At its September 22, 2022 public hearing, the District of Columbia Council (DC Council) will review new condo warranty claims legislation in the district. The pending legislation is known as the Condominium Warranty Claims Clarification Amendment Act of 2022 (B24-934) (the 2022 Proposal).
That Proposal 2022 aims to optimize the ability of homeowners’ associations to access guarantee security funds deposited by housing developers for the repair of structural defects. This initiative was originally launched in 2020. As mentioned in our advance warningthat the proposed legislation threatened to dramatically increase developers’ exposure to condominium warranty liability and severely impact developers’ ability to finance, develop and build condominiums. There was extensive testimony against the 2020 bill proposal and discussions paused as more pressing issues related to apartment tenants and COVID-19 were considered.
While the 2022 bill differs from the 2020 legislation, it remains equally problematic for DC condominium developers. The 2022 proposal raises many specific concerns. Below we list some of the concerns. The full text of the current invoice can be called up here.
- The bill will allow the mayor substantive action to be implemented by the Department of Housing and Community Development (DHCD) upon receipt of a “perfected claim,” but does not define standards for what constitutes a perfected claim.
- A developer only has 30 days to respond to a claim, which may not be enough for complex issues.
- The Mayor is empowered by the DHCD to make decisions about the cost of repairing or replacing structural defects payable out of the warranty security provided by the developer without proper objective standards and due process.
- DHCD will have no resources to substantively evaluate claims or defenses, and funding is not contemplated by the Council.
- A developer can be deprived of his property, ie the guarantee security without a legal hearing in violation of their ordinary procedural rights. Moreover, the burden may be placed on the developer instead of the plaintiff, which is unlawful.
- The guarantee security must be kept and may not be released or reduced if any claim is pending, regardless of the value of the claim.
- There is no protection against double liability if the plaintiff also takes legal action.
- The reasonable litigation procedures often found in condominium documents can be rendered unenforceable as the legislation provides that such procedures must not interfere with the performance bond procedures.
Anyone wishing to testify at the Sept. 22 hearing can email [email protected] or phone (202) 724-8198. The committee will ask for your name, address, phone number, email address, organizational affiliation, and title, if applicable. In addition, written explanations are made of part of the official protocol. Declarations must be submitted to the Committee on Housing and Executive Administration, John A. Wilson Building, 1350 Pennsylvania Avenue, NW, Suite 116, Washington, DC, 20004 or by email to [email protected] The record ends on September 29, 2022 at 5 p.m.
We encourage you to read all of the legislation.