), 47C‑3‑121 (American and State flags and political sign displays), and 47C‑4‑117 (Effect of Violation on Rights of Action; Attorney's Fees), and G.S. 47C‑1‑103 (Definitions), to the extent necessary in construing any of those sections, apply to all condominiums created in this State on or before October 1, 1986, unless the declaration expressly provides to the contrary. Those sections apply only with respect to events and circumstances occurring after October 1, 1986, and do not invalidate existing provisions of the declarations, bylaws, or plats or plans of those condominiums.

(b) The provisions of Chapter 47A, the Unit Ownership Act, do not apply to condominiums created after October 1, 1986 and do not invalidate any amendment to the declaration, bylaws, and plats and plans of any condominium created on or before October 1, 1986 if the amendment would be permitted by this chapter. The amendment must be adopted in conformity with the procedures and requirements specified by those instruments and by Chapter 47A, the Unit Ownership Act. If the amendment grants to any person any rights, powers, or privileges permitted by this chapter, all correlative obligations, liabilities, and restrictions in this chapter also apply to that person.

(c) This chapter does not apply to condominiums or units located outside this State, but the public offering statement provisions (G.S. 47C‑4‑102 through 47C‑4‑108) apply to all contracts for the dispositions thereof signed in this State by any party unless exempt under G.S. 47C‑4‑101(b)."

Maryland statutes on electronic notice, electronic transmission of votes and proxies

		§ 11B-113.1. Electronic transmission of notice.
		(a) In general.- Notwithstanding language contained in the governing documents of a homeowners association, the homeowners association may provide notice of a meeting or deliver information to a lot owner by electronic transmission if:
		(1) The board of directors or other governing body of the homeowners association gives the homeowners association the authority to provide notice of a meeting or deliver information by electronic transmission;
		(2) The lot owner gives the homeowners association prior written authorization to provide notice of a meeting or deliver information by electronic transmission; and
		(3) An officer or agent of the homeowners association certifies in writing that the homeowners association has provided notice of a meeting or delivered material or information as authorized by the lot owner.
		(b) Ineffective notice.- Notice or delivery by electronic transmission shall be considered ineffective if:
		(1) The homeowners association is unable to deliver two consecutive notices; and
		(2) The inability to deliver the electronic transmission becomes known to the person responsible for sending the electronic transmission.
		(c) Same - Effect.- The inadvertent failure to deliver notice by electronic transmission does not invalidate any meeting or other action.

§ 11B-113.2. Electronic transmission of votes or proxies.


		(a) In general.- Notwithstanding language contained in the governing documents of the homeowners association, the board of directors or other governing body of the homeowners association may authorize lot owners to submit a vote or proxy by electronic transmission if the electronic transmission contains information that verifies that the vote or proxy is authorized by the lot owner or the lot owner's proxy.


	(b) When anonymous voting required.- If the governing documents of the homeowners association require voting by secret ballot and the anonymity of voting by electronic transmission cannot be guaranteed, voting by electronic transmission shall be permitted if lot owners have the option of casting anonymous printed ballots.

CONNECTICUT STATUTES ON CORPORATE RECORDS AND INSPECTION

[BASED ON THE REVISED MODEL NON-STOCK CORPORATION ACT]

Sec. 33-1235. Corporate records. (a) A corporation shall keep as permanent records minutes of all meetings of its members, if any, and board of directors, a record of all actions taken by the members, if any, or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors in place of the board or directors on behalf of the corporation.

(b) A corporation shall maintain appropriate accounting records.

(c) A corporation or its agent shall maintain a record of its members, if any, in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order by class, showing the number of votes each member is entitled to cast and the members' class of membership, if any.

(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

(e) A corporation shall keep a copy of the following records at its principal office: (1) Its certificate of incorporation or restated certificate of incorporation and all amendments to it currently in effect; (2) its bylaws or restated bylaws and all amendments to them currently in effect; (3) the minutes of all members' meetings, if any, and records of all action taken by members, if any, without a meeting for the past three years; (4) the financial statements prepared for the past three years under section 33-1241; (5) a list of the names and business addresses of its current directors and officers; and (6) its most recent annual report delivered to the Secretary of the State under section 33-1243.

Sec. 33-1236. Inspection of records by members. (a) A member is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation described in subsection (e) of section 33-1235 if he gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy.

(b) A member is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if he meets the requirements of subsection (c) of this section and gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy: (1) Excerpts from minutes of any meeting of the board of directors, records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation, minutes of any meeting of the members, if any, and records of action taken by the members, if any, or board of directors without a meeting, to the extent not subject to inspection under subsection (a) of this section; (2) accounting records of the corporation; and (3) the membership list.

(c) A member may inspect and copy the records described in subsection (b) of this section only if: (1) His demand is made in good faith and for a proper purpose; (2) he describes with reasonable particularity the purpose and the records he desires to inspect; and (3) the records are directly connected with this purpose.

(d) The right of inspection granted by this section may not be abolished or limited by a corporation's certificate of incorporation or bylaws.

(e) This section does not affect: (1) The right of a member to inspect records under section 33-1070 or, if the member is in litigation with the corporation, to the same extent as any other litigant; or (2) the power of a court, independently of sections 33-1000 to 33-1290, inclusive, to compel the production of corporate records for examination.

Sec. 33-1237. Scope of inspection right. (a) A member's agent or attorney has the same inspection and copying rights as the member represented.

