2006 -- S 2461

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LC01959

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2006

____________

A N A C T

RELATING TO REAL PROPERTY -- RESTRICTIONS

     Introduced By: Senators Tassoni, Walaska, and Blais

     Date Introduced: February 09, 2006

     Referred To: Senate Commerce, Housing & Municipal Government

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 34-4-19, 34-4-20, 34-4-21, 34-4-22, 34-4-23 and 34-4-26 of the

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General Laws in Chapter 34-4 entitled "Estates in Real Property" are hereby amended to read as

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follows:

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     34-4-19. Limitation of possibilities of reverter and rights of entry. -- If a possibility of

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reverter or right of entry for condition broken in land is reserved in a deed executed after May 11,

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1953, or in a will of a testator who dies after May 11, 1953, and the possibility of reverter does

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not become a possessory interest or the right of entry is not exercised within twenty (20) years

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from the date of the execution of the deed or the death of the testator, then the possibility of

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reverter or right of entry shall become void, except a housing restriction as set forth in section 34-

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39.1-3.

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     34-4-20. Possibilities of reverter and rights of entry exempt from limitation. --

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Section 34-4-19 shall not apply to a possibility of reverter or right of entry for condition broken

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in:

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     (1) Lease for a term of years;

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     (2) Grant, gift or devise to the state and Providence Plantations;

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     (3) Grant, gift or devise for public, charitable, or religious purposes;

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     (4) Deed to a railroad or public utility corporation.;

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     (5) Housing restriction as set forth in section 34-39.1-3.

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     34-4-21. Limitation of restrictive covenants. -- If a covenant or restriction concerning

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the use of land, other than housing restrictions as set forth in section 34-39.1-3, and conservation

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restrictions and preservation restrictions as set forth in sections 34-39.1-1, 34-39.1-2, 34-39.1-3,

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34-39.1-4 and 34-39.1-5, is created by any instrument taking effect after May 11, 1953, the

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covenant or restriction, if unlimited in time in the instrument, shall cease to be valid and operative

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thirty (30) years after the execution of the instrument creating it.

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     34-4-22. Expiration of recorded options affecting real estate. -- When a recorded

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instrument has created, or shall create, an option to purchase or lease real estate, other than

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housing restrictions as set forth in section 34-39.1-3, and conservation restrictions and

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preservation restrictions as set forth in sections 34-39.1-1, 34-39.1-2, 34-39.1-3, 34-39.1-4 and

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34-39.1-5, which, according to its terms, or by operation of law, has expired, and one year has

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elapsed since the time of expiration, and no conveyance, contract, lease, or other instrument has

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been recorded showing that the option has been exercised or extended, then the instrument

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creating the option shall cease to be notice to any person or to put any person on inquiry, with

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respect to the existence, exercise, or extension of the option or of any contract, conveyance, lease,

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or other writing which may have been executed pursuant to the option. The one year period

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provided for in this section shall not be extended by any disability, absence from the state,

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acknowledgment, or new promise not of record, payment after maturity, or for any other cause.

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     34-4-23. Expiration of recorded instruments affecting real estate. -- Any recorded

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contract or other instrument, other than housing restrictions as set forth in section 34-39.1-3, and

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conservation restrictions and preservation restrictions as set forth in sections 34-39.1-1, 34-39.1-

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2, 34-39.1-3, 34-39.1-4 and 34-39.1-5, which has created or shall create a right or obligation

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(other than an option) to purchase or sell real estate shall cease to be notice to any person or to put

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any person on inquiry with respect thereto unless, within ninety (90) days after the date therein

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provided for the delivery of the deed, or if no date is therein provided, then within ninety (90)

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days after the date therein provided for the payment of the final payment or installment of the

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purchase price, or if no delivery date or payment date is therein provided, then within ninety (90)

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days after the date of the recording of the contract or other instrument, an action or proceeding

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shall have been commenced to enforce the contract or other instrument and a notice of the

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pendency of the action, containing a reference to the contract or other instrument and the book

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and page of the recording thereof and a description of the real estate sufficient to identify it, shall

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have been duly recorded. The ninety (90) day period provided for in this section shall not be

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extended by any disability, absence from the state, acknowledgement, or new promise not of

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record, payment after maturity, or for any other cause with the exception that the ninety (90) day

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period may be extended by agreement of all the parties to the contract or other instrument at the

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time of the execution of the contract or other instrument.

