SF 2282 (LSB 5063SV (3) 86)

SENATE FILE 2282

BY  COMMITTEE ON JUDICIARY

(SUCCESSOR TO SF 2012)

A BILL FOR

An Act relating to reinstatement of lapsed use restrictions within a common interest community.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  564B.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Common interest community” means real estate described in a declaration with respect to which a person, by virtue of the person’s ownership of a parcel, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, improvements, services, or other expenses related to common elements or other real estate described in the declaration. 
   2.  “Declaration” means a duly recorded instrument and any amendments thereto, however denominated, that established the common interest community and use restrictions for the common interest community, and that subject the common interest community to administration by an owners’ association in which the parcel owners are required to be members. 
   3.  “Executive board” means the body, however denominated, designated to act on behalf of the owners’ association. 
   4.  “Owners’ association” means an entity responsible for administration of a common interest community in which the voting membership is made up of parcel owners and in which membership is a mandatory condition of parcel ownership.
   5.  “Parcel” means a physical portion of the common interest community designated for separate ownership. 
   6.  “Parcel owner” means the record owner of legal title to a parcel or, if the parcel is subject to a contract for deed, the vendee of the real estate contract. “Parcel owner” does not include a person having an interest in a parcel solely as security for an obligation. 
   7.  “Use restrictions” means the same as defined in section 614.24, subsection 5.
    Sec. 2.  NEW SECTION.  564B.2  Reinstatement of use restrictions.
   1.  Parcel owners in a common interest community may reinstate use restrictions in a declaration that have become unenforceable by operation of section 614.24 in the manner provided in this chapter.
   2.  The proposal to reinstate use restrictions may contain fewer than all of the use restrictions that have become unenforceable. The proposal must not amend or modify any use restriction sought to be reinstated. 
   3.  Use restrictions reinstated pursuant to this chapter shall affect the same parcels as were affected at the time the use restrictions became unenforceable.
    Sec. 3.  NEW SECTION.  564B.3  Procedure to reinstate use restrictions by recorded agreement.
   1.  Use restrictions may be reinstated upon the filing with the recorder of each county in which the common interest community is located a reinstatement agreement that contains the complete text of the use restrictions being reinstated and is executed by the owners of a majority of the affected parcels. The executive board shall file the reinstatement agreement within thirty days after a majority of the owners of the affected parcels have executed the reinstatement agreement.
   2.  The reinstated use restrictions filed by the executive board shall have annexed a certification by the executive board that the reinstatement agreement was executed by the owners of a majority of the affected parcels.
   3.  Immediately after recording the reinstatement agreement, the executive board shall mail or hand deliver to each parcel owner a complete copy of the recorded agreement.
    Sec. 4.  NEW SECTION.  564B.4  Procedure to reinstate use restrictions by vote of parcel owners.
   1.  Use restrictions may be reinstated by vote of the parcel owners in the manner provided in this section. 
   2.  A proposal to reinstate use restrictions may be initiated by either of the following: 
   a.  The executive board. 
   b.  A petition signed by owners of at least ten percent of the affected parcels. Such petition shall include the text of the use restrictions proposed to be reinstated. 
   3.  If a proposal is initiated under subsection 2, the executive board shall give notice, by mail or hand delivery, to the persons who own the affected parcels as of the close of business on the business day preceding the day on which notice is given. If notice is given by mail, the notice is deemed given on the date of mailing. The notice shall contain the following information:
   a.  The complete text of the proposed use restrictions to be submitted to the affected parcel owners for approval.
   b.  A graphic depiction of the property and parcels affected by the reinstated use restrictions. 
   c.  The place, date, and time of the meeting at which the reinstatement of the use restrictions will be considered and voted upon, or instructions for an action by written ballot, including the last date that a written ballot will be accepted. 
   d.  A statement that the use restrictions will be reinstated if parcel owners who own a majority of the affected parcels vote to approve reinstatement. 
   4.  The use restrictions contained in the proposal shall be reinstated upon approval by the owners of a majority of the affected parcels by a vote at a meeting conducted in the manner described in section 564B.5, or by written ballot as described in section 564B.6, and shall be effective in accordance with section 564B.7. 
   5.  There shall be one vote per parcel, regardless of the number of parcel owners who own such parcel. If a parcel is owned by more than one person, all owners must vote to approve or the vote shall not be counted as a vote for approval.
    Sec. 5.  NEW SECTION.  564B.5  Meetings to reinstate use restrictions.
   1.  A meeting on the matter of voting to reinstate use restrictions shall not be held less than fourteen days or more than sixty days after the last notice has been given under section 564B.4, subsection 3. 
   2.  The parcel owners entitled to vote at the meeting are the owners of affected parcels as of the date of the meeting. 
   3.  a.  The parcel owners have the right to vote in person or by proxy. 
   b.  To be valid, a proxy must be dated, must state the place, date, and time of the meeting for which the proxy was given, and must be signed by the parcel owner. If a parcel is owned by more than one person, each parcel owner must sign the proxy for such proxy to be valid.
   c.  A proxy is effective only for the specific meeting for which the proxy was originally given.
   d.  A proxy is revocable at any time at the discretion of any parcel owner who executed the proxy. 
   e.  If the proxy form expressly so provides, any proxy holder may appoint, in writing, a substitute to act in the proxy holder’s place. 
   4.  A quorum shall be met if parcel owners who own a majority of the affected parcels are present at the meeting, either in person or by proxy.
    Sec. 6.  NEW SECTION.  564B.6  Action by written ballot.
   1.  A vote to reinstate use restrictions may be taken without a meeting, if the executive board includes a written ballot with the notice and other documents required to be given under section 564B.4, subsection 3.
   2.  A written ballot must set forth the use restrictions proposed to be reinstated and provide an opportunity to vote for or against reinstatement. 
   3.  One written ballot shall be provided for each parcel, regardless of the number of parcel owners who own such parcel. 
