2015 Delaware Code
Title 25 - Property
CHAPTER 81. DELAWARE UNIFORM COMMON INTEREST OWNERSHIP ACT
Subchapter IV Protection of Purchasers
§ 81-409 Resales of units.

(a) Except in the case of a sale in which delivery of a public offering statement is required, or unless exempt under § 81-401(b) of this title, a unit owner shall furnish to a purchaser not later than the time of the signing of the contract to purchase, a copy of the declaration (other than any plats and plans), all amendments to the declaration, the bylaws, and the rules of the association (including all amendments to the rules), and a certificate containing or attaching the following, to be correct to within 120 days prior to the date the certificate of the unit owner is furnished to the purchaser:

(1) A statement disclosing the effect on the proposed disposition of any right of first refusal or other restraint on the free alienability of the unit held by the association;

(2) A statement setting forth the amount of the periodic common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner;

(3) A statement of any other fees payable by the owner of the unit being sold;

(4) In a condominium or cooperative, a statement of the current number of unit owners delinquent in the payment of common expense assessments and the aggregate amount of such delinquency;

(5) In a condominium or cooperative, a statement of the current balance in the repair and replacement reserve;

(6) A statement of any capital expenditures approved by the association for the current and succeeding fiscal years, including a statement of the amount of such capital expenditures to be taken from the repair and replacement reserve;

(7) In a condominium or cooperative, a copy of the most recent reserve study;

(8) The most recent regularly prepared balance sheet and income and expense statement, if any, of the association;

(9) The most recent report of auditors (if required by § 81-306(a)(6) of this title) on the association balance sheet and income and expense statement or any accountant's report on any unaudited association balance sheet and income and expense statement;

(10) The current operating budget of the association;

(11) A statement of any unsatisfied judgments against the association and the status of any pending suits in which the association is a defendant;

(12) A statement describing any insurance coverage provided for the benefit of unit owners;

(13) In a condominium or cooperative, a statement as to whether the executive board has given or received written notice that any existing uses, occupancies, alterations, or improvements in or to the unit or to the limited common elements assigned thereto violate any provision of the declaration;

(14) In a condominium or cooperative, a statement as to whether the executive board has received written notice from a governmental agency of any violation of environmental, health, or building codes with respect to the unit, the limited common elements assigned thereto, or any other portion of the common interest community which has not been cured;

(15) In a condominium or cooperative, a statement of the remaining term of any leasehold estate affecting the common interest community and the provisions governing any extension or renewal thereof;

(16) In a cooperative, an accountant's statement, if any was prepared, as to the deductibility for federal income tax purposes by the unit owner of real estate taxes and interest paid by the association;

(17) A statement describing any pending sale or encumbrance of common elements;

(18) A statement of any fees payable by the purchaser of the unit to the association at settlement; and

(19) Copies of the minutes for the executive board meeting for the preceding 6 months or, if none, for the most recent executive board meeting for which minutes are available.

(b) The association, within 10 days after a request by a unit owner, shall furnish a certificate containing the information necessary to enable the unit owner to comply with this section. If the unit owner has requested the information from the association and the association fails to provide any portion of the requested information or if the unit owner, after reasonable investigation, has no information on any particular item to be included in the certificate, or if the requested information does not exist, the unit owner shall include a statement to that effect in the certificate from the unit owner. A unit owner providing a certificate pursuant to subsection (a) of this section is not liable to the purchaser for any erroneous information provided by the association and included in the certificate and is not liable to the purchaser under this section if the owner had, after reasonable investigation, reasonable grounds to believe, and did believe, at the time the information was provided to the purchaser, that the statements were true and there was no omission to state a material fact necessary to make the statements made not misleading, in light of the circumstances under which the statements were made. The association may require that such certificate and information be furnished in an electronic format. Except as provided in this subsection, the association may charge a fee for providing such certificate and related information. Such fee shall not exceed $200 for each certificate, except that if the association agrees to furnish a certificate and related information in a paper copy format, it may charge an additional cost not to exceed $50 for each such certificate. If the association fails to provide the requested certificate within the 10-day period, the association may not charge any fee for providing that certificate. Unless the purchaser is given the resale certificate before execution of a contract for the purchase of a unit, the purchaser, before conveyance, may cancel the contract within 5 days after first receiving the resale certificate.

