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Act; who is to preside over the meeting and who will keep the minute book wherein the resolutions shall be recorded.

(c) Care, upkeep, and surveillance of the building and its general or limited common elements and services.

(d) Manner of collecting from the coowners for the payment of common expenses.

(e) Designation, hiring, and dismissal of the personnel necessary for the good working order of the building and for the proper care of the general or limited common elements and to provide services for the building.

(f) Such restrictions on or requirements respecting the use and maintenance of the units and the use of the common elements as are designed to prevent unreasonable interference with the use of the respective units and of the common elements by the several unit owners.

(g) Designation of person authorized to accept service of process in any action relating to two or more units or to the common elements as authorized under section 24 of this Act. Such person must be a resident of and maintain an office in the District of Columbia.

(h) Notice as to the existence or nonexistence of a declaration in trust for the enforcement of the lien for common expenses permitted under section 19 of this Act.

The sole owner of the building, or if there be more than one, the coowners representing two-thirds of the votes provided for in section 6 of this Act may at any time modify the system of administration, but each one of the particulars set forth in this section shall

always be embodied in the bylaws. Sec. 15. Books OF RECEIPTS AND EXPENDITURES; AVAILABILITY FOR EXAMINATION.—The manager, administrator, or the board of directors, or of administration, or other form of administration specified in the bylaws, shall keep books with detajled accounts in chronological order, of the receipts and of the expenditures affecting the building and its administration and specifying the maintenance and repair expenses of the common elements and any other expenses incurred. Both said books and the vouchers accrediting the entries made thereupon shall be available for examination by the coowners, their duly authorized agents or attorneys, at convenient hours on working days that shall be set and announced for general knowledge. All books and records shall be kept in accordance with good accounting practice and shall be audited at least once a year by an auditor outside the organization.

Sec. 16. Common Profits, CONTRIBUTIONS FOR PAYMENT OF COMMON ExPENSES OF ADMINISTRATION AND MAINTENANCE.- - The common profits of the property shall be distributed among and the common expenses shall be charged to the unit owners according to the percentages established by section 6 of this Act.

All coowners are bound to contribute in accordance with the said percentages toward the expenses of administration and of maintenance and repairs of the general common elements, and, in proper case, of the limited common elements of the building and toward any other expenses lawfully agreed upon by the council of coowners.

No owner shall be exempt from contributing toward such common expenses by waiver of the use or enjoyment of the common elements both general and limited, or by the abandonment of the condominium unit belonging to him.

Said contribution may be determined, levied, and assessed as a lien on the beginning of each calendar or fiscal year, and may become and be due and payable in such installments as the bylaws may provide, and said bylaws may further provide that upon default in the payment of any one or more of such installments, the balance of said lien may be accelerated at the option of the manager, board of directors, or of management and be declared due and payable in full.

Sec. 17. PRIORITY OF LIENS.—The lien established by section 16 of this Act shall have preference over any other assessments, liens, judgments, or charges of whatever nature, except the following:

(a) General and special assessments for real estate taxes on the condominium unit and,

(b) The liens of any deeds of trust, mortgage instruments, or encumbrances duly recorded on the condominium unit prior to the asessment of the lien thereon or duly recorded on said unit after receipt of a written statement from the manager, board of directors, or of management reflecting that payments on said lien were current as of the date of recordation of said

deed of trust, mortgage instrument, or encumbrance. Upon a voluntary sale or conveyance of a condominum unit all unpaid assessments against a grantor coowner for his pro rata share of the expenses to which

FOR

section 16 of this Act refers shall first be paid out of the sales price or by the grantee in the order of preference set forth above. Upon an involuntary sale through foreclosure of a deed of trust, mortgage, or encumbrance having preference as set forth in subparagraph (b) of this section a purchaser thereunder shall not be liable for any installments of such lien as became due prior to his acquisition of title. Such arrears shall be deemed common expenses, collectible from all coowners, including such purchaser.