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     34-4-26. Expiration of recorded rights affecting real estate. -- (a) Any recorded

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contract, deed or other instrument entered into which creates a preemptive right, right to

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repurchase, or a right of first refusal to purchase real estate, other than housing restrictions as set

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forth in section 34-39.1-3, and conservation restrictions and preservation restrictions as set forth

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in sections 34-39.1-1, 34-39.1-2, 34-39.1-3, 34-39.1-4 and 34-39.1-5, which by its own terms,

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does not provide for a specific expiration date, shall expire ten (10) years after the date of

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execution, or ten (10) years after recording, if no date of execution is contained in the instrument.

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If these rights are created under a lease, then the rights shall expire on the termination or

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expiration of the lease.

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      (b) Any rights created prior to the passage of this act may be extended for a period of ten

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(10) years by refiling a Notice of Intention to extend said rights in the Land Evidence Records

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prior to July 1, 1991.

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     SECTION 2. Sections 34-36.1-2.03, 34-36.1-2.05, 34-36.1-2.06, 34-36.1-2.07 and 34-

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36.1-2.17 of the General Laws in Chapter 34-36.1 entitled "Condominium Law" are hereby

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amended to read as follows:

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     34-36.1-2.03. Construction and validity of declaration and bylaws. -- (a) All

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provisions of the declaration and bylaws are severable, except a housing restriction as set forth in

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section 34-39.1-3, may not be severed from the declaration and bylaws.

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      (b) The rule against perpetuities may not be applied to defeat any provision of the

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declaration, bylaws, rules, or regulations adopted pursuant to section 34-36.1-3.02(a)(1).

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      (c) In the event of a conflict between the provisions of the declaration and the bylaws,

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the declaration prevails except to the extent the declaration is inconsistent with this chapter.

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      (d) Title to a unit and common elements is not rendered unmarketable or otherwise

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affected by reason of an insubstantial failure of the declaration to comply with this chapter.

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Whether a substantial failure impairs marketability is not affected by this chapter.

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     34-36.1-2.05. Contents of declaration. -- (a) The declaration for a condominium must

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contain:

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      (1) The name of the condominium, which must include the word "condominium" or be

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followed by the words "a condominium," and the association;

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      (2) The name of every municipality in which any part of the condominium is situated;

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      (3) A legally sufficient description of the real estate included in the condominium;

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      (4) A statement of the maximum number of units which the declarant reserves the right

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to create;

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      (5) A description of the boundaries of each unit created by the declaration, including the

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unit's identifying number;

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      (6) A description of any limited common elements, other than those specified in section

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34-36.1-2.02(2) and (4), or as provided in section 34-36.1-2.09(b)(10);

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      (7) A description of any real estate (except real estate subject to development rights)

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which may be allocated subsequently as limited common elements, other than limited common

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elements specified in section 34-36.1-2.02(2) and (4), together with a statement that they may be

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so allocated;

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      (8) A description of any development rights and other special declarant rights (section

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34-36.1-1.03(26)) reserved by the declarant, together with a legally sufficient description of the

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real estate to which each of those rights applies, and a time limit within which each of those rights

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must be exercised;

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      (9) If any development right may be exercised with respect to different parcels of real

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estate at different times, a statement to that effect together with:

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      (i) Either a statement fixing the boundaries of those portions and regulating the order in

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which those portions may be subjected to the exercise of each development right, or a statement

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that no assurances are made in those regards, and

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      (ii) A statement as to whether, if any development right is exercised in any portion of the

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real estate subject to that development right, that development right must be exercised in all or in

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any other portion of the remainder of that real estate;

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      (10) Any other conditions or limitations under which the rights described in subdivision

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(8) may be exercised or will lapse;

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      (11) An allocation to each unit of the allocated interests in the manner described in

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section 34-36.1-2.07;

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      (12) Any restrictions on use, occupancy, and alienation of the units, including any

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housing restrictions as set forth in section 34-39.1-3;

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      (13) The recording data for recorded easements and licenses appurtenant to or included

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in the condominium or to which any portion of the condominium is or may become subject by

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virtue of a reservation in the declaration; and

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      (14) All matters required by sections 34-36.1-2.06, 34-36.1-2.07, 34-36.1-2.08, 34-36.1-

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2.09, 34-36.1-2.15, 34-36.1-2.16, and 34-36.1-3.03(d).

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      (b) The declaration may contain any other matters the declarant deems appropriate.

