Senate File 2012 - Introduced SENATE FILE 2012 BY HART A BILL FOR An Act relating to the revival of lapsed use restrictions by a 1 common interest community. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5063XS (3) 86 jh/sc
S.F. 2012 Section 1. NEW SECTION . 564B.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Bylaws” means the instruments, however denominated, 4 that contain the procedures for conducting the affairs of the 5 homeowners’ association or the executive board regardless of 6 the form in which the homeowners’ association is organized, 7 including any amendments to such instruments. 8 2. a. “Common interest community” means real estate 9 described in a declaration with respect to which a person, by 10 virtue of the person’s ownership of a parcel, is obligated 11 to pay for a share of real estate taxes, insurance premiums, 12 maintenance, or improvement of, or services or other expenses 13 related to, common elements, other parcels, or other real 14 estate described in the declaration. “Common interest 15 community” includes a cooperative under chapter 499A and a 16 horizontal property regime under chapter 499B. 17 b. “Common interest community” does not include a covenant 18 that requires the owners of separate parcels of real estate to 19 share costs or other obligations related to a wall, driveway, 20 well, or other similar structure, unless all such owners 21 consent in writing to the creation of a common interest 22 community. 23 3. “Declaration” means a recorded written instrument in the 24 nature of covenants running with the land that subject the land 25 comprising the common interest community to the jurisdiction 26 and control of a homeowners’ association in which the owners of 27 the parcels are required to be members. 28 4. “Executive board” means the body, regardless of name, 29 designated in the declaration, formation document, or bylaws to 30 act on behalf of the homeowners’ association. 31 5. “Formation document” means the document filed with the 32 secretary of state that creates a business entity, including 33 but not limited to articles of incorporation, articles of 34 organization, and a certificate of organization. 35 -1- LSB 5063XS (3) 86 jh/sc 1/ 8
S.F. 2012 6. “Homeowners’ association” means an entity responsible 1 for the operation of a common interest community in which the 2 voting membership is made up of parcel owners and in which 3 membership is a mandatory condition of parcel ownership, and 4 which is authorized to impose assessments that, if unpaid, may 5 become a lien on the parcel. 6 7. “Parcel” means a physical portion of the common interest 7 community designated for separate ownership or occupancy or 8 as otherwise defined in the statute under which the common 9 interest community is organized. 10 8. “Parcel owner” means the record owner of legal title to 11 a parcel or, if the parcel is subject to a contract for deed, 12 the vendee of the real estate contract. “Parcel owner” does 13 not include a person having an interest in a parcel solely as 14 security for an obligation. 15 9. “Use restrictions” means the same as defined in section 16 614.24, subsection 5. 17 Sec. 2. NEW SECTION . 564B.2 Revival of use restrictions. 18 Parcel owners in a common interest community may revive use 19 restrictions in a declaration that have become unenforceable 20 by operation of section 614.24 if all of the following 21 requirements are met: 22 1. All parcels which will be subject to the revived use 23 restrictions were previously subject to the use restrictions. 24 2. The affected parcel owners approve the revived use 25 restrictions in the manner provided in this chapter. 26 Sec. 3. NEW SECTION . 564B.3 Procedure to revive use 27 restrictions. 28 1. The proposal to revive use restrictions may contain 29 less than all of the use restrictions which have become 30 unenforceable by operation of section 614.24, but shall not 31 modify any use restriction sought to be revived. 32 2. The proposal to revive use restrictions in a declaration 33 under the terms of this chapter may be initiated by either of 34 the following: 35 -2- LSB 5063XS (3) 86 jh/sc 2/ 8
S.F. 2012 a. The executive board. 1 b. The parcel owners, if a petition is signed by parcel 2 owners who own at least ten percent of the parcels. Such 3 petition shall include the language of the use restrictions 4 proposed to be revived. 5 3. If a proposal is initiated under subsection 2, the 6 executive board shall prepare or cause to be prepared the 7 complete text of the proposed use restrictions to be submitted 8 to the affected parcel owners for approval. 9 4. a. The executive board shall present or cause to be 10 presented to all of the affected parcel owners, by mail or hand 11 delivery, all of the following: 12 (1) A notice containing either the place, date, and time of 13 the meeting at which the revival of the use restrictions will 14 be considered and voted upon or instructions for an action by 15 written ballot, including the last date that a written ballot 16 will be accepted. 17 (2) A copy of the complete text of the use restrictions 18 proposed to be revived. 