(b) The right to copy records under section 33-1236 includes, if reasonable, the right to receive copies by xerographic or other means, including copies through an electronic transmission if available and so requested by the member.

(c) The corporation may comply at its expense with a member's demand to inspect the membership list under subdivision (3) of subsection (b) of section 33-1236 by providing the member with a membership list that was compiled no earlier than the date of the member's demand.

(d) The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the member. The charge may not exceed the estimated cost of production, reproduction or transmission of the records.

Sec. 33-1238. Court-ordered inspection. (a) If a corporation does not allow a member who complies with subsection (a) of section 33-1236 to inspect and copy any records required by that subsection to be available for inspection, the superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the member.

(b) If a corporation does not within a reasonable time allow a member to inspect and copy any other record, the member who complies with subsections (b) and (c) of section 33-1236 may apply to the superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis.

(c) If the court orders inspection and copying of the records demanded, it shall also order the corporation to pay the member's costs, including reasonable attorney's fees, incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the member to inspect the records demanded.

(d) If the court orders inspection and copying of the records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding member.

Sec. 33-1239. Inspection of records by directors. (a) A director of a corporation is entitled to inspect and copy the books, records and documents of the corporation at any reasonable time to the extent reasonably related to the performance of the director's duties as a director, including duties as a member of a committee, but not for any other purpose or in any manner that would violate any duty to the corporation.

(b) The superior court for the judicial district where the corporation's principal office or, if none in this state, its registered office is located may order inspection and copying of the books, records and documents at the corporation's expense, upon application of a director who has been refused such inspection rights, unless the corporation establishes that the director is not entitled to such inspection rights. The court shall dispose of an application under this subsection on an expedited basis.

(c) If an order is issued, the court may include provisions protecting the corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the corporation, and may also order the corporation to reimburse the director for the director's costs, including reasonable counsel fees, incurred in connection with the application

NEW JERSEY ELECTRONIC BALLOTING LAW

f. Any vote permitted under P.L. , c. (C. ) (pending before the Legislature as this bill) may, at the election of the executive board, be made electronically provided that (1) the association is able to verify that the vote is cast by a unit owner having the right to do so, and (2) the ballot may be cast anonymously or, when that is not reasonably practicable, the identity of the unit owner and selection indicated on any ballot shall be known only to a person or persons appointed to count the ballots, which person or persons shall not be a member of the executive board and who shall subscribe to an oath not to divulge the identity of, or selection indicated by, any unit owner. If the anonymity of an electronic ballot cannot be guaranteed, electronic voting shall be permitted provided that a unit owner is given the option of casting an anonymous written ballot. A unit owner voting by electronic means shall be deemed to be present at a meeting provided that no person shall be authorized to vote with respect to any matter not appearing on the electronic ballot unless the unit owner submits a proxy pursuant to subsection b. of this section.

b. is repeated below because it is referenced above:

b. Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner. A proxy vote in connection with the election of members to the executive board shall be subject to section 69 of P.L. , c. (C. ) (pending before the Legislature as this bill). Unless the declaration or bylaws provide otherwise, in connection with any other matter to be voted upon by the unit owners, a proxy may be a general proxy permitting the proxy agent to cast the vote in the proxy agent's discretion. If a proxy is permitted to be a general proxy pursuant to the terms of this subsection b., and is given to an officer of the association who is identified in the proxy by corporate title, the proxy agent shall cast the vote given by the proxy as determined by a majority vote of the executive board. If a unit is owned by more than one person, each owner of the unit may vote, unless the additional vote would violate the terms of the declaration, or register protest to the casting of votes by the other owners of the unit through a duly executed proxy. A proxy shall be void if it is not dated.

BOB DIAMOND INSURANCE PROVISIONS IN DECLARATION

ARTICLE 6

Insurance

Section 6.1. General Provisions

(a) Authority, Liability and Notice. Except as otherwise provided in Section 6.5, all insurance policies relating to the Property shall be purchased by the Board of Directors and the cost thereof shall be a common expense allocated as provided in paragraph (2) of Subsection 5.1(c). The Board of Directors, the managing agent and the Declarant shall not be liable for failure to obtain any coverages required by this Article 6 or for any loss or damage resulting from such failure: (i) if such failure is due to the unavailability of such coverages from reputable insurance companies; (ii) if such coverages are so available only at demonstrably unreasonable cost; or (iii) if the Unit Owners Association's insurance professionals advise that the coverages required by paragraph (2) of Subsection 6.2(b) are not necessary. The Board of Directors shall promptly furnish to each unit owner written notice of the procurement of, subsequent changes in, or termination of, insurance coverages obtained on behalf of the Association, in compliance with subsection 55‑79.81B, section 42-1903.10, section 11-114 of the Condominium Act.

(b) Policy Requirements.

(1) All policies of insurance shall be written by reputable companies licensed or qualified to do business in the Commonwealth of Virginia, District of Columbia, or State of Maryland. Physical damage policies shall be in form and substance and with carriers acceptable to a majority of the Mortgagees.

(2) The deductible or self-insured retention (if any) on any insurance policy purchased by the Board of Directors shall be a common expense (or a Limited Common Expense, as appropriate); provided, however, that the Association may, pursuant to Subsection 9.1(a), assess any deductible amount necessitated by the act, neglect or carelessness for which a unit owner is responsible against such unit owner.

(3) The Declarant, so long as Declarant shall own any unit, shall be protected by all such policies as a unit owner. The coverage provided to the Declarant under the insurance policies obtained in compliance with this Article 6 shall not be deemed to protect or be for the benefit of any general contractor engaged by the Declarant nor shall such coverage be deemed to protect the Declarant against liability for (or waive any rights with respect to) warranty claims.

