House File 2041 - Introduced HOUSE FILE 2041 BY MOMMSEN A BILL FOR An Act relating to reinstatement of lapsed use restrictions 1 within a common interest community and including 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5569YH (3) 87 md/jh
H.F. 2041 Section 1. NEW SECTION . 564B.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Common interest community” means real estate described 4 in a declaration with respect to which a person, by virtue of 5 the person’s ownership of a parcel, is obligated to pay for a 6 share of real estate taxes, insurance premiums, maintenance, 7 improvements, services, or other expenses related to common 8 elements or other real estate described in the declaration. 9 2. “Declaration” means a duly recorded instrument and any 10 amendments thereto, however denominated, that establish the 11 common interest community and use restrictions for the common 12 interest community, and that subject the common interest 13 community to administration by an owners’ association in which 14 the parcel owners are required to be members. 15 3. “Executive board” means the body, however denominated, 16 designated to act on behalf of the owners’ association. 17 4. “Owners’ association” means an entity responsible for 18 administration of a common interest community in which the 19 voting membership is made up of parcel owners and in which 20 membership is a mandatory condition of parcel ownership. 21 5. “Parcel” means a physical portion of the common interest 22 community designated for separate ownership. 23 6. “Parcel owner” means the record owner of legal title to 24 a parcel or, if the parcel is subject to a contract for deed, 25 the vendee of the real estate contract. “Parcel owner” does 26 not include a person having an interest in a parcel solely as 27 security for an obligation. 28 7. “Use restrictions” means the same as defined in section 29 614.24, subsection 5. 30 Sec. 2. NEW SECTION . 564B.2 Reinstatement of use 31 restrictions. 32 1. Parcel owners in a common interest community having 33 five hundred or more parcels may reinstate use restrictions in 34 a declaration that have become unenforceable by operation of 35 -1- LSB 5569YH (3) 87 md/jh 1/ 8
H.F. 2041 section 614.24 in the manner provided in this chapter. 1 2. The proposal to reinstate use restrictions may contain 2 fewer than all of the use restrictions that have become 3 unenforceable. The proposal must not amend or modify any use 4 restriction sought to be reinstated. 5 3. Use restrictions reinstated pursuant to this chapter 6 shall affect the same parcels as were affected at the time the 7 use restrictions became unenforceable. 8 Sec. 3. NEW SECTION . 564B.3 Procedure to reinstate use 9 restrictions by recorded agreement. 10 1. Use restrictions may be reinstated upon the filing 11 with the recorder of each county in which the common interest 12 community is located a reinstatement agreement that contains 13 the complete text of the use restrictions being reinstated 14 and is executed by the owners of a majority of the affected 15 parcels. The executive board shall file the reinstatement 16 agreement within thirty days after a majority of the owners of 17 the affected parcels have executed the reinstatement agreement. 18 2. The reinstated use restrictions filed by the executive 19 board shall have annexed a certification by the executive board 20 that the reinstatement agreement was executed by the owners of 21 a majority of the affected parcels. 22 3. Immediately after recording the reinstatement agreement, 23 the executive board shall mail or hand deliver to each parcel 24 owner a complete copy of the recorded agreement. 25 Sec. 4. NEW SECTION . 564B.4 Procedure to reinstate use 26 restrictions by vote of parcel owners. 27 1. Use restrictions may be reinstated by vote of the parcel 28 owners in the manner provided in this section. 29 2. A proposal to reinstate use restrictions may be initiated 30 by either of the following: 31 a. The executive board. 32 b. A petition signed by owners of at least ten percent of 33 the affected parcels. Such petition shall include the text of 34 the use restrictions proposed to be reinstated. 35 -2- LSB 5569YH (3) 87 md/jh 2/ 8
H.F. 2041 3. If a proposal is initiated under subsection 2, the 1 executive board shall give notice, by mail or hand delivery, 2 to the persons who own the affected parcels as of the close of 3 business on the business day preceding the day on which notice 4 is given. If notice is given by mail, the notice is deemed 5 given on the date of mailing. The notice shall contain the 6 following information: 7 a. The complete text of the proposed use restrictions to be 8 submitted to the affected parcel owners for approval. 9 b. A graphic depiction of the property and parcels affected 10 by the reinstated use restrictions. 11 c. The place, date, and time of the meeting at which the 12 reinstatement of the use restrictions will be considered and 13 voted upon, or instructions for an action by written ballot, 14 including the last date that a written ballot will be accepted. 15 d. A statement that the use restrictions will be reinstated 16 if parcel owners who own a majority of the affected parcels 17 vote to approve reinstatement. 