§ 42-1903.16. Warranty against structural defects; limitation for conversion condominiums; exclusion or modification of warranty.
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Current through October 23, 2012
(a) As used in this section, the term "structural defect" means a defect in a component that constitutes any unit or portion of the common elements that reduces the stability or safety of the structure below standards commonly accepted in the real estate market, or restricts the normally intended use of all or part of the structure and which requires repair, renovation, restoration, or replacement. Nothing in this section shall be construed to make the declarant responsible for any items of maintenance relating to the units or common elements.
(b) A declarant shall warrant against structural defects in each of the units for 2 years from the date each unit is first conveyed to a bona fide purchaser, and all of the common elements for 2 years. The 2 years shall begin as to any portion of the common elements whenever the portion has been completed or, if later:
(1) If within any additional land or portion thereof that does not contain a unit, at the time the additional land is added to the condominium;
(2) If within any convertible land or portion thereof that does not contain a unit, at the time the convertible land may no longer be converted;
(3) If within any additional land or convertible land or portion of either that does contain a unit, at the time the first unit therein is first conveyed to a bona fide purchaser; or
(4) If within any other portion of the condominium, at the time the first unit is conveyed to a bona fide purchaser.
(c) A declarant of a conversion condominium may offer the units, common elements, or both in "as is" condition. If the conversion condominium is offered in "as is" condition, the declarant's warranty against structural defects shall apply only to a defect in components installed by the declarant or work done by the declarant unless the declarant gives a more extensive warranty in writing.
(d) Except with respect to a purchaser of a unit that may be used for residential purposes, the warranty against structural defects:
(1) May be excluded or modified by agreement of the parties; and
(2) Is excluded by an expression of disclaimer such as "as is", "with all faults", or other language that in common understanding calls the purchaser's attention to the exclusion of warranties.
(e)(1) Prior to the declarant's first conveyance of a residential unit to a purchaser, the declarant shall post a bond or letter of credit with the Mayor in the amount of 10% of the estimated construction or conversion costs, or shall provide any other form of security the Mayor shall approve to satisfy any costs that arise from the declarant's failure to satisfy the requirements of this section. The other security may include a lien in favor of the Mayor against the declarant's equity in any unsold units, including any non-residential units, in which event the unsold units will be valued, for purposes of computing the declarant's equity, at 90% of the current listed sales price of the units, or if not listed, then the current listed sales price of comparable units in the condominium. The bond, letter of credit, or other security shall be reduced at the declarant's request in pro rata segments (based on the residential unit's percentage interest in the residential portion of the condominium) 2 years after the conveyance of each unit; provided, however, that in no event shall the security be reduced below 50% of the original amount of the security until one year after transfer of control of the residential executive board of the condominium association to purchasing residential unit owners other than the declarant. For purposes of this subsection, "transfer of control" shall have occurred when 51% or more of the residential executive board is composed of residential unit owners other than the declarant, or successor declarant, or the declarant's selections or nominees. At the end of 5 years from the conveyance of the first residential unit to a purchaser, and provided one year has passed following transfer of control by the declarant, the declarant may sell unsold residential units as resale units, in which event no warranty against structural defects in the units under this section shall be required and the bond shall be reduced pro rata as to those unsold units. The bonding requirements pursuant to this subsection and the warranties required under this section are applicable only to residential condominiums or the residential condominium portion of mixed use condominiums or mixed use projects. If residential condominium units are part of a mixed use condominium, the cost of the residential portion of the condominium shall include the residential condominium units' pro rata share of common elements, based on the residential condominium units' percentage interest in the common elements. If a residential condominium is part of a mixed use project, the cost of the residential condominium includes its pro rata share of those portions of the project directly supporting, enclosing or servicing the residential condominium.
(2) If claims for structural defects under this section are pending at the time the bond or other security posted would otherwise no longer be required, then the bond or other security shall be required to be maintained in the amount of the claim, until the claims have been finally resolved and the bond or other security has been made available to satisfy the declarant's responsibilities to the unit owners and association under this section. The bylaws and other condominium documents to be prepared by the declarant shall not restrict or hinder the residential executive board's right to assert claims under this section.
(f) As used in this section, the term "conveyance" shall mean the transfer of title by written instrument.
(g)(1) The Mayor shall issue proposed rules to implement the provisions of this section within 180 days of October 22, 1999. The proposed rules shall be submitted to the Council for a 45-day period of review, excluding Saturdays, Sundays, legal holidays, and days of Council recess. If the Council does not approve or disapprove the proposed rules, in whole or in part, by resolution within this 45-day review period, the proposed rules shall be deemed approved.
