COMMITTEE SUBSTITUTE
FOR
H. B. 2679
(By Delegates Manuel, Vest and Doyle)
(Originating in the House Committee on the Judiciary)
[April 1, 1993]
A BILL to amend and reenact section two hundred three, article
one, chapter thirty-six-b of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to amend
and reenact sections one hundred one, one hundred three and
one hundred eight, article four of said chapter, all
relating to the uniform common interest ownership act;
increasing maximum annual assessment and providing that
purchaser be actually damaged by failure to provide public
offering statement; and providing limitation on action for
damages and penalty.
Be it enacted by the Legislature of West Virginia:
That section two hundred three, article one, chapter thirty-
six-b of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that
sections one hundred one, one hundred three and one hundred
eight, article four of said chapter be amended and reenacted, all
to read as follows:
ARTICLE 1. GENERAL PROVISIONS.
§36B-1-203. Applicability to new common interest communities.
-- Exception for small and limited expense
liability planned communities.
If a planned community:
(1) Contains no more than twelve units and is not subject to
any development rights; or
(2) Provides, in its declaration, that the annual average
common expense liability of all units restricted to residential
purposes, exclusive of optional user fees and any insurance
premiums paid by the association, may not exceed $100, $300 as
adjusted pursuant to section 1-114 (adjustment of dollar amounts)
it is subject only to sections 1-105 (separate titles and
taxation) 1-106 (applicability of local ordinances, regulations
and building codes) and 1-107 (eminent domain) unless the
declaration provides that this entire chapter is applicable.
ARTICLE 4. PROTECTION OF PURCHASERS.
§36B-4-101. Applicability; waiver.
(a) This article applies to all units subject to this
chapter except as provided in subsection (b) or as modified or
waived by agreement of purchasers of units in a common interest
community in which all units are restricted to nonresidential
use.
(b) Neither a public offering statement nor a resale
certificate need be prepared or delivered in the case of:
(1) A gratuitous disposition of a unit;
(2) A disposition pursuant to court order;
(3) A disposition by a government or governmental agency;
(4) A disposition by foreclosure or deed in lieu offoreclosure;
(5) A disposition to a dealer;
(6) A disposition that may be canceled at any time and for
any reason by the purchaser without penalty; or
(7) A disposition of a unit in a planned community in which
the declaration limits the maximum annual assessment of any unit
to not more than three five hundred dollars, as adjusted pursuant
to section 1-114 (Adjustment of dollar amounts) if:
(i) The declarant has a reasonable and good faith belief
that the maximum stated assessment will be sufficient to pay the
expenses of the planned community;
(ii) The declaration cannot be amended to increase the
assessment during the period of declarant or declarant's family
control without the consent of all a majority of unit owners
other than the declarant; and
(iii) The planned community is not subject to any
development rights.
§36B-4-103. Public offering statement; general provisions.
(a) Except as provided in subsection (b), a public offering
statement must contain or fully and accurately disclose:
(1) The name and principal address of the declarant and of
the common interest community and a statement that the common
interest community is either a condominium, cooperative or
planned community;
(2) A general description of the common interest community,
including to the extent possible, the types, number, and
declarant's schedule of commencement and completion of
construction of buildings and amenities that the declarantanticipates including in the common interest community;
(3) The number of units in the common interest community;
(4) Copies and a brief narrative description of the
significant features of the declaration, other than any plats and
plans and any other recorded covenants, conditions, restrictions
and reservations affecting the common interest community; the
bylaws and any rules or regulations of the association; copies of
any contracts and leases to be signed by purchasers at closing
and a brief narrative description of any contracts or leases that
will or may be subject to cancellation by the association under
section 3-105;
(5) Any current balance sheet and a projected budget for the
association, either within or as an exhibit to the public
offering statement, for one year after the date of the first
conveyance to a purchaser and thereafter the current budget of
the association, a statement of who prepared the budget and a
statement of the budget's assumptions concerning occupancy and
inflation factors. The budget must include, without limitation:
(i) A statement of the amount or a statement that there is
no amount, included in the budget as a reserve for repairs and
replacement;
(ii) A statement of any other reserves;
(iii) The projected common expense assessment by category of
expenditures for the association; and
(iv) The projected monthly common expense assessment for
each type of unit;
(6) Any services not reflected in the budget that the
declarant provides, or expenses that he pays and which he expectsmay become at any subsequent time a common expense of the
association and the projected common expense assessment
attributable to each of those services or expenses for the
association and for each type of unit;
(7) Any initial or special fee due from the purchaser at
closing, together with a description of the purpose and method of
calculating the fee;
(8) A description of any liens, defects, or encumbrances on
or affecting the title to the common interest community;
(9) A description of any financing offered or arranged by
