PRECEDENTS

The bill is an adaptation of the condominium legislation enacted in:

The bill is designed as nearly as possible to conform District of Columbia real estate transfers with that in such other jurisdictions.

SECTION-BY-SECTION ANALYSIS

Section 2. Definitions.-Note particularly:

(a) "Unit" or "condominium unit" means an enclosed space, consisting of one or more rooms, occupying all or part of a floor in buildings of one or more floors or stories regardless of whether it be designed for residence, for office, for the operation of any industry or business, or for any other type of independent use, and shall include such accessory units as may be appended thereto, such as garage, storage space, balcony, terrace, or patio: Provided, That said unit has a direct exit to a thoroughfare or to a given common space leading to a thoroughfare.

(c) "Condominium project" means a real estate condominium project; a plan or project whereby five or more apartments, rooms, office spaces, or other units in existing or proposed buildings or structures are offered or proposed to be offered for sale.

Section 3. Horizontal property regimes.-Conforms this new concept of ownership to the prevailing District of Columbia custom of subdivision by plat rather than the use of filed floor plans. The legislation recently enacted in Utah and Maryland also follows this form.

Section 4. Status of condominium units within a horizontal property regime. Section 5. Joint tenancies, tenancies in common, tenancies by the entirety.-Sections 4 and 5 follow in form the previously enacted legislation in other States. Section 6. Ownership of condominium units, of common elements; declaration; voting; individual unit deeds.-Provides for the exclusive fee simple ownership of a condominium unit with the owner having a common right to share, with other coowners, an individual fee simple interest in the common elements of the property, equivalent to the percentage representing the value of the unit to the value of whole property.

Section 7. Indivisibility of common elements; limitation upon partition.-Restrains judicial partition of the project while the same is subject to a horizontal property regime. This is an essential element to assure purchasers or lenders of the continued existence of the particular project in condominium form.

Section 8. Use of elements held in common, right to repair common elements.— Is common to the legislation enacted in other States and designed to prevent one unit from becoming a hazard to other owners or to the public.

Section 9. Condominium subdivision.-Details the form to be used in the creation of a plat of condominium subdivision. It parallels existing District of Columbia Code provisions for land subdivisions, permits condominiums only upon duly subdivided lots in order that the unit dividing lines may be definitely fixed by the surveyor to establish lot lines.

Section 10. Reference to plat.-Provides for a short from of description of individual units to avoid metes and bounds descriptions of a cube to the end that the present short code form of deed may also be used in conveyance of condominium units.

Section 11. Termination and waiver of regime.-Provides for termination of the horizontal property regime. A method of judical termination has been added to permit termination where the coowners neglect or refuse to act in a situation where a partially damaged or destroyed building may become a hazard to the public. Section 12. Merger no bar to reconstitution.-Provides for reconstitution and is common to the legislation of the other States.

Section 13. Bylaws, availability for examination.

Section 14. Necessary contents of bylaws; modification of system.

Section 15. Books of receipts and expenditures; availability for examination.— Sections 13, 14, and 15 provide for the management of the project and are similar to other legislation on the subject.

Section 16. Common profits, contributions for payment of common expenses of administration and maintenance.

Section 17. Priority of liens.

Section 18. Joint and several liability of purchaser and seller for amounts owing under section 16; purchasers' recovery, purchasers' or lenders' right to a statement setting forth amount due.-Sections 16, 17, and 18 provide for the levy and collection of a lien for common expenses.

Section 19. Supplementary method of enforcement of lien.-This is a supplementary method to enforce the lien for common expenses, to provide for a quick method of enforcement in a form parallel to the District of Columbia method of foreclosures under deeds of trust.

Section 20. Insuring building against risks; individual rights of coowners.— Provides for insurance and follows the FHA model act.

Section 21. Application of insurance proceeds to reconstruction; pro rata distribution in certain cases; rules governing. This follows previously enacted legislation. Section 22. Sharing of reconstruction cost where building is not insured or insurance indemnity is insufficient; modification of section of resolution. This has been revised to conform to HHFA technical comments.

Section 23. Separate taxation.-Parallels existing District of Columbia Code provisions for assessment and taxation of real property and provides for separate taxation of the individual units. This fulfills an essential need.

Section 24. Actions; right to separate release of judgment.

Section 25. Mechanics' and materialmen's liens, enforcement thereof; removal from lien; effect of part payment.-These two sections provide for an orderly manner of litigation and enables individual owners to obtain separate releases of judgments or mechanics' liens. Section 25 now conforms to HHFA's technical comments following the FHA model act.