(c) In the event that a unit for which a certificate is required pursuant to subsection (a) of this section is subject to more than one association, the unit owner must include in the certificate the information required by subsection (a) of this section for each association governing that unit, but the unit owner does not have to duplicate the information for any particular association if it is already included with respect to any one of the associations.

(d) A purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the association.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, §§ 71-75, 82; 77 Del. Laws, c. 364, §§ 8-10.;

§ 81-410 Escrow of deposits.

Any deposit made in connection with the purchase or reservation of a unit from a person required to deliver a public offering statement pursuant to § 81-402(c) of this title must be placed in escrow and held either in this State or in an account designated solely for that purpose by an attorney or a licensed real estate broker or an institution whose accounts are insured by a governmental agency or instrumentality until: (i) delivered to the declarant at closing; (ii) delivered to the declarant because of the purchaser's default under a contract to purchase the unit; or (iii) refunded to the purchaser. An escrow agent acting in good faith and in accordance with the terms of the escrow shall have no liability for the disposition of the fund.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-411 Release of liens.

(a) In the case of a sale of a unit where delivery of a public offering statement is required pursuant to § 81-402(c) of this title, a seller

(1) Shall have the subject property released from all liens, except liens on real estate that a declarant has the right to withdraw from the common interest community, that the purchaser does not expressly agree to take subject to or assume and that encumber:

(i) In a condominium, that unit and its common element interest, and

(ii) In a cooperative or planned community, that unit and any limited common elements assigned thereto, or

(2) Shall provide a surety bond or substitute collateral for or insurance against the lien as provided for liens on real estate.

(b) Before conveying real estate to the association, the declarant shall have that real estate released from: (1) all liens the foreclosure of which would deprive unit owners of any right of access to or easement of support of their units, and (2) all other liens on that real estate unless the public offering statement describes certain real estate that may be conveyed subject to liens in specified amounts.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, §§ 76, 82.;

§ 81-412 Conversion buildings.

(a) A declarant of a common interest community containing conversion buildings, and any dealer who intends to offer units in such a common interest community, shall give each of the residential tenants and any residential subtenant in possession of a portion of a conversion building notice of the conversion and provide those persons with the public offering statement no later than 120 days before the tenants and any subtenant in possession are required to vacate. The notice must set forth generally the rights of tenants and subtenants under this section and must be given as required in § 81-127 of this title. No tenant or subtenant may be required to vacate upon less than 120-days' notice, except by reason of nonpayment of rent, waste, or conduct that disturbs other tenants' peaceful enjoyment of the premises, and the terms of the tenancy may not be altered during that period. Failure to give notice as required by this section is a defense to an action for possession. A conversion does not relieve either the landlord or tenant of their obligations pursuant to the Delaware Residential Landlord-Tenant Code [Part III of this title], if applicable.

(b) For 60 days after delivery or mailing of the notice described in subsection (a) of this section, the person required to give the notice shall offer to convey each unit or proposed unit occupied for residential use to the tenant who leases that unit. If a tenant fails to purchase the unit during that 60 day period, the offeror may not offer to dispose of an interest in that unit during the following 180 days at a price or on terms more favorable to the offeree than the price or terms offered to the tenant. This subsection does not apply to any unit in a conversion building if that unit will be restricted exclusively to nonresidential use or the boundaries of the converted unit do not substantially conform to the dimensions of the residential unit before conversion.

(c) If a seller, in violation of subsection (b) of this section, conveys a unit to a purchaser for value who has no knowledge of the violation, the recordation of the deed conveying the unit or, in a cooperative, the conveyance of the unit, extinguishes any right a tenant may have under subsection (b) of this section to purchase that unit if the deed states that the seller has complied with subsection (b) of this section, but the conveyance does not affect the right of a tenant to recover damages from the seller for a violation of subsection (b) of this section.

(d) If a notice of conversion specifies a date by which a unit or proposed unit must be vacated and otherwise complies with the provisions of Delaware law, the notice also constitutes a notice to vacate specified by that statute.

(e) Nothing in this section permits termination of a lease by a declarant in violation of its terms.

