Condo Media - September 2012 - 44

LEGISLATIVE UPDATE
by Nena Groskind

Good News for Rhode Island
Legislative Season Ends Quietly in New England
he spring legislative season was quiet for CAI-New England’s Legislative Action Committees (LACs), but it wasn’t entirely uneventful. And it produced some particularly good news in Rhode Island. Lawmakers there had been considering a measure that would have barred transfer fees triggered by the sale of residential property. This has been a major concern for CAI nationally, as many other states, as well as the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, and the Federal Housing Administration (FHA) have considered similar restrictions. CAI argued successfully that the ban on transfer fees target private developers, who are the sole beneficiary of the fees, and should not apply to community association fees, which benefit the communities. Frank Lombardi, Esq., a partner in Goodman, Shapiro & Lombardi and co-chairman of the Rhode Island LAC, said the committee was concerned that the fee ban the legislature was considering would capture not only the working capital deposit associations charge new buyers (CAI’s primary concern), but also fees charged for preparing resale certificates and “move-in and move-out” fees, which “might also have been construed as transfer fees,” Lombardi said. The LAC proposed language creating a “carve-out” for condominium associations, homeowner associations and cooperatives, which legislators included in the bill they ultimately approved (see story on page 16). There were a few other bills pending during the session, including a number

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of foreclosure-related measures that would have had an indirect impact on condominiums, Lombardi said, “but this was the one we were following most closely.” The committee is eyeing another issue involving the foreclosure process that may require attention if it becomes more problematic. An existing law requires mortgagees to go through arbitration with borrowers or submit a certificate indicating that they have provided counseling for them before completing a foreclosure. Registrars in a few cities and towns have told attorneys representing community associations that condominium associations foreclosing on owners’ units for non-payment of common fees and assessments are subject to the same requirement. These have been isolated incidents so far, according to Lombardi, who said he was personally involved in a “testy” dispute with a recorder of deeds, resolved when that local official accepted Lombardi’s argument that “condominium associations aren’t mortgagees and the statute does not apply to them.” But if the problem becomes more widespread and more registrars move to block association foreclosure filings based on this statute, the LAC will “want to be proactive,” Lombardi said, noting that this is one of the issues the committee will be discussing when it plans its agenda for the fall. The Maine LAC didn’t have any horses in the race during the spring legislative term — traditionally a short session in the state’s legislative cycle, during which lawmakers focus almost exclusively on approving the budget and appropriations measures, considering

only emergency bills unrelated to the financial ones. “This is typically a very quiet session,” LAC Chairman Bruce McGlauflin, an attorney with Petruccelli, Martin & Haddow, LLP, observed, and there were no indications that this session would be an exception. “We’ll keep an eye on the proceedings, in case anything of interest to community association surfaces,” McGlauflin said in an interview before the session had ended, but he wasn’t expecting to spot anything “with even a remote impact” on condominiums. As of late July, the Maine LAC hadn’t yet met to discuss its agenda for the next session, beginning in January, so McGlauflin said it was premature to discuss what will be on it. The committee might want to suggest some “tweaking” of changes approved last year in the state condominium statute, most of them dealing with “good governance” and financial management issues for community associations. “But we’re going to wait and see how those provisions work on the ground” before suggesting any changes, McGlauflin said. The Massachusetts legislature considers hundreds of bills every year, and most of them (90 to 95 percent, according to some estimates) are referred to a study committee, which effectively kills them until the next legislative session. When the measures target condominiums, “we’re usually happy about that,” Matt Gaines, a partner in Marcus, Errico, Emmer & Brooks and chairman of the Massachusetts LAC, said. This year, a few bills the LAC would have been happier seeing consigned to a study received favorable reports from

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CONDO MEDIA • SEPTEMBER 2012
Condo Media - September 2012

Table of Contents for the Digital Edition of Condo Media - September 2012
