wa-law.org > bill > 2025-26 > HB 1516 > Original Bill

HB 1516 - Insurance/affordable units

Source

Section 1

  1. The office of the insurance commissioner shall conduct a study regarding how projects that develop new permanently affordable homeownership units may utilize different insurance coverage options or approaches to reduce costs related to condominium construction defect liability and maintain commensurate access to insurance coverage.

  2. The study must be conducted in consultation with: Identified nonprofit organizations and government entities that sponsor permanently affordable homeownership units; authorized insurers of permanently affordable homeownership projects; unauthorized insurers of permanently affordable homeownership projects; and relevant state associations.

  3. In conducting the study, the insurance commissioner shall collect and use relevant findings from past insurance market studies conducted by the office of the insurance commissioner on or after December 31, 2017, or other relevant information released on or after December 31, 2017, that may assist the insurance commissioner in conducting the analysis or making recommendations.

  4. Consistent with RCW 43.01.036, the insurance commissioner shall submit a report on its findings to the appropriate committees of the legislature by December 31, 2025. The report must include:

    1. An actuarial analysis of how the condominium construction defect liability risk pools for nonprofit organizations and government entities that sponsor permanently affordable homeownership units may differ from other models of condominium production, sale, and ownership;

    2. An analysis of the role that the commissioner and insurers can play to lower condominium construction defect liability costs for nonprofit organizations and government entities that sponsor permanently affordable homeownership units; and

    3. Recommendations for how current or new insurance products and practices may be used to reduce insurance costs for nonprofit organizations and government entities that sponsor permanently affordable homeownership units.

  5. For the purposes of this section, "permanently affordable homeownership" means a unit that, in addition to meeting the definition of "affordable housing" in RCW 43.185A.010, is:

    1. Sponsored by a nonprofit organization or governmental entity;

    2. Subject to a ground lease or deed restriction, the forms of which may include a ground lease, deed restriction, community land trust lease, or affordability covenant that includes:

      1. A resale restriction designed to provide affordability for future low and moderate-income homebuyers;

      2. A right of first refusal for the sponsoring organization to purchase the home at resale, except in cases where the sponsor organization is a limited equity cooperative, defined as "cooperative" in RCW 64.90.010, and the sponsor organization is not partnered with a community land trust; and

      3. A requirement that the sponsor must approve any refinancing secured by the home, including home equity lines of credit, except where the sponsor organization is a limited equity cooperative, defined as "cooperative" in RCW 64.90.010, and the sponsor organization is not partnered with a community land trust; and

    3. Sponsored by a nonprofit organization or governmental entity and the sponsor:

      1. At the initial sale and at each successive sale of the unit, executes a new ground lease or deed restriction, the forms of which may include a ground lease, deed restriction, community land trust lease, or affordability covenant with a duration of at least 99 years; and

      2. Supports the unit's homeowner and enforces the ground lease or deed restriction.

  6. This section expires December 31, 2025.

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