SEC. 18. JOINT AND SEVERAL LIABILITY OF PURCHASER AND SELLER AMOUNTS OWING UNDER SECTION 16; PURCHASERS' RECOVERY, PURCHASERS' OR LENDERS' Right To A STATEMENT SETTING FORTH AMOUNT DUE.-The purchaser of a condominium unit in a voluntary sale shall be jointly and severally liable with the seller for the amounts owing by the latter under section 16 of this Act upon his interest in the condominium unit up to the time of conveyance; without prejudice to the purchasers' right to recover from the other party the amounts paid by him as such joint debtor: Provided, That any such purchaser, or a lender under a deed of trust, mortgage, or encumbrance, or parties designated by them shall be entitled to a statement from the manager, board of directors, or of administration, as the case may be, setting forth the amount of unpaid assessments against the seller or borrower, and the unit conveyed or encumbered shall not be subject to a lien for any unpaid assessment in excess of the amount set forth.

Sec. 19. SUPPLEMENTARY METHOD OF ENFORCEMENT OF LIEN.-In addition to proceedings available at law or equity for the enforcement of the lien established by section 16 of this Act, all the owners of property constituted into a horizontal property regime may execute bonds conditioned upon the faithful performance and payment of the installments of the lien permitted by section 16 of this Act and may secure the payment of such obligations by a declaration in trust recorded among the land records of the District of Columbia, granting unto a trustee or trustees appropriate powers to the end that upon default in the performance of such bond, said declaration in trust may be foreclosed by said trustee or trustees, acting at the direction of the manager, board of directors, or of management, as is proper practice in the District of Columbia in foreclosing a deed of trust.

And the bylaws may require in the event such bonds have been executed and such declaration in trust is recorded that any subsequent purchaser of a condominium unit in said horizontal property regime shall take title subject thereto and shall assume such obligations: Provided, That the said lien, bond, and declaration in trust shall be subordinate to and a junior lien to liens of general or special assessments for real estate taxes, then or thereafter accruing against the unit and to the lien of any duly recorded deeds of trust, mortgages, or encumbrances previously placed upon the unit and said lien, bond, and declaration in trust shall be and become subordinate to any subsequently recorded deeds of trust, mortgages, or encumbrances: Provided, That the lender thereunder shall first obtain from the manager, board of directors, or of administration a written statement as provided in section 18, of this Act reflecting that payments due under this lien are current as of the date of recordation of such subsequent deed of trust, mortgage, or encumbrance.

Sec. 20. INSURING BUILDING AGAINST Risks; INDIVIDUAL RIGHTS OF CoOWNERS.—The manager or the board of directors, if required by the bylaws or by a majority of the coowners, or at the request of a mortgagee having a first mortgage of record covering a unit, shall have the authority to, and shall, obtain insurance for the property against loss or damage by fire and such other hazards under such terms and for such amounts as shall be required or requested. Such insurance coverage shall be written on the property in the name of such manager or of the board of directors of the council of coowners, as trustee for each of the unit owners in the percentages established in the declaration. Premiums shall be common expenses. Provision for such insurance shall be without prejudice to the right of each unit owner to insure his own unit for his benefit.

SEC. 21. APPLICATION OF INSURANCE PROCEEDS TO RECONSTRUCTION; PRO Rata DISTRIBUTION IN CERTAIN Cases; Rules GOVERNING.-In case of fire or other disaster the insurance indemnity shall, except as provided in the next succeeding paragraph of this section, be applied to reconstruct the building.

Reconstruction shall not be compulsory where destruction comprises the whole or more than two-thirds of the buildings and other improvements in a condominium project. In such cases, and unless otherwise unanimously agreed upon by the coowners, the indemnity shall be delivered pro rata to the coowners entitled to it in accordance with provisions made by the bylaws or in accordance with a decision of three-fourths of the coowners, if there be no bylaw provision, after first paying off, out of the respective shares of the unit owners, to the extent sufficient for the purpose, all liens on the unit of each coowner. Should it be proper to proceed with the reconstruction, the provisions for such eventuality made in the bylaws shall be observed, or, in lieu thereof, the decision of the council of coowners shall prevail.

