Condo Media - January 2010 - 26

RHODE ISLAND N e w s by Frank A. Lombardi, Esq. R e g i o n a l RILAC Scores Again Legislation to Amend Rhode Island Condominium Act Passes fter its success in getting a super lien amendment passed in 2008, the Rhode Island Legislative Action Committee (RILAC) submitted legislation to amend the Rhode Island Condominium Act and again, came away with a win. House Bill 5906, which became law on Nov. 9, 2009, without Gov. Donald L. Carcieri’s signature, adds language to the Condominium Act, providing for easier management of condominium associations. C A I You’ve Got Mail The bill essentially covers two parts: The first part, section 3.01, makes it easier for the public to get in touch with the condominium association as a whole. The revised language states as follows in the pertinent part: 34-36.1-3.01. Organization of unit owners’ association In the case of an unincorporated association, a certificate evidencing the names of the executive board members and mailing address for the association shall be recorded with the municipal land records department for the city or town in which the condominium is located, which shall be updated as often as necessary to reflect any changes in the composition of the executive board. Specifically, the new language requires all unincorporated associations to complete a certificate listing the names and addresses of its board members and to file it with the clerk’s office in the town or city where the condominium is located. For example, let’s say a unit owner has declared bankruptcy or the bank that holds the mortgage is foreclosing. In either case, Rhode Island law will require that the association, as an interested party, be given formal notice of the proceedings. Very often, an association may not have a formal address and may not have received appropriate notice of these proceedings that could adversely affect it. Before, by the time the association received notice, it was too late for it to protect itself vis a vis the collection of condominium fees owed on the unit. With this new law, in those situations when a party seeks to notify the association, it now can go to the town hall where the condominium is located, and find a certificate listing the name and address of the board members of the association. Naturally, there is a great deal of work to be done to “get the word out.” Managers, board members and unit owners are encouraged to file this certificate as soon as possible. As new boards are voted in, new certificates must be filed to keep the information current. Note that this bill addresses only associations that are not incorporated. The ones that are incorporated already must file its list of board members with the secretary of state and an agent for service of process/notice. However, association boards are urged to update the information on record there as well, to prevent a situation where an address or identity of board members/agents is stale. and to use as collateral its right to collect assessments in the future. (a) Except as provided in subsection (b), (not applicable here) and subject to the provisions of the declaration, the association, even if unincorporated, may: (14) Borrow funds including the right to assign and/or pledge its right to future income, including the right to receive common expense assessments Let’s say you have a two-family investment property that you rent out to two tenants, and you want to borrow money from a bank to fix the place up. The bank will lend you money and will take as part of its collateral your right to collect rent from the tenants. It’s the same with the condo association loan: if money is needed to replace decks, the bank can lend money to the association and take as security the right of the association to collect the assessments from each unit owner. The association’s authority to borrow and pledge its assets is subject to the wording of the declaration. For example, in most declarations and bylaws, there will be provisions establishing the requisite number of unit owner approval (i.e., 67 percent) before a board could take out a loan. As always, the RILAC would like to recognize and thank State Rep. Pat Serpa (D-West Warwick) for her help in sponsoring this bill. CM Frank A. Lombardi, Esq. is a partner in the law firm Goodman, Shapiro & Lombardi LLC. He is co-chair of the RILAC and member of the CAI-NE Rhode Island Regional Committee and a frequent author and speaker. … or a Borrower Be The second part of the bill amends 34-36.1-3.02. Powers of unit owners’ association and makes it easier for associations to borrow money, by specifically listing as one of the association’s powers the ability to borrow CONDO MEDIA • JANUARY 2010

Condo Media - January 2010

Table of Contents for the Digital Edition of Condo Media - January 2010