19 (3) The existing declaration, formation document, and 20 bylaws of the homeowners’ association. 21 (4) A graphic depiction of the property and the parcels to 22 be governed by the revived use restrictions. 23 (5) A statement that the use restrictions will be revived 24 if parcel owners who own a majority of the affected parcels 25 approve revival. 26 b. The parcel owners entitled to receive notice and the 27 materials described in paragraph “a” are the owners of affected 28 parcels as of the close of business on the business day 29 preceding the day on which notice is given. 30 5. The use restrictions contained in the proposal shall be 31 revived if the owners of a majority of the affected parcels 32 approve the revived use restrictions by a vote at a meeting of 33 the affected parcel owners conducted in the manner described in 34 section 564B.4 or in an action by written ballot as described 35 -3- LSB 5063XS (3) 86 jh/sc 3/ 8
S.F. 2012 in section 564B.5, and shall be effective in accordance with 1 section 564B.7. 2 Sec. 4. NEW SECTION . 564B.4 Meetings to revive use 3 restrictions. 4 1. A vote to revive use restrictions shall not be held 5 unless the parcel owners described in section 564B.3, 6 subsection 4, paragraph “b” , received the notice and documents 7 specified in section 564B.3, subsection 4, not less than 8 fourteen days or more than sixty days before such a vote. 9 2. A quorum shall be met if parcel owners who own a majority 10 of the affected parcels are present at the meeting, either in 11 person or by proxy. 12 3. The parcel owners entitled to vote at the meeting are the 13 owners of affected parcels as of the date of the meeting. 14 4. At the meeting, there shall be one vote per parcel, 15 regardless of the number of parcel owners who own such parcel. 16 5. a. The parcel owners have the right to vote in person 17 or by proxy. 18 b. To be valid, a proxy must be dated, shall state the date, 19 time, and place of the meeting for which the proxy was given, 20 and shall be signed by the parcel owner. If a parcel is owned 21 by more than one person, each owner of the parcel shall sign 22 the proxy for such proxy to be valid. 23 c. A proxy is effective only for the specific meeting for 24 which the proxy was originally given. 25 d. A proxy is revocable at any time at the discretion of a 26 parcel owner who executed the proxy. 27 e. If the proxy form expressly so provides, any proxy holder 28 may appoint, in writing, a substitute to act in the proxy 29 holder’s place. 30 Sec. 5. NEW SECTION . 564B.5 Action by written ballot. 31 1. A vote to revive use restrictions may be taken without a 32 meeting if the executive board delivers a written ballot with 33 the notice and other documents required to be delivered under 34 section 564B.3, subsection 4, to the owners of every affected 35 -4- LSB 5063XS (3) 86 jh/sc 4/ 8
S.F. 2012 parcel. 1 2. A written ballot shall set forth the use restrictions 2 proposed to be revived and provide an opportunity to vote for 3 or against revival. 4 3. One written ballot shall be provided for each parcel, 5 regardless of the number of parcel owners who own such parcel. 6 4. The deadline for the written ballot to be received to 7 be counted shall be at least fourteen days, but not more than 8 sixty days, after the written ballot was delivered. 9 5. A written ballot that has been cast shall not be revoked. 10 Sec. 6. NEW SECTION . 564B.6 Recording and notice of 11 recording. 12 1. No later than thirty days after the parcel owners have 13 approved the revival of the use restrictions, the executive 14 board shall file the revived use restrictions with the recorder 15 of each county in which the land comprising the common interest 16 community is located. 17 2. Immediately after recording the revived use 18 restrictions, the executive board shall mail or deliver, or 19 shall cause to be mailed or delivered, a complete copy of the 20 revived use restrictions to each parcel owner. 21 Sec. 7. NEW SECTION . 564B.7 Effect of revived use 22 restrictions. 23 1. The revived use restrictions shall be effective upon 24 recordation with respect to each affected parcel, regardless 25 of whether an owner of an affected parcel approved the revived 26 use restrictions. 27 2. The revived use restrictions shall not be given 28 retroactive effect with respect to any affected parcel. 29 3. A use restriction revived under this chapter shall not be 30 enforced against a parcel if each of the following are true: 31 a. A parcel owner made a good-faith investment that would be 32 impaired by such enforcement. 33 b. The good-faith investment described in paragraph “a” was 34 made after the use restriction was unenforceable under section 35 -5- LSB 5063XS (3) 86 jh/sc 5/ 8
