§ 34-18.2-3. Transfer of leased land — Right of first refusal.
(a) In any instance in which a landowner has been sent a certified letter from an incorporated
homeowners' association indicating that the association has at least fifty-one percent
(51%) of the homeowners owning residential dwellings on the landowners' land as members
and has articles of incorporation specifying all rights and powers, including the
power to negotiate for and acquire land on behalf of the member homeowners, then,
before leased land may be sold for any purpose and before it may be leased for any
purpose that would result in a discontinuance, the owner shall notify the association
by certified mail of any bona fide offer that the owner intends to accept, to buy
the leased land or to lease it for a use that would result in a discontinuance. The
owner shall also give notice by certified mail to the incorporated homeowners' association
of any intention to sell or lease the land for a use which will result in a discontinuance
within fourteen (14) days of any advertisement or other public notice by the owner
or the owner's agent that the land is for sale or the land upon which the residential
dwelling is located is for lease.
(b) The notice to the homeowners' association shall include the price, calculated as a
single lump sum amount which reflects the present value of any installment payments
offered and of any promissory notes offered in lieu of cash payments or, in the case
of an offer to rent the capitalized value of the annual rent, and the terms and conditions
of the offer. Any incorporated homeowners' association entitled to notice under this
section shall have the right to purchase, in the case of a third party bona fide offer
to purchase, or to lease in the case of a third party bona fide offer to lease, the
land, provided it meets the same price and the same terms and conditions of any offer
of which it is entitled to notice under this section by executing a contract or purchase
and sale or lease agreement with the owner within one hundred eighty (180) days of
notice of the offer. No owner shall attempt to terminate the tenancy of any member
of the incorporated homeowners' association except for nonpayment of rent for a period
of one hundred and eighty (180) days following a notice of sale or lease under this
section. No owner shall unreasonably refuse to enter into, or unreasonably delay the
execution of a purchase and sale or lease agreement with a homeowners' association
that has made a bona fide offer to meet the same price and the same terms and conditions
of an offer for which notice is required to be given pursuant to this section. Failure
of the incorporated homeowners' association to execute such a purchase and sale agreement
or lease within the first one-hundred-eighty-day (180) period shall serve to terminate
the right of the association to purchase or lease the land. The time periods may be
extended by agreement of the association and the owner. Nothing herein shall be construed
to require an owner to provide financing to any association or to prohibit an owner
from requiring an association which is offering to lease land to have within its possession
a sum equivalent to the capitalized value of the proposed rent of the land and requiring
that a portion of the sum, of an amount necessary to pay the rent on the land for
a period of no greater that two (2) years, be kept in escrow for such purpose during
the term of the lease. In the event that an incorporated homeowners' association accepts
an offer under this section, the tenancy of the members of the association shall be
extended on a month to month basis until the time set in the offer for closing on
the offer.
(c)(1) When an owner has been properly notified under the terms of this section of the existence
of an incorporated homeowners' association, the owner shall include in any purchase
and sale agreement or lease agreement which would be subject to this section, a statement
informing the purchaser or lessee of the homeowners association's right of first refusal
pursuant to this section.
(2) In addition, the homeowners' association shall record in the land evidence records
of the city or town where the leased land is located, a copy of its articles of incorporation
together with a statement setting forth its statutory right of first refusal to purchase
or lease the land of the owner pursuant to this section.
(3) The right of first refusal created herein shall not be deemed to allow a homeowners'
association to vary the terms of any offer made to an owner and to make a counteroffer
to said owner. The homeowners' association shall have the right of first refusal only
on the exact terms and conditions as set forth in the offer received by the owner;
provided, however, that the homeowners' association shall not be required to meet
any terms or conditions that would result in the removal of members of the association
from the property which is the subject of the offer.
(4) The right of first refusal created herein shall inure to a homeowners' association
for the time periods provided in this section, beginning on the date of notice to
the homeowners' association. The effective period of the right of first refusal shall
apply separately for each substantially different bona fide offer to purchase the
land or to lease it for a purpose that would result in a discontinuance, and for each
offer the same as an offer made more than three (3) months prior to the later offer;
provided, however, that in the case of the same offer made by a prospective buyer
who has previously made an offer for which notice to a homeowners' association was
required by this section, the right of first refusal shall apply only if the subsequent
offer is made more than six (6) months after the earlier offer. The right of first
refusal shall not apply with respect to any offer received by the owner for which
notice to a homeowners' association is not required pursuant to this section.
(5) No right of first refusal shall apply to a government taking by eminent domain or
negotiated purchase, a forced sale pursuant to a foreclosure, transfer by gift, devise
or operation of law, or a sale to a person who would be included within the table
of descent and distribution if there were to be a death intestate of a landowner.
(d) In any instance in which the incorporated homeowners' association of leased land is
not the successful purchaser or lessee of the land, the seller or lessor of the land
shall prove compliance with this section by filing an affidavit of compliance in the
official land evidence records of the city or town where the property is located within
seven (7) days of the sale or lease of the land.
(e) No landowner shall attempt to increase any rental amount due regarding leased land
from the time of his or her receipt of any bona fide offer to purchase or to lease
for a purpose which would result in a discontinuance, until the expiration of the
time period during which a homeowners' association may exercise its right of first
refusal or until the time set in the offer for closing on the offer.
(f) In the event that an owner terminates the tenancies of all of the members of the incorporated
association, the right of first refusal created by this section shall inure to the
benefit of the former membership of the association for a period of one year after
the termination of the tenancies, or until the houses which they occupied are removed
or destroyed, whichever first occurs, with the former members having the same rights
and obligations as existed prior to the terminations.
(g) The landowner shall tender a written lease incorporating the terms and conditions
of the tenancy to all tenants and prospective tenants. The lease shall not be inconsistent
with the provisions of this chapter.
(h) A covenant of good faith and fair dealing shall be deemed to be incorporated into
the terms and conditions of all tenancies between a homeowner and landowner involving
a residential dwelling which is located on leased land, as well as the negotiation
process associated therewith.
(i)(1) RIHousing shall work with the executive office of housing, the infrastructure bank,
and other appropriate private and public entities to investigate and determine ways
to further assist an incorporated homeowners' association (hereinafter the "association�)
to exercise rights to purchase the leased land pursuant to the right of first refusal
established in this section, identify the barriers to transferring these kinds of
properties to the homeowners' association, and make recommendations on how to address
these issues and barriers.
(2) The corporation may promulgate rules and regulations to implement the provisions of
this subsection.