Section 26. Zoning. This is intended to prevent zoning regulations being used to thwart establishment of condominium subdivision, yet permit regulation by the Zoning Commission of the project when considered as an entity.

Section 27. Supplement of existing code provisions. Is to supplement the existing code to the end that section by section revision will not be necessary to adapt the present code to this new concept and to give the horizontal property regime exemption, where necessary, from existing code provisions such as the rule against perpetuities.

Section 28. Severability.-Is a standard severability provision.

Mr. HUDDLESTON. We are happy to call upon Judge Godfrey L. Munter, chairman of the Real Property Committee of the Bar Association of the District of Columbia, as our first witness.

Judge Munter, we are ready to hear from you, and you may proceed in your own way.

STATEMENT OF JUDGE GODFREY L. MUNTER, CHAIRMAN, REAL PROPERTY COMMITTEE, BAR ASSOCIATION OF THE DISTRICT OF COLUMBIA

Judge MUNTER. Mr. Chairman, I feel honored and indeed privileged to appear before this important committee this morning to testify in regard to this legislation, H.R. 4276, which, Your Honor indicated formerly is for the most part a copy of a bill which had been introduced in the last Congress, the 87th Congress, but on account of a lapse of time no action was possible on the part of your committee. This legislation, may it please Your Honor, is brought to you principally by the Bar Associatiou of the District of Columbia, and the mortgage bankers and the Federal Housing Administration, and many related organizations who have to do with the financing of projects and construction of multiunit projects.

I am the chairman of the Committee of the Bar Association of the District of Columbia on Real Property Law, and about a year or so ago I was requested by the president of the association to take this matter under consideration by my committee.

Frankly, I had never heard of "condominium" prior to that time and so the first step I undertook was to look in the history of it and Webster's Unabridged and, of course, the word "condominium" is of Latin derivation, and "dominium" means ownership and "con" means with others or joint.

I was very much interested to find out from the history that the ancient Romans had condominium ownership and that in the code of Napoleon there is a specific provision for the ownership of joint multiunit projects.

And then it may interest this committee and you, Mr. Chairman, to know that after the First World War, five of the world powers, including the United States, exercised joint ownership under the condominium precept of the Sudan, and also certain islands in the Pacific Ocean.

In this Western Hemisphere, the project was first originated in Puerto Rico in order to give or afford an opportunity, for people without too much money, to own their own home.

As Your Honor has said, we have now over 12 States in the United States and Puerto Rico, who have passed legislation similar to the one that we are proposing here and asking Your Honor to promote.

The nearby States of Maryland and Virginia, for example, have both passed this legislation.

And I might say that this proposed bill, H.R. 4276, is a composite of the bills that we have sent for from most of the other jurisdictions, and we have tried to make them workable here in the District of Columbia.

Mr. HUDDLESTON. Judge, which State law did you use as your principal guide in drafting this legislation?

Which one is this one most similar to?

Judge MUNTER. Well, Virginia, Kentucky, Arizona, Oklahoma, and Louisiana are similar. It has also been passed in South Carolina and Hawaii and, as I said, in Puerto Rico.

I understand that similar legislation is pending in the State of New York, in the Legislature of New York, and I hope that when Mr. Rockefeller gets back it will recieve prompt consideration in that State,

too.

Now, the question that everybody usually asks is: What is the principal difference between condominium and the cooperative project?

The principal differences, as our committee sees it, are these: In a cooperative the purchaser is required to purchase stock in a corporation; whereas, under the condominium project the purchaser of an apartment buys the apartment.

He has a fee simple title to the apartment. He has a deed just like you receive a deed to a house or a store or any other real estate.

The next principal difference is that the owner of a unit, of a multiunit project of five or more units, knows in advance what his exact liability is.

Let us assume, for the sake of simplicity, that there are 100 apartments in a project and that all the apartments are of the same value and relatively the same size.

One purchaser of one unit would have a 100th say in all affairs regarding the management of the unit, of the whole project.

He would be liable to be assessed 1 percent of the total, there being 100 apartments and he having one and it all being the same set.

There is, therefore, the certainty as to the nature and extent of his liability.

I might, at this point, speak of the common elements. Perhaps this is a good place to talk about the common elements.