(4) Each such policy shall provide that:

(A) The insurer waives any right to claim by way of subrogation against the Declarant, the Association, the Board of Directors, the managing agent or the unit owners, and their respective guests, invitees, tenants, agents and employees and, in the case of the unit owners, the members of their households or companies;

(B) Such policy shall not be cancelled, invalidated or suspended due to the conduct of any unit owner (including the members of such unit owner's household or company and such unit owner's guests, invitees, tenants, agents and employees) or of any member, officer or employee of the Board of Directors or the managing agent without a prior demand in writing that the Board or the managing agent cure the defect and neither shall have so cured such defect within sixty days after such demand;

(C) Such policy may not be cancelled or substantially modified (including cancellation for nonpayment of premium) without at least thirty days prior written notice to the Board of Directors, the managing agent, as to liability insurance, flood insurance (if applicable), pressure, mechanical and electrical equipment, including air conditioning equipment, coverage and director’s and officer’s liability only, and all Mortgagees;

(D) The Association is the "First Named Insured" under the policy.

Section 6.2. Property Insurance

(a) Coverage. Subject to Subsection 6.5(c), The Board of Directors shall obtain and maintain a policy of insurance against Special Causes of Loss (formerly “all-risk”), including without limitation fire damage, vandalism, malicious mischief, sprinkler leakage (if applicable), cost of demolition, debris removal, and water damage coverage, insuring the entire Property (including without limitation all of the units and the fixtures initially installed therein by the Declarant, and replacements thereof up to the value of those initially installed by the Declarant, but not including furniture, wall coverings, improvements and additions, furnishings or other personal property supplied or installed by unit owners), together with all air conditioning and heating equipment and other service machinery contained therein and covering the interests of the Unit Owners Association, the Board of Directors and all unit owners and their Mortgagees, as their interests may appear, (subject, however, to the loss payment and adjustment provisions in favor of the insurance trustee), in an amount equal to one hundred percent of the then current replacement cost of the Property (exclusive of the land, excavations, foundations and other items normally excluded from such coverage), without deduction for depreciation (such amount to be redetermined annually by the Board with the assistance of the insurance company affording such coverage). Subject to Subsection 6.5(c), The Board of Directors shall also obtain and maintain such coverage on all real and personal property owned by the Association. Prior to obtaining any policy of physical damage insurance or any renewal thereof the Board of Directors shall obtain an appraisal from an insurance company, or such other source as the Board may determine, of the then current replacement cost of the Property (exclusive of the land, excavations, foundations and other items normally excluded from such coverage), without deduction for depreciation, for the purpose of determining the amount of physical damage insurance to be secured pursuant to this section.

(b) Waivers and Endorsements. Such policy shall also provide:

(1) a waiver of any right of the insurer to repair, rebuild or replace any damage or destruction, if a decision is made pursuant to these Bylaws not to do so;

(2) the following endorsements (or equivalent): (A) “no control” (to the effect that coverage shall not be prejudiced by any act or neglect of any occupant or unit owner or their agents when such act or neglect is not within the control of the insured, or the unit owners collectively; nor by any failure of the insured, or the unit owners collectively, to comply with any warranty or condition with regard to any portion of the Condominium over which the insured, or the unit owners collectively, have no control); (B) ordinance/law coverage for (i) the “cost of demolition” of the undamaged portion of the Property; (ii) “contingent liability from operation of building laws or codes”; and (iii) “increased cost of construction”; (C) “condominium replacement cost”; (D) “inflation guard”; and (E) “agreed amount” or elimination of coinsurance” clause; and

(3) subject to Subsection 6.5(c), that any “no other insurance” clause expressly exclude individual unit owners' policies from its operation so that the physical damage policy purchased by the Board of Directors shall be deemed primary coverage and any individual unit owners' policies shall be deemed excess coverage, and in no event shall the insurance coverage obtained and maintained by the Board of Directors hereunder provide for or be brought into contribution with insurance purchased by individual unit owners or their Mortgagees, unless otherwise required by law; and

(4) such deductibles and self-insured retentions as to loss as the Board of Directors in its sole discretion deems prudent and economical.

(c) Certificates. A duplicate original of the policy of physical damage insurance, all renewals thereof, and any subpolicies or certificates and endorsements issued thereunder, together with proof of payment of premiums, shall be delivered by the insurer to any Mortgagee requesting the same, at least thirty days prior to expiration of the then current policy.

(d) Notice to Mortgagees. The Board of Directors shall promptly notify all Mortgagees of any event giving rise to a claim under such policy arising from damage to the common elements in excess of five percent of the then current replacement cost of the Property. The Board of Directors shall promptly notify the Mortgagee of a unit of any event giving rise to a claim under such policy arising from damage to such unit.