18 4. The use restrictions contained in the proposal shall be 19 reinstated upon approval by the owners of a majority of the 20 affected parcels by a vote at a meeting conducted in the manner 21 described in section 564B.5, or by written ballot as described 22 in section 564B.6, and shall be effective in accordance with 23 section 564B.7. 24 5. There shall be one vote per parcel, regardless of the 25 number of parcel owners who own such parcel. If a parcel is 26 owned by more than one person, all owners must vote to approve 27 or the vote shall not be counted as a vote for approval. 28 Sec. 5. NEW SECTION . 564B.5 Meetings to reinstate use 29 restrictions. 30 1. A meeting on the matter of voting to reinstate use 31 restrictions shall not be held less than fourteen days or more 32 than sixty days after the last notice is given under section 33 564B.4, subsection 3. 34 2. The parcel owners entitled to vote at the meeting are the 35 -3- LSB 5569YH (3) 87 md/jh 3/ 8
H.F. 2041 owners of affected parcels as of the date of the meeting. 1 3. a. The parcel owners have the right to vote in person 2 or by proxy. 3 b. To be valid, a proxy must be dated, must state the place, 4 date, and time of the meeting for which the proxy was given, 5 and must be signed by the parcel owner. If a parcel is owned by 6 more than one person, each parcel owner must sign the proxy for 7 such proxy to be valid. 8 c. A proxy is effective only for the specific meeting for 9 which the proxy was originally given. 10 d. A proxy is revocable at any time at the discretion of any 11 parcel owner who executed the proxy. 12 e. If the proxy form expressly so provides, any proxy holder 13 may appoint, in writing, a substitute to act in the proxy 14 holder’s place. 15 4. A quorum shall be met if parcel owners who own a majority 16 of the affected parcels are present at the meeting, either in 17 person or by proxy. 18 Sec. 6. NEW SECTION . 564B.6 Action by written ballot. 19 1. A vote to reinstate use restrictions may be taken without 20 a meeting if the executive board includes a written ballot 21 with the notice and other documents required to be given under 22 section 564B.4, subsection 3. 23 2. A written ballot must set forth the use restrictions 24 proposed to be reinstated and provide an opportunity to vote 25 for or against reinstatement. 26 3. One written ballot shall be provided for each parcel, 27 regardless of the number of parcel owners who own such parcel. 28 4. The deadline for the written ballot to be received in 29 order to be counted shall be at least fourteen days, but not 30 more than sixty days, after the notice containing the written 31 ballot is given. 32 5. A written ballot that has been cast shall not be revoked 33 by any person. 34 Sec. 7. NEW SECTION . 564B.7 Recording and notice of 35 -4- LSB 5569YH (3) 87 md/jh 4/ 8
H.F. 2041 recording. 1 1. Within thirty days after a majority of the parcel 2 owners have voted to approve the reinstatement of the use 3 restrictions, the executive board shall file the reinstated 4 use restrictions with the recorder of each county in which the 5 common interest community is located. 6 2. The reinstated use restrictions filed by the executive 7 board shall have annexed a certification by the executive board 8 that the reinstated use restrictions were approved by a vote of 9 the owners of a majority of the affected parcels. 10 3. Immediately after recording the reinstated use 11 restrictions, the executive board shall mail or hand deliver to 12 each parcel owner a complete copy of the recorded reinstated 13 use restrictions. 14 Sec. 8. NEW SECTION . 564B.8 Effect of reinstated use 15 restrictions. 16 1. The reinstated use restrictions shall be effective upon 17 recordation with respect to each affected parcel, regardless of 18 whether an owner of an affected parcel approved the reinstated 19 use restrictions. 20 2. The reinstated use restrictions shall not be given 21 retroactive effect with respect to any affected parcel. 22 3. A reinstated use restriction shall not be enforced 23 against a parcel if each of the following are true: 24 a. A parcel owner made a good-faith investment that would be 25 impaired by such enforcement. 26 b. The good-faith investment described in paragraph “a” 27 was made after the use restriction became unenforceable by 28 operation of section 614.24 and before reinstatement under this 29 chapter. 30 Sec. 9. Section 614.24, Code 2018, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 4A. If use restrictions are reinstated 33 pursuant to chapter 564B, the recording date for purposes of 34 the twenty-one-year limitation in subsection 1 shall be the 35 -5- LSB 5569YH (3) 87 md/jh 5/ 8