   4.  The deadline for the written ballot to be received in order to be counted shall be at least fourteen days, but not more than sixty days, after the notice containing the written ballot was given. 
   5.  A written ballot that has been cast shall not be revoked by any person.
    Sec. 7.  NEW SECTION.  564B.7  Recording and notice of recording.
   1.  Within thirty days after a majority of the parcel owners have voted to approve the reinstatement of the use restrictions, the executive board shall file the reinstated use restrictions with the recorder of each county in which the common interest community is located.
   2.  The reinstated use restrictions filed by the executive board shall have annexed a certification by the executive board that the reinstated use restrictions were approved by a vote of the owners of a majority of the affected parcels. 
   3.  Immediately after recording the reinstated use restrictions, the executive board shall mail or hand deliver to each parcel owner a complete copy of the recorded reinstated use restrictions.
    Sec. 8.  NEW SECTION.  564B.8  Effect of reinstated use restrictions.
   1.  The reinstated use restrictions shall be effective upon recordation with respect to each affected parcel, regardless of whether an owner of an affected parcel approved the reinstated use restrictions. 
   2.  The reinstated use restrictions shall not be given retroactive effect with respect to any affected parcel.
   3.  A reinstated use restriction shall not be enforced against a parcel if each of the following are true: 
   a.  A parcel owner made a good-faith investment that would be impaired by such enforcement.
   b.  The good-faith investment described in paragraph “a” was made after the use restriction became unenforceable by operation of section 614.24 and before reinstatement under this chapter.
    Sec. 9.  Section 614.24, Code 2016, is amended by adding the following new subsection:
   NEW SUBSECTION.  4A.  If use restrictions are reinstated pursuant to chapter 564B, the recording date for purposes of the twenty-one-year limitation in subsection 1 shall be the date the reinstated use restrictions are recorded under section 564B.3 or 564B.7.
    Sec. 10.  APPLICABILITY.  This Act applies to common interest communities created prior to, and still in existence on, July 1, 2016, and created on or after July 1, 2016.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the ability of a common interest community to reinstate lapsed use restrictions.
   The bill defines “common interest community” as real estate described in a declaration with respect to which a person, by virtue of the person’s ownership of a parcel, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, improvements, services, or other expenses related to common elements or other real estate described in the declaration.
   The bill references the definition of “use restriction” in Code section 614.24, which is a limitation or prohibition on the rights of a landowner to make use of the landowner’s real estate, including limitations or prohibitions on commercial uses, rental use, parking and storage of recreational vehicles and their attachments, ownership of pets, outdoor domestic uses, construction and use of accessory structures, building dimensions and colors, building construction materials, and landscaping. “Use restriction” does not include an easement granting a person an affirmative right to use land in the possession of another person, including but not limited to an easement for pedestrian or vehicular access, reasonable ingress and egress, solar access, utilities, supporting utilities, parking areas, bicycle paths, and water flow, an agreement between two or more parcel owners providing for the sharing of costs and other obligations for real estate taxes, insurance premiums, and for maintenance, repair, improvements, services, or other costs related to two or more parcels of real estate regardless of whether the parties to the agreement are owners of individual lots or incorporated or unincorporated lots or have ownership interests in common areas in a horizontal property regime or residential housing development, or an agreement between two or more parcel owners for the joint use and maintenance of driveways, party walls, landscaping, fences, wells, roads, common areas, waterways, or bodies of water.
   Under Code section 614.24, an action arising or existing by reason of the provisions of any contract providing for use restrictions in and to real estate may not be maintained after 21 years from the recording of the contract unless a claimant has filed a verified claim with the county recorder within the 21-year period. Therefore, if an owners’ association or other claimant does not file a verified claim regarding a common interest community’s declaration before the expiration of the 21-year period, the use restrictions in the declaration become unenforceable. 
   The bill enacts new Code chapter 564B to provide a mechanism for common interest communities to reinstate use restrictions which have become barred by operation of Code section 614.24. Use restrictions may be reinstated upon the filing with the county recorder of a reinstatement agreement that contains the complete text of the use restrictions being reinstated and is executed by owners of a majority of the affected parcels. Use restrictions may also be reinstated after an affirmative vote by a majority of the affected parcel owners, either at a meeting or by written ballot. A proposal for a vote to reinstate use restrictions may be brought by the executive board of the owners’ association or by petition of parcel owners who own at least 10 percent of the affected parcels.
   The bill specifies the form of the notice the executive board shall provide to parcel owners regarding a proposal for a vote to reinstate use restrictions. The proposal may be voted upon at a meeting which shall be held no less than 14 days and no more than 60 days after notice was provided to the parcel owners. The proposal may also be voted on by written ballot. If the vote is by written ballot, the notice must specify when ballots are due, which must be no earlier than 14 days and no later than 60 days after the written ballots were delivered.
   Upon proper notice, if the owners of a majority of the affected parcels in the common interest community approve the reinstatement of lapsed use restrictions, the lapsed use restrictions are reinstated as to all parcels in the common interest community.
   The reinstated use restrictions become effective upon recordation. The reinstated use restrictions are not given retroactive applicability. Reinstated use restrictions cannot be enforced against a parcel if a parcel owner made a good-faith investment that would be impaired by such enforcement and such investment was made while the use restriction was unenforceable under Code section 614.24 and before the use restriction was reinstated under new Code chapter 564B.
   The bill provides that if use restrictions are reinstated under new Code chapter 564B, the 21-year limitation period under Code section 614.24 begins as of the recordation date of the reinstated use restrictions.
   The bill applies to common interest communities created prior to, and still in existence on, July 1, 2016, and created on or after July 1, 2016.