Section 6.3. Liability Insurance. Subject to Subsection 6.5(c), The Board of Directors shall obtain and maintain comprehensive general liability (including libel, slander, false arrest and invasion of privacy coverage) and property damage liability insurance in such limits as the Board may from time to time determine, insuring each director and officer, the managing agent, each unit owner and the employees of the Unit Owners Association against any liability to the public or to the unit owners (and their guests, invitees, tenants, agents and employees) arising out of, or incident to the ownership or use of the common elements. Such insurance shall be issued on a commercial general liability basis and shall contain: (1) a cross liability endorsement under which the rights of a named insured under the policy shall not be prejudiced with respect to an action against another named insured; (2) hired and non‑owned vehicle coverage; (3) host liquor liability coverage with respect to events sponsored by the Association; (4) products and completed operations coverage; and (5) a “severability of interest” endorsement which shall preclude the insurer from denying liability coverage to a unit owner because of negligent acts of the Association or of another unit owner. The Board of Directors shall also obtain advertising injury and employment practices liability insurance. The Board of Directors shall review such limits once each year, but in no event shall such insurance be less than one million dollars covering all claims for bodily injury, property damage, personal injury and advertising injury. This coverage, or a separate policy, shall also contain protection for the Association if it operates a website or conducts business using the website, email or similar means. Reasonable amounts of “umbrella” liability insurance in excess of the primary limits shall also be obtained so that the total of the primary and excess limits are in an amount not less than @four@ million dollars.

Section 6.4. Other Insurance. Subject to Subsection 6.5(c), The Board of Directors shall obtain and maintain:

(a) Fidelity. Adequate fidelity coverage to protect against dishonest acts on the part of Officers, directors, trustees and employees of the Unit Owners Association and all others who handle, or are responsible for handling, funds of the Association, including the managing agent. Such fidelity bonds shall: (i) name the Association as an obligee; (ii) be written in an amount not less than one‑half the total annual condominium assessments for the year or the amount required by the Mortgagees, Fannie Mae or the Federal Home Loan Mortgage Corporation, whichever is greatest; (iii) contain waivers of any defense based upon the exclusion of persons who serve without compensation from any definition of “employee” or similar expression; and (iv) may provide that the managing agent is an insured under the policy.

(b) Flood Insurance. If required by any governmental or quasi‑governmental agency, including without limitation Fannie Mae or the Federal Home Loan Mortgage Corporation, flood insurance in accordance with the then applicable regulations of such agency.

(c) Workers’ Compensation. Workers' compensation insurance if and to the extent necessary to meet the requirements of law (including a voluntary employees endorsement and an “all states” endorsement).

(d) Boiler and Machinery/Mechanical Breakdown Insurance. If applicable, broad form machinery and pressure vessel explosion insurance pressure, mechanical and electrical equipment including information technology equipment and air conditioning equipment coverage on a comprehensive form in an amount not less than the greater of (i) five hundred thousand dollars per accident per location or (ii) the replacement cost of all such insured equipment.

(e) Directors and Officers Liability Insurance. Directors and officers liability insurance in an amount not less than one million dollars including coverage for the Association, directors, officers, committee members and employees. The policy may also provide that the managing agent is an insured under the policy except with respect to claims that the managing agent may file against the Association or that the Association may file against the managing agent. Such coverage, to the extent available, shall include non-monetary damages, breach of contract, fair housing disputes and allegations of wrongful purchase of the insurance program in form, content or amount; and

(f) Other. Such other insurance as the Board of Directors may determine or as may be requested from time to time by a Majority Vote. Such insurance may include, without limitation: (i) business income and extra expense; (ii) employee benefits; (iii) employment practices liability; (iv) auto (owned); (v) medical payments protection; and (vi) electronic data processing (EDP) coverage.

Section 6.5. Unit Owner Insurance

(a) Insurance Restriction. No unit owner shall acquire or maintain insurance coverage so as to: (i) decrease the amount which the Board of Directors, on behalf of all unit owners, may realize under any insurance policy maintained by the Board; or (ii) cause any insurance coverage maintained by the Board to be brought into contribution with insurance coverage obtained by a unit owner. No unit owner shall obtain separate insurance policies on the Condominium except as provided in this section.

(b) Optional Coverage. Each unit owner shall have the right to obtain personal insurance for such unit owner's benefit, at such unit owner's expense, covering the unit and such unit owner's personal property and personal liability, as well as any improvements made to the unit by such unit owner (under coverage normally called “improvements and betterments coverage”); and in the case of Commercial Units, units which may be used for commercial purposes for such other risks as are normally insured.

(b) Required Coverage. (1) Each unit owner shall obtain commercial or personal insurance for such unit owner's benefit, at such unit owner's expense, covering the unit and such unit owner's personal property and personal liability, as well as any improvements made to the unit by such unit owner (under coverage normally called “improvements and betterments coverage”); and in the case of Commercial Units, or units which may be used for commercial purposes for such other risks as are normally insured. Such personal insurance shall also include coverage for "loss assessment" that may be levied by the Association against the unit owner (including loss assessment for Association insurance deductibles and retentions) and shall provide protections for the unit owner for any permitted home business pursuits. The Association shall not be responsible for any claim for loss of business, income, clients, reputation or other loss from a permitted home business use because of any damage or claim (insured or otherwise) to the common elements or arising from actions of the Association, the Board of Directors, committee members or the managing agent. Each unit owner of a Commercial Unit or a unit which may be used for commercial purpose shall obtain general liability insurance in a minimum amount of one million dollars and upon request, shall provide a new certificate of insurance to the Board of Directors two weeks prior to the expiration date of such insurance.

(2) If a unit owner fails to obtain the insurance coverage required by this subsection, the Board of Directors may purchase such insurance coverage on such unit owner's behalf and assess the unit owner for the cost thereof. The Declarant, the Association and the Board of Directors shall not be held liable for the failure of any unit owner to purchase insurance or for not purchasing such insurance on the unit owner's behalf.