the declarant;
(10) The terms and significant limitations of any warranties
provided by the declarant, including statutory warranties and
limitations on the enforcement thereof or on damages;
(11) A statement that:
(i) Within fifteen days after receipt of a public offering
statement a purchaser, before conveyance, may cancel any contract
for purchase of a unit from a declarant;
(ii) If a declarant fails to provide a public offering
statement to a purchaser before conveying a unit, that purchaser
may recover from the declarant ten percent of the sales price of
the unit plus ten percent of the share, proportionate to his
common expense liability, of any indebtedness of the association
secured by security interests encumbering the common interest
community: and
Provided,
That purchaser is required to show that
he or she has been actually damaged as a result of the failure to
provide such offering statement and that his or her action to
recover such damage and the penalty provided in this paragraph isinstituted within three years from the date on which purchaser's
right of action shall have accrued; and
(iii) If a purchaser receives the public offering
statement more than fifteen days before signing a contract, he
cannot cancel the contract;
(12) A statement of any unsatisfied judgments or pending
suits against the association and the status of any pending suits
material to the common interest community of which a declarant
has actual knowledge;
(13) A statement that any deposit made in connection with
the purchase of a unit will be held in an escrow account until
closing and will be returned to the purchaser if the purchaser
cancels the contract pursuant to section 4-108, together with the
name and address of the escrow agent;
(14) Any restraints on alienation of any portion of the
common interest community and any restrictions: (i) On use,
occupancy, and alienation of the units; and (ii) on the amount
for which a unit may be sold or on the amount that may be
received by a unit owner on sale, condemnation or casualty loss
to the unit or to the common interest community or on termination
of the common interest community;
(15) A description of the insurance coverage provided for
the benefit of unit owners;
(16) Any current or expected fees or charges to be paid by
unit owners for the use of the common elements and other
facilities related to the common interest community;
(17) The extent to which financial arrangements have been
provided for completion of all improvements that the declarant isobligated to build pursuant to section 4-119 (Declarant's
Obligation to Complete and Restore);
(18) A brief narrative description of any zoning and other
land use requirements affecting the common interest community;
(19) All unusual and material circumstances, features and
characteristics of the common interest community and the units;
and
(20) In a cooperative, (i) whether the unit owners will be
entitled, for federal, state and local income tax purposes, to a
pass through of deductions for payments made by the association
for real estate taxes and interest paid the holder of a security
interest encumbering the cooperative; and (ii) a statement as to
the effect on every unit owner if the association fails to pay
real estate taxes or payments due the holder of a security
interest encumbering the cooperative.
(b) If a common interest community composed of not more than
twelve units is not subject to any development rights and no
power is reserved to a declarant to make the common interest
community part of a larger common interest community, group of
common interest communities, or other real estate, a public
offering statement may but need not include the information
otherwise required by paragraphs (9), (10), (15), (16), (17),
(18) and (19) of subsection (a) and the narrative descriptions of
documents required by subsection (a)(4).
(c) A declarant promptly shall amend the public offering
statement to report any material change in the information
required by this section.
§36B-4-108. Purchaser's right to cancel.
(a) A person required to deliver a public offering statement
pursuant to section 4-102(c) shall provide a purchaser with a
copy of the public offering statement and all amendments thereto
before conveyance of the unit, and not later than the date of any
contract of sale. Unless a purchaser is given the public
offering statement more than fifteen days before execution of a
contract for the purchase of a unit, the purchaser, before
conveyance, may cancel the contract within fifteen days after
first receiving the public offering statement.
(b) If a purchaser elects to cancel a contract pursuant to
subsection (a), he may do so by hand delivering notice thereof to
the offeror or by mailing notice thereof by prepaid United States
mail to the offeror or to his agent for service of process.
Cancellation is without penalty, and all payments made by the
purchaser before cancellation must be refunded promptly.
(c) If a person required to deliver a public offering
statement pursuant to section 4-102(c) fails to provide a
purchaser to whom a unit is conveyed with that public offering
statement and all amendments thereto as required by subsection
(a), the purchaser, in addition to any rights to damages or other
relief, is entitled to receive from that person an amount equal
to ten percent of the sale price of the unit, plus ten percent of
the share, proportionate to his common expense liability, of any
indebtedness of the association secured by security interests
encumbering the common interest community:
Provided,
That
purchaser must show that he or she has been actually damaged as
a result of the failure to provide such offering statement and
that his or her action to recover such damage and the penaltyprovided in this subsection is instituted within three years from
the date on which purchaser's right of action shall have accrued.