(2) The Mayor shall report to the Council on an annual basis on the use and effect of this section and the number of condominium units traded each year.
(Mar. 29, 1977, D.C. Law 1-89, title III, § 316, as added Mar. 8, 1991, D.C. Law 8-233, § 2(jj), 38 DCR 261; Mar. 20, 1992, D.C. Law 9-82, § 2(l), 39 DCR 683; Oct. 22, 1999, D.C. Law 13-46, § 2, 46 DCR 6598.)
HISTORICAL AND STATUTORY NOTES
Prior Codifications
1981 Ed., § 45-1856.
Effect of Amendments
D.C. Law 13-46 added subsecs. (f) and (g) and rewrote subsec. (e) which formerly provided:
"(e)(1) Prior to the declarant's first conveyance of a residential unit to a purchaser, the declarant shall post a bond or letter of credit with the Mayor in the amount of 10% of the estimated construction or conversion costs, or shall provide any other form of security the Mayor shall approve to satisfy any costs that arise from the declarant's failure to satisfy the requirements of this section. The other security may include a lien in favor of the Mayor against the declarant's equity in any unsold units, including any non-residential units, in which event the unsold units will be valued, for purposes of computing the declarant's equity, at 90% of the current listed sales price of the units, or if not listed, then the current listed sales price of comparable units in the condominium. The bond, letter of credit, or other security shall be reduced at the declarant's request in pro rata segments (based on the residential unit's percentage interest in the residential portion of the condominium) 2 years after the conveyance of each unit; provided, however, that in no event shall the security be reduced below 50% of the original amount of the security until one year after transfer of control of the residential executive board of the condominium association to purchasing residential unit owners other than the declarant. For purposes of this subsection, 'transfer of control' shall have occurred when 51% or more of the residential executive board is composed of residential unit owners other than the declarant, or successor declarant, or the declarant's selections or nominees. At the end of 5 years from the conveyance of the first residential unit to a purchaser, and provided one year has passed following transfer of control by the declarant, the declarant may sell unsold residential units as resale units, in which event no warranty against structural defects in the units under this section shall be required and the bond shall be reduced pro rata as to those unsold units. The bonding requirements pursuant to this subsection and the warranties required under this section are applicable only to residential condominiums or the residential condominium portion of mixed use condominiums or mixed use projects. If residential condominium units are part of a mixed use condominium, the cost of the residential portion of the condominium shall include the residential condominium units' pro rata share of common elements, based on the residential condominium units' percentage interest in the common elements. If a residential condominium is part of a mixed use project, the cost of the residential condominium includes its pro rata share of those portions of the project directly supporting, enclosing or servicing the residential condominium.
"(2) If claims for structural defects under this section are pending at the time the bond or other security posted would otherwise no longer be required, then the bond or other security shall be required to be maintained in the amount of the claim, until the claims have been finally resolved and the bond or other security has been made available to satisfy the declarant's responsibilities to the unit owners and association under this section. The bylaws and other condominium documents to be prepared by the declarant shall not restrict or hinder the residential executive board's right to assert claims under this section."
Emergency Act Amendments
For temporary (90 day) amendment of section, see § 2 of Condominium Warranty Bond Release Discretion Clarification Emergency Amendment Act of 2006 (D.C. Act 16-420, July 18, 2006, 53 DCR 6163).
Legislative History of Laws
For legislative history of D.C. Law 8-233, see Historical and Statutory Notes following § 42-1901.07.
For legislative history of D.C. Law 9-82, see Historical and Statutory Notes following § 42-1901.01.
Law 13-46, the "Condominium Amendment Act of 1999," was introduced in Council and assigned Bill No. 13-151, which was referred to the Committee on Consumer and Regulatory Affairs. The Bill was adopted on first and second readings on June 8, 1999, and July 6, 1999, respectively. Signed by the Mayor on July 23, 1999, it was assigned Act No. 13-123 and transmitted to both Houses of Congress for its review. D.C. Law 13-46 became effective on October 22, 1999.
Delegation of Authority
Delegation of Authority Pursuant to D.C. Law 13-46, the "Condominium Amendment Act of 1999", see Mayor's Order 2002-166, September 27, 2002 (49 DCR 8926).
Miscellaneous Notes
Section 4 of D.C. Law 13-46 provides: "This act shall be applicable to all condominiums registered after January 1, 1999."