[MASTER POLICY] (c) Indirect Insurance. The Board of Directors need not obtain and maintain the insurance coverage required by this Article except to the extent, if any, that @__________@ fails to obtain and maintain equivalent coverage by means of policies of insurance that comply with the requirements of this Article. @@__________@, however, has no obligation to provide such coverage, and if @__________@ does not provide such coverage, the Unit Owners Association shall pay the reasonable cost thereof not to exceed the cost of obtaining the coverage directly. If indirect insurance is obtained, the Board of Directors shall obtain from each insurer providing coverage a certification that the coverage is at least equivalent to the coverage required by this Article and, if there are multiple insurers and if appropriate, a joint settlement agreement for the adjustment of losses.

BOB DIAMOND –

DECLARATION PROVISIONS ON USE OF NEW TECHNOLOGY BY ASSOCIATION

Section 11.5. Use of New Technology. Due to the ongoing development of new technologies and corresponding changes in business practices, to the extent permitted by law now or in the future: (1) any notice required to be sent or received; (2) any signature, vote, consent or approval required to be obtained; or (3) any payment required to be made, under the condominium instruments may be accomplished using the most advanced technology available at that time if such use is a generally accepted business practice. This Section shall govern the use of technology in implementing the provisions of the condominium instruments dealing with notices, payments, signatures, votes, consents or approvals.

(a) Electronic Means. To the extent permitted by law, the Unit Owners Association and its unit owners and occupants may perform any obligation or exercise any right by use of any technological means providing sufficient security, reliability, identification and verifiability. Acceptable technological means shall include without limitation electronic communication over the internet, the community or other network, whether by direct connection, intranet, telecopier or e-mail.

(b) Signature Requirements. A digital signature meeting the requirements of applicable law shall satisfy any requirement for a signature under the condominium instruments.

(c) Electronic Funds Transfer. Payment of all sums to and from the Association and the unit owners and occupants may be made by electronic transfer of funds creating a record evidencing the transaction for the period such record would be required to be available in non-electronic form.

(d) Voting Rights. Voting and approval of any matter under the condominium instruments may be accomplished by electronic means provided that a record is created as evidence thereof and maintained as long as such record would be required to be maintained in non-electronic form.

(e) Non-technology Alternatives. If any unit owner, occupant or third party does not have the capability or desire to conduct business using electronic or other technological means, the Association shall make reasonable accommodation, at its expense, for such person to conduct business with the Association without use of such electronic or other means until such means has become generally (if not universally) accepted in similar communities in the area.

DRAFT LEGISLATION – NATIONAL ASSOCIATION OF HOME BUILDERS

[A BIT PONDEROUS, IN THE REPORTER’S EYES]

Notice & Opportunity to Cure Act

Summary:  A claimant filing a construction defect suit must provide written notice of each alleged construction defect to a contractor 90 days before a suit is filed; Contractors must provide a copy of the notice to each subcontractor, supplier, and design professional involved in constructing the dwelling; Claimants must provide contractors, subcontractors, suppliers, or design professionals reasonable access to the dwelling to determine the nature and extent of a defect(s); Contractors, subcontractors, suppliers, or design professionals must respond to the claimant within 30 days of the notice and may offer to remedy the defect, compromise by payment, or dispute the claim; Claimants may not amend their list of defects without providing additional notice and opportunity to repair to contractors;  Courts shall dismiss actions commenced against a contractor, subcontractor, supplier, or design professional by a claimant who has failed to comply with the notice and opportunity to repair requirements; Claimants unreasonable rejection of a contractor, subcontractor, supplier, or design professional’s offer to repair a defect, or otherwise compensate a homeowner, limits the damages that may be recovered by the claimant; In all construction defect suits, damages are limited to those that are proximately caused by the construction defect; Serving of notices required by the act tolls any applicable statute of limitations or repose until 60 days after the end of the period of notice and opportunity for cure provided; Insurance companies required to perform upon contractor, subcontractor, supplier, or design professional’s submission of a claimant’s construction defect notice; Contractors required to provide names of all subcontractors to initial purchasers of dwellings; Homeowners associations must get the approval of their executive boards prior to commencing civil actions against contractors

By: {State Legislator}

Referred to: {Committee with original jurisdiction over insurance issues}

An Act relating to construction defect claims in dwellings asserting property loss and damage.

Legislative declaration: The legislature finds, declares, and determines that {state} needs an alternative method to resolve legitimate construction disputes that would reduce the need for litigation while adequately protecting the rights of homeowners. The legislature declares that an effective alternative dispute resolution mechanism in certain construction defect matters should involve the claimant filing a notice of claim with the construction professional that the claimant asserts is responsible for the defect, and providing the construction professional with the opportunity to resolve the claim without litigation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF {STATE}:

Section 1 - Definitions

1. “Action” means any civil lawsuit or action or arbitration proceeding for damages or indemnity asserting a claim for injury or loss to a dwelling or personal property caused by an alleged defect arising out of or related to the design, construction, condition or sale of the dwelling or a remodel of a dwelling.

2. “Association” means (typically statutory definition – consult local law).

3. “Claimant” means a homeowner, including a subsequent purchaser, or association who asserts a claim against a construction professional concerning a defect in the design, construction, condition or sale of a dwelling or in the remodel of a dwelling.

4. “Construction defect” means a deficiency in, or a deficiency arising out of, the design, specifications, surveying, planning, supervision, or observation of construction, or construction of residential improvements that results from any of the following:

(i)      Defective material, products, or components used in the construction of residential improvements.