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     34-36.1-2.06. Leasehold condominiums. -- (a) Any lease the expiration or termination

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of which may terminate the condominium or reduce its size, or a memorandum thereof, shall be

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recorded. Every lessor of those leases must sign the declaration, and the declaration shall state:

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      (1) The recording data for the lease (or a statement of where the complete lease may be

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inspected);

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      (2) The date on which the lease is scheduled to expire;

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      (3) A legally sufficient description of the real estate subject to the lease;

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      (4) Any right of the unit owners to redeem the reversion and the manner whereby those

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rights may be exercised, or a statement that they do not have those rights;

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      (5) Any right of the unit owners to remove any improvements within a reasonable time

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after the expiration or termination of the lease, or a statement that they do not have those rights;

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and

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      (6) Any rights of the unit owners to renew the lease and the conditions of any renewal, or

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a statement that they do not have those rights.; and

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     (7) Any housing restriction as set forth in section 34-39.1-3, and the details thereof.

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      (b) After the declaration for a leasehold condominium is recorded, neither the lessor nor

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his or her successor in interest may terminate the leasehold interest of a unit owner who makes

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timely payment of his or her share of the rent and otherwise complies with all covenants which, if

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violated, would entitle the lessor to terminate the lease. A unit owner's leasehold interest is not

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affected by failure of any other person to pay rent or fulfill any other covenant.

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      (c) Acquisition of the leasehold interest of any unit owner by the owner of the reversion

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or remainder does not merge the leasehold and fee simple interests unless the leasehold interests

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of all unit owners subject to that reversion or remainder are acquired.

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      (d) If the expiration or termination of a lease decreases the number of units in a

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condominium, the allocated interests shall be reallocated in accordance with section 34-36-7(a) as

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though those units had been taken by eminent domain. Reallocations shall be confirmed by an

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amendment to the declaration prepared, executed, and recorded by the association.

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     34-36.1-2.07. Allocation of common element interest, votes, and common expense

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liabilities. -- (a) The declaration shall allocate a fraction or percentage of undivided interests in

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the common elements and in the common expenses of the association, and a portion of the votes

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in the association, to each unit including land only units and state the formulas used to establish

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those allocations. Those allocations may not discriminate in favor of units owned by the

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declarant, but may discriminate in favor of units subject to a housing restriction as set forth in

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section 34-39.1-3. Except as set forth in section 34-36.1-1.03(7), no minimum percentage interest

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in the common elements is otherwise required.

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      (b) If units may be added to or withdrawn from the condominium, the declaration must

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state the formulas to be used to reallocate the allocated interests among all units included in the

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condominium after the addition or withdrawal.

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      (c) The declaration may provide: (i) That different allocations of votes shall be made to

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the units on particular matters specified in the declaration; (ii) For cumulative voting only for the

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purpose of electing members of the executive board; and (iii) For the class voting on specified

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issues affecting the class if necessary to protect valid interests of the class. A declarant may not

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utilize cumulative or class voting for the purpose of evading any limitation imposed on declarants

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by this chapter, nor may units constitute a class because they are owned by a declarant.

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      (d) Except for minor variations due to rounding, the sum of the undivided interests in the

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common elements and common expense liabilities allocated at any time to all the units must each

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equal one if stated as fractions or one hundred percent (100%) if stated as percentages. In the

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event of discrepancy between an allocated interest and the results derived from application of the

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pertinent formula, the allocated interest prevails.

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      (e) The common elements are not subject to partition, and any purported conveyance,

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encumbrance, judicial sale, or other voluntary or involuntary transfer of an undivided interest in

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the common elements made without the unit to which that interest is allocated, is void.

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      (f) Subject to the provisions of the declaration and other provisions of law, and except as

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provided in section 34-36.1-2.12 which provides for the relocation of boundaries between

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adjoining units, the owners of any two (2) or more units may apply for a reallocation of their

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respective allocated interests to the executive board; but their application shall not attempt to alter

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common element interests except as they relate to the proposed reallocation of unit interests.

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Unless the executive board determines within thirty (30) days, that the reallocations are

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unreasonable, the association shall prepare an amendment that identifies the units involved, states

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the reallocations, is executed by those unit owners, contains words of conveyance between them,

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and upon recordation, is indexed in the name of the grantor and the grantee.

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     34-36.1-2.17. Amendment of declaration. -- (a) Except in cases of amendments that

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may be executed by a declarant under section 34-36.1-2.09(f) or 34-36.1-2.10; the association

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under section 34-36.1-1.07, 34-36.1-2.06(d), 34-36.1-2.07(f), 34-36.1-2.08(c), 34-36.1-2.12(a), or

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34-36.1-2.13; or certain unit owners under section 34-36.1-2.07(f), 34-36.1-2.08(b), 34-36.1-2.12,

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34-36.1-2.13(b), or 34-36.1-2.18(b), and except as limited by subsection (d) of this section, the

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declaration, including the plats and plans, may be amended only by vote or agreement of unit

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owners of units to which at least sixty-seven percent (67%) of the votes in the association are

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allocated, or any larger majority the declaration specifies. The declaration may specify a smaller

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number only if all the units are restricted exclusively to nonresidential use.

