Page:United States Statutes at Large Volume 94 Part 2.djvu/399

 PUBLIC LAW 96-399—OCT. 8, 1980

94 STAT. 1677

(d) Following the unit owners' vote, the termination shall be Effective date. effective ninety days after hand delivering notice or mailing notice by prepaid United States mail to the parties to the contract. CIVIL ACTION;

UNCONSCIONABLE LEASES

SEC. 609. (a) Cooperative and condominium unit owners through 15 USC 3608. the unit owners' association may bring an action seeking a judicial determination that a lease or leases, or portions thereof, were unconscionable at the time they were made. An action may be brought under this section if each such lease has all of the following characteristics: (1) it was made in connection with a cooperative or condominium project; (2) it was entered into while the cooperative or condominium owners' association was controlled by the developer either through special developer control or because the developer held a majority of the votes in the owners' association; (3) it had to be accepted or ratified by purchasers or through the unit owners' association as a condition of purchase of a unit in the cooperative or condominium project; (4) it is for a period of more than twenty-one years or is for a period of less than twenty-one years but contains automatic renewal provisions for a period of more than twenty-one years; (5) it contains an automatic rent increase clause; and (6) it was entered into prior to June 4, 1975. Such action must be authorized by the cooperative or condominium Unit owners unit owners through a vote of not less than two-thirds of the owners authorization. of the units other than units owned by the developer or an affiliate of the developer, and may be brought by the cooperative or condominium unit owners through the units owners' association. Prior to instituting such action, the cooperative or condominium unit owners must, through a vote of not less than two-thirds of the owners of the units other than units owned by the developer or an affiliate of the developer, agree to enter into negotiation with the lessor and must seek through such negotiation to eliminate or modify any lease terms that are alleged to be unconscionable; if an agreement is not reached in ninety days from the date on which the authorizing vote was taken, the unit owners may authorize an action after following the procedure specified in the preceding sentence. (b) A rebuttable presumption of unconscionability exists if it is established that, in addition to the characteristics set forth in subsection (a) of this section, the lease— (1) creates a lien subjecting any unit to foreclosure for failure to make payments; (2) contains provisions requiring either the cooperative or condominium unit owners or the cooperative or condominium association as lessees to assume all or substantially all obligations and liabilities associated with the maintenance, management and use of the leased property, in addition to the obligation to make lease payments; (3) contains an automatic rent increase clause without establishing a specific maximum lease payment; and (4) requires an annual rental which exceeds 25 per centum of the appraised value of the leased property as improved: Provided, "Annual rental. That, for purposes of this paragraph "annual rental" means the amount due during the first twelve months of the lease for all units, regardless of whether such units were occupied or sold

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