(ii)     Violation of the applicable codes in effect at the time of construction of residential improvements.

(iii)         Failure of the design of residential improvements to meet the applicable professional standards of care at the time of governmental approval of the design of residential improvements.

(iv)        Failure to construct residential improvements in accordance with accepted trade standards for good and workmanlike construction at the time of construction.  Compliance with the applicable codes in effect at the time of construction shall conclusively establish construction in accordance with accepted trade standards for good and workmanlike construction, with respect to all matters specified in those codes.

5.             “Contractor” means any person, firm, partnership, corporation, association or other organization that is engaged in the business of designing, developing, constructing or selling dwellings.

6. “Design Professional” means a person licensed in the state as an architect, interior designer, landscape architect, engineer, or surveyor

7. “Dwelling” means a single-family house, duplex, or multifamily unit designed for residential use in which title to each individual unit is transferred to the owner under a condominium or cooperative system and shall include common areas and improvements that are owned or maintained by an Association or by members of an Association. A Dwelling includes the systems, other components and improvements that are part of a single or multifamily unit at the time of construction.

8. “Service” means personal service or delivery by certified mail, return receipt requested, to the last known address of the addressee.

9. “Subcontractor” means a contractor who performs work on behalf of another contractor in the construction of a dwelling

10. “Supplier” means a person who provides materials, equipment, or other supplies for the construction of dwelling

Section 2 - Dwelling action: dismissal without prejudice

A. If a claimant files a dwelling action without first complying with the provisions of this Act, on application by a party to the action, the court shall dismiss the action, without prejudice, and the action may not be refilled until the claimant has complied with the requirements of this Act.

Section 3 – Act not applicable to personal injury/death claims

A. Nothing in this Act shall apply to actions arising out of claims for:

1. Personal injury;

2. Death

Section 4 - Notice and opportunity to repair

A. In every action brought against a contractor arising out of the construction of a dwelling, the claimant shall, no later than ninety days before filing an action, serve written notice of claim on the contractor. The notice of claim shall state that the claimant asserts a construction defect claim and the notice of claim shall describe the claim or claims in reasonable detail sufficient to determine the general nature of any alleged construction defects and a description of the results of the defects, if known.

B.Within fifteen days after the initial service of the notice of claim required in subsection A, the contractor shall forward a copy of the notice to each subcontractor, supplier, and design professional who the contractor reasonably believes is responsible for a defect specified in the notice and include with the notice the specific defect for which the contractor believes the subcontractor, supplier, or design professional is responsible

C. On the request of the contractor, subcontractor, supplier or design professional who has received a notice pursuant to subsection A or subsection B of this section, the claimant shall provide to the contractor, subcontractor, supplier or design professional any evidence that depicts the nature and cause of the defect and the nature and extent of repairs necessary to remedy the defect, including expert reports, photographs, and videotapes, if that evidence would be discoverable under {local evidentiary rules}.

D. Within thirty days after service of the notice of claim by claimant required in subsection A or subsection B, each contractor, subcontractor, supplier, or design professional that has received a notice of claim shall serve a written response on the claimant by registered mail or personal service. The written response shall:

(i) Offer to compromise and settle the claim by monetary payment without inspection

(ii) Propose to inspect the dwelling that is the subject of the claim

(iii) State that the contractor, subcontractor, supplier, or design professional disputes the claim and will neither remedy the alleged construction defect nor compromise and settle the claim

E. If the contractor, subcontractor, supplier, or design professional disputes the claim (pursuant to subsection D(iii)) and will neither remedy the alleged construction defect nor compromise and settle the claim, or does not respond to the claimant’s notice of claim within the time stated in subsection D, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the notice of claim without further notice.

F. If the claimant rejects the inspection proposal or the settlement offer made by the contractor, subcontractor, supplier, or design professional pursuant to subsection D, the claimant shall serve written notice of the claimant’s rejection on the contractor, subcontractor, supplier, or design professional. The notice shall include the basis for the claimant’s rejection of the contractor, subcontractor, supplier, or design professional’s proposal or offer.

G. After service of the rejection required by subsection F, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim(s) described in the initial notice of claim required by subsection A or subsection B of this Act without further notice.

H. If the claimant elects to allow the contractor, subcontractor, supplier, or design professional to inspect the dwelling in accordance with the contractor, subcontractor, supplier, or design professional’s proposal pursuant to section D(ii) the claimant shall provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant’s residence during normal working hours to inspect the premises and the claimed defect to determine the nature and cause of the alleged defects and the nature and extent of any repairs or replacements necessary to remedy the alleged defects.

I. Within fourteen days following completion of the inspection, the contractor, subcontractor, supplier, or design professional shall serve on the claimant:

(i) A written offer to remedy the construction defect at no cost to the claimant, including a report of the scope of the inspection, the findings and results of the inspection, a description of the additional construction necessary to remedy the defect described in the claim, and a timetable for the completion of such construction;

(ii) A written offer to compromise and settle the claim by monetary payment; or

(iii) A written statement that the contractor, subcontractor, supplier, or design professional will not proceed further to remedy the defect

If a claimant accepts a contractor, subcontractor, supplier, or design professional’s offer made pursuant to subsection I(i) or (I)(ii) and the contractor, subcontractor, supplier, or design professional does not proceed to make the monetary payment or remedy the construction defect within the agreed timetable, the claimant may bring an action against the contractor, subcontractor, supplier, or design professional for the claim described in the initial notice of claim required by subsection A or subsection B without further notice.