SEC. 22. SHARING OF RECONSTRUCTION Cost WHERE BUILDING Is Not INSURED OR INSURANCE INDEMNITY IS INSUFFICIENT; MODIFICATION OF SECTION OF RESOLUTION.-.Where the building is not insured or where the insurance indemnity is insufficient to cover the cost of reconstruction the new building costs shall be paid by all the coowners in the same proportion as their proportionate ownership of the common elements of the condominium project, and if any one or more of those composing the minority shall refuse to make such payments, the majority may proceed with the reconstruction at the expense of all the coowners and the share of the resulting common expense may be assessed against all the coowners and such assessment for this expense shall have the same priority as provided under section 17 of this Act.

SEC. 23. SEPARATE TAXATION.–For the purposes of assessment and taxation of property constituted into a horizontal property regime and to conform to the system of numbering squares, lots, blocks, and parcels for taxation purposes in effect in the District of Columbia, each condominium unit duly situate upon a subdivided lot and square shall bear a number or letter that will distinguish it from every other condominium unit situate in said lot and square.

Each of said condominium units shall be carried on the records of the assessor as a separate and distinct entity and all real estate taxes, including general and special assessments, shall be assessed, levied, and collected against each of said several, separate, and distinct units in conformity with the percentages of coownership established by section 6 of this Act. Said individual assessments shall include the value of the percentage interest in the common elements and of the unit itself.

No forfeiture or sale of the improvements or the real estate as a whole for delinquent real estate taxes, special assessments, or charges shall ever divest or in anywise affect the title to an individual condominium unit so long as the real estate taxes or duly levied share of special assessments and charges on said individual condominium unit are currently paid.

SEC. 24. ACTIONS; RIGHT TO SEPARATE RELEASE OF JUDGMENT.— Without limiting the right of any coowner, actions may be brought on behalf of two or more of the unit owners, as their respective interests may appear, by the manager, or board of directors, or of administration with respect to any cause of action relating to the common elements or more than one unit.

Service of process on two or more unit owners in any action relating to the common elements may be made on the person designated in the bylaws in conformity with section 14(g) of this Act.

In the event of entry of a final judgment as a lien against two or more unit owners, the unit owners of the separate units may remove their unit and their percentage interest in the common elements from the lien thereof by payment of the fractional proportional amounts attributable to each of the units affected. Said individual payment shall be computed by reference to the percentage established pursuant to section 6 of this Act. After such partial payment, partial discharge, or release or other satisfaction, the unit and its percentage interest in the common elements shall thereafter be free and clear of the lien of such judgment.

Such partial payment, satisfaction or discharge shall not prevent such a judgment creditor from proceeding to enforce his rights against any unit and its percentage interest in the common elements not so paid, satisfied or discharged.

Sec. 25. MECHANICS' AND MATERIALMEN'S LIENS, ENFORCEMENT THEREOF; REMOVAL FROM LIEN; EFFECT OF PART PAYMENT.-Subsequent to establishment of a horizontal property regime as provided in this Act, and while the property remains subject to this Act, no lien shall thereafter arise or be effective against the property. During such period liens or encumbrances shall arise or be created and enforced only against each unit and the percentage of undivided interest in the common areas and facilities appurtenant to such unit in the same manner and under the same conditions in every respect as liens or encumbrances may arise or be created upon or against any other separate parcel or real property subject to individual ownership: Provided, That no labor performed or materials furnished with the consent or at the request of a unit owner or his agent or his contractor or subcontractor, shall be the basis for the filing of a lien pursuant to the provisions of section 1237 of the Act of March 3, 1901 (31 Stat. 1384), against the unit or any other property of any other unit owner not expressly consenting to or requesting the same, except that such express consent shall be deemed to be given by the owner of any unit in the case of emergency repairs thereto. Labor performed or materials furnished for the common areas and facilities, if duly authorized by the council of coowners, the manager, or board of directors in accordance with this Act, the declaration or bylaws, shall be deemed to be performed or furnished with the express consent of each unit owner and shall be the basis for the filing of a lien pursuant to the provisions of section 1237 of the Act of March 3, 1901 (31 Stat. 1384), against each of the units and shall be subject to the provisions of subparagraph (b) hereunder. Notice of said lien may be served on the person designated in conformity with section 14(g) of this Act.