(f) Conversion of a residential conversion building must also comply with all other laws applicable to a conversion.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, §§ 77, 82.;

§ 81-413 Express warranties of quality.

(a) Express warranties made by a declarant to a purchaser of a unit, if relied upon by the purchaser, are created as follows:

(1) Any affirmation of fact or promise in writing which relates to the unit, its use, or rights appurtenant thereto, area improvements to the common interest community that would directly benefit the unit, or the right to use or have the benefit of facilities not located in the common interest community, creates an express warranty that the unit and related rights and uses will substantially conform to the affirmation or promise in all material respects;

(2) Any model or description of the physical characteristics of the common interest community, including plans and specifications of or for improvements, creates an express warranty that the common interest community will substantially conform to the model or description in all material respects unless the model or description discloses that it is only proposed or is subject to change;

(3) Any description of the quantity or extent of the real estate comprising the common interest community, including plats or surveys, creates an express warranty that the common interest community will substantially conform to the description in all material respects, subject to customary tolerances; and

(4) A provision that a purchaser may put a unit only to a specified use is an express warranty that the specified use is lawful in all material respects.

(b) Neither formal words, such as "warranty'' or "guarantee,'' nor a specific intention to make a warranty, are necessary to create an express warranty of quality, but a statement purporting to be merely an opinion or commendation of the real estate or its value does not create a warranty.

(c) Any conveyance of a unit transfers to the purchaser all express warranties of quality made by the declarant.

(d) The warranties set out in this section are intended to supplement, not supersede or replace, any other statutory construction warranty requirements. To the extent that there is a conflict between such other statutory construction warranty requirements and this section, the provision most favorable to the purchaser shall prevail.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-414 Implied warranties of quality.

(a) A declarant and any dealer warrants that a unit, other than a unit not yet constructed or under construction at the time of contracting, will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting, reasonable wear and tear excepted.

(b) A declarant and any dealer impliedly warrants that a unit and the common elements in the common interest community are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by the declarant or dealer, or made by any person before the creation of the common interest community, will be:

(1) Free from defective materials; and

(2) Constructed in accordance with applicable law, according to sound engineering and construction standards, and in a workmanlike manner.

(c) A declarant and any dealer warrants to a purchaser of a unit that may be used for residential use that an existing use, continuation of which is contemplated by the parties, does not violate applicable law at the earlier of the time of conveyance or delivery of possession.

(d) Warranties imposed by this section may be excluded or modified as specified in § 81-415 of this title.

(e) For purposes of this section, improvements made or contracted for by an affiliate of a declarant are made or contracted for by the declarant.

(f) Any conveyance of a unit transfers to the purchaser all of the declarant's implied warranties of quality.

(g) The warranties set out in this section are intended to supplement, not supersede or replace, any other statutory construction warranty requirements. To the extent that there is a conflict between such other statutory construction warranty requirements and this section, the provision most favorable to the purchaser shall prevail.

76 Del. Laws, c. 422, § 2; 70 Del. Laws, c. 186, § 1; 77 Del. Laws, c. 91, § 82.;

§ 81-415 Exclusion or modification of implied warranties of quality.

(a) Except as limited by subsection (b) of this section with respect to a purchaser of a unit that may be used for residential use, implied warranties of quality:

(1) May be excluded or modified by agreement of the parties; and

(2) Are excluded by 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.

(b) With respect to a purchaser of a unit that may be occupied for residential use, no general disclaimer of implied warranties of quality is effective, but a declarant and any dealer may disclaim liability in an instrument signed by the purchaser for a specified defect or specified failure to comply with applicable law, if the defect or failure entered into and became a part of the basis of the bargain.

(c) The warranty provided in § 81-414(b) of this title on a unit for residential use commences with the earlier of the time of the conveyance or the delivery of possession and extends for a period of 1 year.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-416 Statute of limitations for warranties.

(a) Unless a period of limitation is tolled under § 81-311 of this title or affected by subsection (d) of this section, a judicial proceeding for breach of any obligation arising under § 81-413 or § 81-414 of this title must be commenced within the applicable periods of any applicable statute of limitations or statute of repose but in all events within 6 years after the cause of action accrues.