If a claimant receives a written statement that the contractor, subcontractor, supplier, or design professional will not proceed further to remedy the defect, the claimant may bring an action against the contractor, subcontractor, supplier, or design profession for the claim described in the initial notice of claim required by subsection A or subsection B without further notice.

If the claimant rejects the offer made by the contractor, subcontractor, supplier, or design professional to either remedy the construction defect or to compromise and settle the claim by monetary payment, the claimant shall serve written notice of the claimant’s rejection on the contractor, subcontractor, supplier, or design professional. The notice shall include the basis for the claimant’s rejection of the contractor, subcontractor, supplier, or design professional’s offer. After service of the rejection the claimant may bring an action against contractor, subcontractor, supplier, or design professional for the claim described in the notice of claim without further notice.

If a claimant unreasonably rejects an offer made as provided by this section or does not permit the contractor, subcontractor, supplier, or design professional a reasonable opportunity to repair the defect pursuant to an accepted offer of settlement, the claimant may not recover an amount in excess of:

(i) the reasonable cost of the offered repairs which are necessary to cure the construction defect and which are the responsibility of the contractor, subcontractor, supplier, or design professional; or

(ii) the amount of the monetary settlement offered by the contractor, subcontractor, supplier, or design professional

Any claimant accepting the offer of the contractor, subcontractor, supplier, or design professional to remedy the construction defects shall do so by serving the contractor, subcontractor, supplier, or design professional with a written notice of acceptance within a reasonable period of time after receipt of the offer but no later than thirty days after receipt of the offer

If a claimant accepts a contractor, subcontractor, supplier, or design professional’s offer to repair a defect described in an initial notice of claim, the claimant shall provide the contractor, subcontractor, supplier, or design professional and its contractors or other agents reasonable access to the claimant’s residence during normal working hours to perform and complete the construction by the timetable stated in the offer

A claimant’s failure to do any of the following is admissible in any dwelling action and creates a rebuttable presumption that the claimant’s damages could have been mitigated:

(i) Allow a reasonable inspection requested by the contractor, subcontractor, supplier, or design professional

(ii) Provide a good faith, written response to a contractor, subcontractor, supplier, or design professional’s offer

Q. Absent good cause, the contractor, subcontractor, supplier, or design professional’s failure to respond in good faith to the claimant’s notice pursuant to subsection A shall preclude the contractor, subcontractor, supplier, or design professional from asserting that the claimant did not comply with the provisions of this Act.

R.A claimant’s written notice pursuant to subsection A tolls the applicable statute of limitations until ninety days after the contractor, subcontractor, supplier, or design professional receives the notice.

Section 5 – Additional construction defects; additional notice and opportunity to repair required

A. A construction defect which is discovered after a claimant has provided a contractor with the claim notice required in section 4 of this Act, may not be alleged until the claimant has given the contractor, subcontractor, supplier, or design professional who performed the original construction:

(i) Written notice of the alleged defect required by Section 4 of this Act; and

(ii) A reasonable opportunity to repair the alleged construction defect in the manner provided in Section 4 of this Act

Section 6 – Insurance; performance requirements

A. A contractor, subcontractor, supplier, or design professional who receives notice of a constructional defect pursuant to section 4 of this Act may present the notice to an insurer who issued a policy of insurance covering all or part of the conduct or business of the contractor, subcontractor, supplier, or design professional

B.A notice provided to an insurer pursuant to subsection A of this section:

(i) Constitutes the making of a claim under the policy; and

(ii) Requires the contractor, subcontractor, supplier, or design professional and the insurer to perform any obligations or duties required by the policy upon the making of a claim

Section 7 – Contract of Sale; Provisions

A. Upon entering into a contract for sale, construction, or substantial remodel of a dwelling, the contractor, subcontractor, supplier, or design professional shall provide notice to the owner of the dwelling of the contractor, subcontractor, supplier, or design professional's right to offer to cure construction defects before a claimant may commence litigation against the contractor, subcontractor, supplier, or design professional. Such notice shall be conspicuous and may be included as part of the underlying contract.

B.The notice required by subsection A shall be in substantially the following form:

{State Law} CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY FILE A LAWSUIT FOR DEFECTIVE CONSTRUCTION AGAINST THE CONTRACTOR WHO CONSTRUCTED YOUR HOME. NINETY DAYS BEFORE YOU FILE YOUR LAWSUIT, YOU MUST DELIVER TO THE CONTRACTOR A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE YOUR CONTRACTOR AND ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS THE OPPORTUNITY TO MAKE AN OFFER TO REPAIR OR PAY FOR THE DEFECTS.  YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER MADE BY THE CONTRACTOR OR ANY SUBCONTRACTORS, SUPPLIERS, OR DESIGN PROFESSIONALS. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECTYOUR ABILITY TO FILE A LAWSUIT.Section 8 – Contractor notification requirements

A. Each contractor who constructs a new residential dwelling shall, within 30 days after the close of the sale, provide in writing to the initial purchaser of the residence:

(i) The name, license number, business address, and telephone number of each subcontractor or design professional who performed any work related to the design or construction of the dwelling;

(ii) A brief description of the work performed by each subcontractor identified pursuant to this section

Section 9 – Actions of associations

A. A person shall not provide or offer to provide anything of monetary value to a property manager of an association or to a member or officer of an executive board to induce the property manager, member or officer to encourage or discourage the association to file a claim for damages arising from a construction defect.

B. A property manager shall not accept anything of value given to him in exchange for encouraging or discouraging the association that he manages to file a claim for damages arising from a construction defect.

