wa-law.org > bill > 2025-26 > HB 1516 > Substitute 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 and approaches to reduce costs related to condominium construction defect liability while maintaining 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; representatives of the residential building construction industry; and relevant state associations.

  3. In conducting the study, the insurance commissioner shall:

    1. 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; and

    2. Collect information and data from entities transacting insurance in the state. Any identified authorized insurers, unauthorized insurers, and risk retention groups are required to provide the requested information and data to the insurance commissioner for purposes of this subsection.

  4. The insurance commissioner may contract with actuarial or other consultants to facilitate the study.

  5. 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, 2026. 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 for-profit 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 insurance costs for nonprofit organizations and government entities that sponsor permanently affordable homeownership units; and

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

  6. Funding for the study shall be provided from the insurance commissioner's regulatory account established under RCW 48.02.190.

  7. 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.

  8. This section expires December 31, 2027.

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