In addition to the unit, which this purchaser acquires, and the unit is delineated by a plat which is filed with the Recorder of Deeds here in the District of Columbia, it is contemplated by the developer, and the unit is delineated exactly by inches, by metes and bounds, of so many floors, for example, above-well, let us say Wisconsin Avenueso many feet above the level of Wisconsin Avenue, so many feet between the surface of the floor to this ceiling up here, and so many feet from the exterior of this wall to the exterior of that wall; the outside walls of the unit I am talking about, not to the inside bedrooms or bathrooms or whatever other rooms there may be.

Now, with every unit, of course, there usually is a storage space. There is a garage and there is a patio in most of these apartments. Incidentally, in California, and Your Honor may have seen in the Wall Street Journal advertisements of condominium projects down in Miami and Fort Lauderdale, but in California the law is so flexible that they have been able to go ahead and build hundreds of these condominium units without any legislation at all.

The reason we need some legislation here in the District of Columbia is that, under the present statutes, the tax assessor and the surveyor do not have authority to assess an apartment in a multifamily dwelling or an office, let's say, for instance in the Shoreham Building.

And the same is true of the surveyor. He has, under the present law-it is doubtful whether he has.

In California they just went ahead and did it anyhow. Now, then, in addition to the units, in addition to the description of the particular unit that each person buys, he is a joint owner with all the other owners of the project based upon this percentage of ownership.

I have said 100 but usually there is a variance. A man might have one-fifth or one-twentieth of ownership in a total project, but he is also the owner as a tenant in common with all the other owners of the common elements, and the common elements of a project like this are the land on which the structure is erected, the outside walls, the roof, the elevators, the stairways, the fire escapes, and the heating system and things of that kind, the air-conditioning system.

He owns that with all the other owners as a tenant in common, and his percentage in the ownership is, as I say, determined according to the original determination of his relationship of the value that he has of his apartment with all the rest.

And, under this bill, of course, the owner of a condominium apartment can buy, sell, borrow money on it, deed it, convey it by will, and he can take title by himself or a tenant by the entirety or a tenant in common, as he wishes.

It is just like any other real estate transaction.

A condominium transaction is a real estate transaction, and it is not a stock proposition. And when a person buys a condominium unit or sells it it is settled in a law office or by the title company.

Down in Alabama I know down there Woodruff & Woodruff in Athens, and Malone & Malone and so on, and they do all the real estate down there.

30-152-64

They do not have title companies in that part of the country, but here in the District, of course, we have title companies, and the transfer of a condominium unit would be handled just the same as any other real estate transaction.

The additional difference between a condominium and a cooperative is very, very basic, is very important, and the Federal Housing Administration has, in its wisdom, drafted a uniform condominium act, which is the guiding star for all its lending throughout the whole United States and Puerto Rico.

In our bill, after many conferences with Mr. Davis here, the Chief Counsel, and others of the FHA-and we had many meetings before we finally came up with this bill-we have eliminated some of the things that the Federal Housing Administration thought should be liberalized, and we have added some that they thought should be in there.

What it really does is that if you can borrow 97 percent, as it is possible under this project, from the FHA it opens the door to thousands and thousands of worthwhile people to buy their own homes which, under the cooperatives, is impossible because under a cooperative project you usually have to pay one-third down.

What this will mean is a terrific development here for the building industry and the lending industry, but, above all, it will give the people in the District of Columbia a chance to acquire homes which they cannot do under present circumstances.

And I think we all agree that we all like to own our own homes and, if possible, we like to get away from the idea of shoveling snow and cutting the lawn or the grass, and fixing the roof and things of that kind.

Condominium does all that. It is a way for thousands of people to become owners, many economists say that persons who own their own homes have a better interest in the government and the welfare of the city than people who have nothing to be tied down to.

I do not know, Mr. Chairman, of anyone here in the District of Columbia who is opposed to this legislation.

I think, as I look around here, I do not see a single person, with the possible exception of the fellows who are to read the water meters. I have understood that the District Building here in the District has received a complaint from the water meter readers, that it would make too much work for them.

Well, that is a ridiculous objection to the basic concepts of this bill. I venture to say that every year there are fewer water meters read in the District than the year before.

And there in Maryland, where they have this, and in Virginia, where they have this condominium, there are more water meters read.

I do not think it is any objection to a basic piece of important legislation as this is, that the water meter readers or the tax assessors or the surveyor should say it is too complicated or that it will make more "work for us and we can't do it."

All these other States, including some of the biggest States in the United States, have found it workable. It is feasible. It is logical and it is, in my appraisal, a very great step forward in the development of ownership of real estate.

Now, may it please you, Mr. Chairman, I have addressed the Bar Association on this subject in which I have spelled out to a very large extent this concept.