C. A member or officer of an executive board shall not accept anything of value given to him in exchange for encouraging or discouraging the association of which he is a member or officer of the executive board to file a claim for damages arising from a constructional defect

D. A person who willfully violates subsections A, B, or C of this section shall be guilty of a misdemeanor

E. An association may bring an action to recover damages resulting from construction defects in any of the units, common elements or limited common elements of the common-interest community only:

(i) If the association first obtains the written approval of each unit’s owner whose unit or interest in the common elements or limited common elements will be the subject of the action or claim;

(ii) Upon a vote of the units’ owners to which at least a majority of the votes of the members of the association are allocated; and

(iii) Upon a vote of the executive board of the association.

F. If an action is brought by an association to recover damages resulting from construction defects in any of the units, common elements or limited common elements of the common-interest community, the attorney representing the association shall provide to the executive board of the association and to each unit’s owner a statement that includes, in reasonable detail:

(i) The defects and damages or injuries to the units, common elements or limited common elements;

(ii) The cause of the defects, if the cause is known;

(iii) The nature and the extent that is known of the damage or injury resulting from the defects;

(iv) The location of each defect within the units, common elements or limited common elements, if known;

(v) A reasonable estimate of the cost of the action or mediation, including reasonable attorney’s fees;

(vi) An explanation of the potential benefits of the action or mediation and the potential adverse consequences if the association does not commence the action or submit the claim to mediation or if the outcome is not favorable to the association; and

(vii) All disclosures that the unit owner’s is required to make upon the sale of the property.

G. An association or an attorney for an association shall not employ a person to perform destructive tests to determine any damage or injury to a unit, common element or limited common element caused by a constructional defect unless:

(i) The person is licensed as a contractor pursuant to {State law}

(ii) The association has obtained the prior written approval of each unit’s owner whose unit or interest in the common element or limited common element will be affected by such testing;

(iii) The person performing the tests has provided a written schedule for repairs;

(iv) The person performing the tests is required to repair all damage resulting from such tests in accordance with state laws and local ordinances relating thereto; and

(v) The association or the person so employed obtains all permits required to conduct such tests and to repair any damage resulting from such tests.

H. An association may commence an action only upon a vote or written agreement of the owners of the units to which at least a majority of the votes of the members of the association are allocated. In such a case, the association shall provide written notice to the owner of each unit of the meeting at which the commencement of an action is to be considered or action is to be taken within 21 calendar days before the meeting.

I. The executive board of an association may, without giving notice to the units’ owner’s, employ a contractor and such other persons as are necessary to make such repairs to a unit or common element within the common-interest community as are required to protect the health, safety and welfare of the units’ owners

L

REPORTER NOTES – DISCUSSION OF INSURANCE ISSUES IN

UNIFORM COMMON INTEREST OWNERSHIP ACT

COMMITTEE MEETING – PHOENIX, OCTOBER 28-30, 2005

SECTION 3-113 INSURANCE

BOB DIAMOND – the insurance coverage terminology is no longer accurate in 2 areas:

First. We should update the requirements so that when the Act says get “X” , it is available. At the time we did this in the original Act, we required 80% ACV as the minimum needed to avoid coinsurance?

In 1976, there were still 3 kinds of insurance you could buy – and a dispute as to what you ought to get. Years later, thinking people said we should require more coverage.

It would be useful if the statute were expanded. The question is, what is the “right” or correct public policy as to what we require?

Second, the phrase “all risk of direct physical loss” in 3-113 a 1 – today, policies are not written this way. We’d like insurance people here to help us rethink what we wrote in the original Act.

Third, is there any other insurance we ought to require, such as Directors and Officers Liability Insurance? What about flood insurance or disaster coverage or mold insurance – other things “commonly insured against”.

ISSUE As to Deductibles, because of premium increases, associations are shifting the burden of deductibles from association to individual homeowners. Is this a good idea?

On liability side, we simply say “liability” - but we think there is no longer medical payments insurance [?].

BILL BREETZ Statute today requires insurance on units if the units have ‘horizontal boundaries’ – but there is nothing in the statute about stacked units. Perhaps the public policy ought to be that the Act requires a single policy for all parts of a single building, regardless of where the boundaries lie [horizontal or vertical, as in townhouse units.]

ISSUE - In 3-113 (d)(2) – page 74 – should we add ‘tenant’ and ‘guest’ to waiver provision? Or any occupant?

ISSUE Can Associations today purchase insurance for betterments and improvements to units? What does the market provide today? What should the statute say?

This was a co-insurance problem. “Single entity coverage” - another issue was an “agreed amount endorsement”. Is that an issue today?

Do we still care about this issue?

In the environment of 80% of acv, should we also be worried about that subject?

ISSUE - On 3-115 (c) 3 – page 77 – The Act allows the declaration to require that insurance. Are different types of insurance required for different physical configurations of buildings?

ISSUE - Should the declaration be required to spell out how to deal with deductibles and how to deal with fault?

DAVID RAMSEY – I don’t want the statute to dictate the outcome but requiring the declaration to do so is a good outcome.

ISSUE - Should the association have the right NOT to make a claim against the policy so long as the association pays to fix the unit?

JOANNE STUBBLEFIELD – we ought to make clear that the association need not make the claim, as permitted under the business judgment rule.

WRB Maybe we can best address this in the comments regarding the business judgment rule?

ISSUE Do we want the board to be able to force owners to carry ho 6 coverage?