(b) In the event of filing of a lien against two or more units and their respective percentage interest in the common elements, the unit owners of the separate units may remove their unit and their precentage interest in the common elements appurtenant thereto from the said lien by payment, or may file a written undertaking with surety approved by the court as provided in section 1254 of the Act of March 3, 1901 (31 Stat. 1387), of the fractional or proportional amounts attributable to each of the units affected. Said individual payment, or amount of bond, shall be computed by reference to the percentage established pursuant to section 6 of this Act. After such partial payment, filing of bond, partial discharge, or release, or other satisfaction, the unit and its percentage interest in the common elements shall thereafter be free and clear of such lien. Such partial payment, idemnity, satisfaction, or discharge shall not prevent the lienor from proceeding to enforce his rights against any unit and its percentage interest in the common elements not so paid, indemnified, satisfied, or discharged.

SEC. 26. ZONING.–The provisions of the zoning regulations of the District of Columbia, as may be in effect as of the date of enactment of this Act, shall not apply to the condominium subdivision as herein established: Provided, That whenever they deem proper, the Zoning Commission of the District of Columbia may adopt rules and regulations, not inconsistent with general law, governing a horizontal property regime in order to implement this program: And provided further, That this section of this Act shall not be construed so as to create an exception, not otherwise authorized, as to the conformity of use or of structure in whatever district the lot of the land subdivision or the building thereon may be situated within the zoning plan of the District of Columbia.

Sec. 27. SUPPLEMENT OF EXISTING CODE PROVISIONS.—The provisions of this Act shall be in addition to and supplemental to all other provisions of law of the District of Columbia and wheresoever there appears in the provisions the words "square", "lot”, "land", "ground”, “parcel”, "property", "block", or other designation denoting a unit of land, where appropriate to implement this Act, after such descriptive terms, there shall be deemed inserted reference to a condomininium unit, condominium subdivision, or horizontal property regime, whichever shall be appropriate to effect the ends and purposes of this Act: Provided, That wherever the application of the provisions of this Act conflict with the application of such other provisions, this Act shall prevail.

Sec. 28. SEVERABILITY.—If any provision of this Act, or any section, sentence, clause, phrase, or word or the application thereof, in any circumstances is held invalid, the validity of the remainder of this Act, and of the application of any such provision, section, sentence, clause, phrase, or word in any other circumstances shall not be affected thereby and to this end, the provisions of this Act are declared severable.

Mr. HUDDLESTON. Also, I would like to file in the record a staff memorandum on this bill, H.R. 4276.

(The memorandum referred to follows:) STAFF MEMORANDUM-H.R. 4276-HORIZONTAL PROPERTY ACT OF THE DISTRICT

OF COLUMBIA

PURPOSE OF THE BILL

The bill is essential to provide for separate real estate taxation of the individual units and to permit the creation of horizontal subdivision plats. While these primary purposes are being accomplished, the bill also contains detailed authority for the creation of a quasi-corporation to manage the building; to restrain partition; to provide means to levy, collect, and enforce the lien for common expenses; to provide for separate release of the individual units from the liens of judgments or mechanics' liens—all to the end that the ownership of an individual unit will be as similar as possible to the incidents of ownership of an individual home.

PRECEDENTS

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

Utah
Arizona
Kentucky

Virginia
Arkansas
Louisiana

Washington
Georgia
Maryland

West Virginia
Hawaii
Oklahoma

Commonwealth of Puerto
Indiana
South Carolina

Rico Iowa

Tennessee 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 á 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 à 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.

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