(b) Subject to subsection (c) of this section, a cause of action for breach of warranty of quality, regardless of the purchaser's lack of knowledge of the breach, accrues:

(1) As to a unit, at the time the purchaser to whom the warranty is first made enters into possession if a possessory interest was conveyed or at the time of acceptance of the instrument of conveyance if a nonpossessory interest was conveyed; and

(2) As to each common element, at the time the common element is completed or, if later, as to: (i) a common element that is added to the common interest community by exercise of development rights, at the time the first unit which was added to the condominium by the same exercise of development rights is conveyed to a bona fide purchaser, or (ii) a common element within any other portion of the common interest community, at the time the first unit is conveyed to a bona fide purchaser.

(c) If a warranty of quality explicitly extends to future performance or duration of any improvement or component of the common interest community, the cause of action accrues at the time the breach is discovered or at the end of the period for which the warranty explicitly extends, whichever is earlier.

(d) During the period of declarant control, the association may authorize an independent committee of the executive board to evaluate and enforce by any lawful means warranty claims involving the common elements, and to compromise those claims. Only members of the executive board elected by unit owners other than the declarant and other persons appointed by those independent members may serve on the committee, and the committee's decision must be free of any control by the declarant or any member of the executive board or officer appointed by the declarant. All costs reasonably incurred by the committee, including attorneys' fees, are common expenses, and must be added to the budget annually adopted by the association under § 81-315 of this title. If the committee is so created, the period of limitation for claims for these warranties begins to run from the date of the first meeting of the committee, regardless of when the period of declarant control terminates.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-417 Effect of violations on rights of action; attorneys' fees.

(a) If a declarant or any other person subject to this chapter fails to comply with any of its provisions or any provision of the declaration or bylaws, any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief. The court, in an appropriate case, may award court costs and reasonable attorneys' fees.

(b) Parties to a dispute arising under this chapter, the declaration, or the bylaws may agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution, but:

(1) A declarant may agree with the association to do so only after the period of declarant control has expired unless the agreement is made with an independent committee of the executive board elected pursuant to § 81-416(d) of this title; and

(2) An agreement to submit to any form of binding alternative dispute resolution must be in a writing signed by the parties.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-418 Labeling of promotional material.

No promotional material may be displayed or delivered to prospective purchasers which describes or portrays an improvement that is not in existence unless the description or portrayal of the improvement in the promotional material is conspicuously labeled or identified either as "MUST BE BUILT'' or as "NEED NOT BE BUILT''.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-419 Declarant's obligation to complete and restore.

(a) Except for improvements labeled "NEED NOT BE BUILT,'' the declarant shall complete all improvements depicted on any site plan or other graphic representation, including any plats or plans prepared pursuant to § 81-209 of this title, whether or not that site plan or other graphic representation is contained in the public offering statement or in any promotional material distributed by or for the declarant.

(b) The declarant is subject to liability for the prompt repair and restoration, to a condition compatible with the remainder of the common interest community, of any portion of the common interest community affected by the exercise of rights reserved pursuant to or created by § 81-210, § 81-211, § 81-212, § 81-213, § 81-215, or § 81-216 of this title.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-420 Substantial completion of units.

In the case of a sale of a unit for which delivery of a public offering statement is required, a contract of sale may be executed, but no interest in that unit may be conveyed, until the declaration is recorded and the unit is substantially completed, as evidenced by a recorded certificate of substantial completion executed by an independent registered architect or engineer, or by issuance of a certificate of occupancy authorized by law.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, § 82.;

§ 81-421 Amendment to public offering statement.

Following execution of a contract of sale by a purchaser, the declarant may not amend any required public offering statement without the approval of such purchaser if the amendment would materially affect the rights of such purchaser. Approval by such purchaser is not required if the amendment is required by any governmental authority or public utility, or if the amendment is made as a result of actions beyond the control of the declarant or in the ordinary course of affairs of the executive board, or if the amendment is required by, or to achieve compliance with the requirements of Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Housing Authority, Veterans Administration or other governmental agency or their successors.

76 Del. Laws, c. 422, § 2; 77 Del. Laws, c. 91, §§ 78, 82.;