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      (b) No action to challenge the validity of an amendment adopted by the association

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pursuant to this section may be brought more than one year after the amendment is recorded.

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      (c) Every amendment to the declaration must be recorded in every municipality in which

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any portion of the condominium is located, and is effective only upon recordation. An

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amendment shall be indexed in the grantee's index in the name of the condominium and the

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association and in the grantor's index in the name of the parties executing the amendment.

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      (d) Except to the extent expressly permitted or required by other provisions of this

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chapter, no amendment may create or increase special declarant rights, increase the number of

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units, change the boundaries of any unit, the allocated interests of a unit, or the uses to which any

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unit is restricted, in the absence of unanimous consent of the unit owners.

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      (e) Amendments to the declaration required by this chapter to be recorded by the

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association shall be prepared, executed, recorded, and certified on behalf of the association by

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any officer of the association designated for that purpose or, in the absence of designation, by the

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president of the association.

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     (f) A declaration and bylaws may require that amendments to any sections dealing with

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housing restrictions as set forth in section 34-39.1-3, may also require notice to and/or consent of

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the restriction holder before such amendments shall take effect.

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     SECTION 3. Sections 34-39.1-3 and 34-39.1-4 of the General Laws in Chapter 34-39.1

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entitled "The Holders of Low and Moderate Income Housing Restrictions Act" are hereby

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amended to read as follows:

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     34-39.1-3. Definitions. -- For purposes of this chapter:

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      (1) "Housing restriction" means any obligation or requirement to maintain real estate

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affordable for rental to or purchase by low and moderate income citizens of the state or any

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limitation on the future use or transfer of the real estate, whether stated in the form of a charge,

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encumbrance, financing instrument, easement, covenant, or condition in any deed, agreement, or

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other instrument executed by or on behalf of the owner of the real estate.

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      (2) "Restriction holder" means any nonprofit corporation, partnership, association,

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cooperative, or trust established for the primary purpose of owning, operating, leasing,

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preserving, or maintaining housing affordable to persons and families of low and moderate

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income, and entities that provide financing, land, or other benefits related to the development and

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preservation of affordable housing including, but not limited to, state agencies, municipalities,

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foundations, Rhode Island housing and mortgage finance corporation, and public housing

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authorities.

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     34-39.1-4. Housing restrictions enforceable. -- (a) No housing restriction, whether

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presently existing or hereafter created, that is held by a restriction holder shall be unenforceable

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against an owner or assignee of any real estate subject to the housing restriction because of lack

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of privity of estate or contract, or lack of benefit to particular land, or on account of any other

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common law doctrine of property law which might cause the termination of the housing

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restriction.

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     (b) This section shall not be construed to imply that restriction, charge, encumbrance,

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easement, covenant, or condition which is not covered hereunder shall, on account of any

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provisions hereof, be unenforceable.

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     (c) A housing restriction as defined in section 34-39.1-3(a) shall not be subject to the

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thirty (30) year limitation on restricted covenants provided for in section 34-4-21.

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     (d) A housing restriction as defined in subsection 34-39.1-3(a) shall not be subject to any

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of the limitations on possibilities of reverter and rights of entry or expirations or invalidity of

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restrictive covenants provided for in section 34-4-19, 34-4-20, 34-4-22, 34-4-23 or 34-4-26.

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     SECTION 4. Chapter 34-39.1 of the General Laws entitled "The Holders of Low and

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Moderate Income Housing Restrictions Act" is hereby amended by adding thereto the following

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section:

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     34-39.1-6. Invalidity of certain restrictive covenants. – Since decent, safe and sanitary

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housing units available and affordable to persons and families of low and moderate income must

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by their nature be situated in residential areas, including exclusively residential areas and also

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mixed use areas, any restrictive covenant or other private legal impediment which directly or

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indirectly prevents or restricts the establishment of housing subject to a housing restriction as

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defined in this chapter, excluding conservation restrictions and preservation restrictions as

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defined in section 34-39-2, shall be void and unenforceable.

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     SECTION 5. This act shall take effect upon passage.

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LC01959

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO REAL PROPERTY -- RESTRICTIONS

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     This act would amend the real property condominium and low-income housing laws

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concerning housing, conservation and preservation restrictions.

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     This act would take effect upon passage.

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LC01959

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