S.F. 2012 614.24 and before the use restriction was revived pursuant to 1 this chapter. 2 Sec. 8. Section 614.24, Code 2016, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 4A. If use restrictions are revived 5 pursuant to chapter 564B, the recording date for purposes of 6 the twenty-one year limitation in subsection 1 shall be the 7 date the revived use restrictions are recorded under section 8 564B.6, subsection 1. 9 Sec. 9. APPLICABILITY. This Act applies to common interest 10 communities created prior to, and still in existence on, July 11 1, 2016, and created on or after July 1, 2016. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 This bill relates to the ability of a common interest 16 community to revive lapsed use restrictions. 17 The bill defines “common interest community” as real 18 estate described in a declaration with respect to which a 19 person, by virtue of the person’s ownership of a parcel, is 20 obligated to pay for a share of real estate taxes, insurance 21 premiums, maintenance, or improvement of, or services or other 22 expenses related to, common elements, other parcels, or other 23 real estate described in the declaration. “Common interest 24 community” includes a cooperative under Code chapter 499A and a 25 horizontal property regime under Code chapter 499B. 26 The bill references the definition of “use restriction” in 27 Code section 614.24, which is a limitation or prohibition on 28 the rights of a landowner to make use of the landowner’s real 29 estate, including limitations or prohibitions on commercial 30 uses, rental use, parking and storage of recreational vehicles 31 and their attachments, ownership of pets, outdoor domestic 32 uses, construction and use of accessory structures, building 33 dimensions and colors, building construction materials, and 34 landscaping. “Use restriction” does not include an easement 35 -6- LSB 5063XS (3) 86 jh/sc 6/ 8
S.F. 2012 granting a person an affirmative right to use land in the 1 possession of another person, including but not limited to an 2 easement for pedestrian or vehicular access, reasonable ingress 3 and egress, solar access, utilities, supporting utilities, 4 parking areas, bicycle paths, and water flow, an agreement 5 between two or more parcel owners providing for the sharing of 6 costs and other obligations for real estate taxes, insurance 7 premiums, and for maintenance, repair, improvements, services, 8 or other costs related to two or more parcels of real estate 9 regardless of whether the parties to the agreement are owners 10 of individual lots or incorporated or unincorporated lots 11 or have ownership interests in common areas in a horizontal 12 property regime or residential housing development, or an 13 agreement between two or more parcel owners for the joint use 14 and maintenance of driveways, party walls, landscaping, fences, 15 wells, roads, common areas, waterways, or bodies of water. 16 Under Code section 614.24, an action arising or existing 17 by reason of the provisions of any contract providing for use 18 restrictions in and to real estate may not be maintained after 19 21 years from the recording of the contract unless a claimant 20 has filed a verified claim with the county recorder within 21 the 21-year period. Therefore, if a homeowners’ association 22 or other claimant does not file a verified claim regarding a 23 common interest community’s declaration before the expiration 24 of the 21-year period, the use restrictions in the declaration 25 become unenforceable. 26 The bill enacts new Code chapter 564B to provide a mechanism 27 for common interest communities to revive use restrictions 28 which have become barred by operation of Code section 614.24. 29 A proposal to revive use restrictions may be brought by the 30 executive board of the homeowners’ association or by petition 31 of parcel owners who own at least 10 percent of the affected 32 parcels. 33 The bill specifies the form of the notice the executive board 34 shall provide to parcel owners regarding a proposal for the 35 -7- LSB 5063XS (3) 86 jh/sc 7/ 8
S.F. 2012 revival of use restrictions. The proposal may be voted upon at 1 a meeting which shall be held no less than 14 days and no more 2 than 60 days after notice was provided to the parcel owners. 3 The proposal may also be voted on by written ballot. If the 4 vote is by written ballot, the notice must specify when ballots 5 are due, which must be no earlier than 14 days and no later than 6 60 days after the written ballots were delivered. 7 Upon proper notice, if the owners of a majority of the 8 affected parcels in the common interest community approve the 9 revival of lapsed use restrictions, the lapsed use restrictions 10 are revived as to all parcels in the common interest community. 11 The revived use restrictions become effective upon 12 recordation. The revived use restrictions are not given 13 retroactive applicability. Revived use restrictions may not be 14 enforced against a parcel if a parcel owner made a good-faith 15 investment that would be impaired by such enforcement and such 16 investment was made while the use restriction was unenforceable 17 under Code section 614.24 and before the use restriction was 18 revived under new Code chapter 564B. 19 The bill provides that if use restrictions are revived under 20 new Code chapter 564B, the 21-year limitation period under Code 21 chapter 614.24 begins as of the recordation date of the revived 22 use restrictions. 23 The bill applies to common interest communities created 24 prior to, and still in existence on, July 1, 2016, and created 25 on or after July 1, 2016. 26 -8- LSB 5063XS (3) 86 jh/sc 8/ 8