H.F. 2041 date the reinstated use restrictions are recorded under section 1 564B.3 or 564B.7. 2 Sec. 10. APPLICABILITY. This Act applies to common interest 3 communities created prior to, and still in existence on, July 4 1, 2018, and created on or after July 1, 2018. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill relates to the ability of a common interest 9 community to reinstate lapsed use restrictions. 10 The bill defines “common interest community” as real estate 11 described in a declaration with respect to which a person, by 12 virtue of the person’s ownership of a parcel, is obligated 13 to pay for a share of real estate taxes, insurance premiums, 14 maintenance, improvements, services, or other expenses related 15 to common elements or other real estate described in the 16 declaration. 17 The bill references the definition of “use restriction” in 18 Code section 614.24, which is a limitation or prohibition on 19 the rights of a landowner to make use of the landowner’s real 20 estate, including limitations or prohibitions on commercial 21 uses, rental use, parking and storage of recreational vehicles 22 and their attachments, ownership of pets, outdoor domestic 23 uses, construction and use of accessory structures, building 24 dimensions and colors, building construction materials, and 25 landscaping. “Use restriction” does not include an easement 26 granting a person an affirmative right to use land in the 27 possession of another person, including but not limited to an 28 easement for pedestrian or vehicular access, reasonable ingress 29 and egress, solar access, utilities, supporting utilities, 30 parking areas, bicycle paths, and water flow, an agreement 31 between two or more parcel owners providing for the sharing of 32 costs and other obligations for real estate taxes, insurance 33 premiums, and for maintenance, repair, improvements, services, 34 or other costs related to two or more parcels of real estate 35 -6- LSB 5569YH (3) 87 md/jh 6/ 8
H.F. 2041 regardless of whether the parties to the agreement are owners 1 of individual lots or incorporated or unincorporated lots 2 or have ownership interests in common areas in a horizontal 3 property regime or residential housing development, or an 4 agreement between two or more parcel owners for the joint use 5 and maintenance of driveways, party walls, landscaping, fences, 6 wells, roads, common areas, waterways, or bodies of water. 7 Under Code section 614.24, an action arising or existing 8 by reason of the provisions of any contract providing for use 9 restrictions in and to real estate may not be maintained after 10 21 years from the recording of the contract unless a claimant 11 has filed a verified claim with the county recorder within the 12 21-year period. Therefore, if an owners’ association or other 13 claimant does not file a verified claim regarding a common 14 interest community’s declaration before the expiration of the 15 21-year period, the use restrictions in the declaration become 16 unenforceable. 17 The bill enacts new Code chapter 564B to provide a mechanism 18 for common interest communities with 500 or more parcels, 19 as defined in the bill, to reinstate use restrictions which 20 have become barred by operation of Code section 614.24. Use 21 restrictions may be reinstated upon the filing with the 22 county recorder of a reinstatement agreement that contains the 23 complete text of the use restrictions being reinstated and 24 is executed by owners of a majority of the affected parcels. 25 Use restrictions may also be reinstated after an affirmative 26 vote by a majority of the affected parcel owners, either at 27 a meeting or by written ballot. A proposal for a vote to 28 reinstate use restrictions may be brought by the executive 29 board of the owners’ association or by petition of parcel 30 owners who own at least 10 percent of the affected parcels. 31 The bill specifies the form of the notice the executive 32 board shall provide to parcel owners regarding a proposal for a 33 vote to reinstate use restrictions. The proposal may be voted 34 upon at a meeting which shall be held no less than 14 days and 35 -7- LSB 5569YH (3) 87 md/jh 7/ 8
H.F. 2041 no more than 60 days after notice is provided to the parcel 1 owners. The proposal may also be voted on by written ballot. 2 If the vote is by written ballot, the notice must specify when 3 ballots are due, which must be no earlier than 14 days and no 4 later than 60 days after the written ballots are delivered. 5 Upon proper notice, if the owners of a majority of the 6 affected parcels in the common interest community approve 7 the reinstatement of lapsed use restrictions, the lapsed use 8 restrictions are reinstated as to all parcels in the common 9 interest community. 10 The reinstated use restrictions become effective upon 11 recordation. The reinstated use restrictions are not given 12 retroactive applicability. Reinstated use restrictions 13 cannot be enforced against a parcel if a parcel owner made 14 a good-faith investment that would be impaired by such 15 enforcement and such investment was made while the use 16 restriction was unenforceable under Code section 614.24 and 17 before the use restriction was reinstated under new Code 18 chapter 564B. 19 The bill provides that if use restrictions are reinstated 20 under new Code chapter 564B, the 21-year limitation period 21 under Code section 614.24 begins as of the recordation date of 22 the reinstated use restrictions. 23 The bill applies to common interest communities created 24 prior to, and still in existence on, July 1, 2018, and created 25 on or after July 1, 2018. 26 -8- LSB 5569YH (3) 87 md/jh 8/ 8