PA 07-68—HB 5286

Insurance and Real Estate Committee

AN ACT CONCERNING INSURANCE ON RESIDENTIAL CONDOMINIUMS AND FLOOD INSURANCE FOR CONDOMINIUMS LOCATED IN FLOOD HAZARD AREAS

SUMMARY: For condominiums and other common interest communities governed by the Common Interest Ownership Act (CIOA), this act requires the association of unit owners to maintain flood insurance if (1) the property is located in a flood hazard area, as defined and determined by the National Flood Insurance Act and (2) the unit owners, by vote, require it. By law, common expenses for these common interest communities include the cost of repairing and replacing any portion of the common interest community that exceeds the insurance proceeds from the insurance the association must provide by law. The act specifies that common expenses also include any excess resulting from any applicable insurance deductible.

The act imposes similar requirements for condominiums governed by the Condominium Act. For these condominiums, the requirement applies only if the condominium instruments or unit owners' vote requires it. The act imposes this requirement on the association acting through its board of directors, managing agent, or other authorized agent. The act requires, instead of authorizes, them to provide other types of insurance, including workers' compensation, directors' indemnity, and specialized policies covering lands or improvements in which the unit owners' association has or shares ownership or other rights, if the condominium instruments or unit owners' vote requires it.

Under prior law, premiums for insurance that the law requires the condominium associations governed by the Condominium Act to provide had to be treated as common expenses. This act allows the condominium instruments to instead assess the cost of the insurance coverage against the units in proportion to risk.

EFFECTIVE DATE: October 1, 2007

BACKGROUND

CIOA, the Condominium Act, and the Unit Ownership Act

Three different sets of laws govern condominiums, depending on when they were created. CIOA governs the creation, alteration, management, termination, and sale of condominiums and other common interest communities formed in Connecticut after January 1, 1984 (CGS 47-200 et seq. ). The Condominium Act governs condominiums created from 1977 through 1983. (PA 76-308; CGS 47-68a to 47-90c). Condominiums created before the Condominium Act was adopted are governed by the Unit Ownership Act (PA 1963, No. 605, July 10, 1963; CGS 47-67 to 47-115 Revised to 1975).

Certain CIOA provisions automatically apply to condominiums created in Connecticut before January 1, 1984, but only with respect to events and circumstances that occur after December 31, 1983. The CIOA insurance provisions amended by this act do not automatically apply to pre-CIOA condominiums (CGS 47-216).

The law permits condominiums created before January 1, 1984 to amend their governing instruments (declaration, bylaws, survey, or plans) to conform to portions of CIOA that do not automatically apply. Thus, a pre-CIOA condominium may adopt any of these CIOA provisions it wishes and does not have to adopt all of CIOA. Any amendment must be adopted in accordance with the law that applied when the condominium was created and with the procedures and requirements specified by the condominium's declaration and bylaws (CGS 47-218).

Common Interest Community

“Common interest community” means real property described in a declaration on which a person, by virtue of his ownership of a unit, is obligated to make payments for (1) real property taxes, (2) insurance premiums, (3) maintenance, or (4) improvement of any other real property other than the unit described in the declaration (CGS 47-202 (7)).

Related Law

For condominiums governed by CIOA, to the extent required by the declaration, associations must assess the costs of insurance in proportion to risk (CGS 47-257 (c)).

OLR Tracking: GC: KM: JL: dw