Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2005, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 121-H.F.No. 369
An act relating to real property; amending the
Minnesota Common Interest Ownership Act; amending
Minnesota Statutes 2004, sections 515B.1-102;
515B.1-103; 515B.1-106; 515B.1-107; 515B.1-116;
515B.2-101; 515B.2-102; 515B.2-104; 515B.2-105;
515B.2-106; 515B.2-108; 515B.2-110; 515B.2-111;
515B.2-112; 515B.2-113; 515B.2-118; 515B.2-119;
515B.2-121; 515B.2-123; 515B.2-124; 515B.3-101;
515B.3-102; 515B.3-103; 515B.3-105; 515B.3-106;
515B.3-110; 515B.3-112; 515B.3-113; 515B.3-114;
515B.3-115; 515B.3-116; 515B.3-117; 515B.3-120;
515B.4-101; 515B.4-102; 515B.4-105; 515B.4-106;
515B.4-107; 515B.4-108; 515B.4-109; 515B.4-111;
515B.4-115.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 2004, section 515B.1-102, is
amended to read:
515B.1-102 [APPLICABILITY.]
(a) Except as provided in this section, this chapter, and
not chapters 515 and 515A, applies to all common interest
communities created within this state on and after June 1, 1994.
(b) The applicability of this chapter to common interest
communities created prior to June 1, 1994, shall be as follows:
(1) This chapter shall apply to condominiums created under
chapter 515A with respect to events and circumstances occurring
on and after June 1, 1994; provided (i) that this chapter shall
not invalidate the declarations, bylaws or condominium plats of
those condominiums, and (ii) that chapter 515A, and not this
chapter, shall govern all rights and obligations of a declarant
of a condominium created under chapter 515A, and the rights and
claims of unit owners against that declarant.
(2) The following sections in this chapter apply to
condominiums created under chapter 515: 515B.1-104 (Variation
by Agreement); 515B.1-105 (Separate Titles and Taxation);
515B.1-106 (Applicability of Local Ordinances, Regulations, and
Building Codes); 515B.1-107 (Eminent Domain); 515B.1-108
(Supplemental General Principles of Law Applicable); 515B.1-109
(Construction Against Implicit Repeal); 515B.1-112
(Unconscionable Agreement or Term of Contract); 515B.1-113
(Obligation of Good Faith); 515B.1-114 (Remedies to be Liberally
Administered); 515B.1-115 (Notice); 515B.1-116 (Recording);
515B.2-103 (Construction and Validity of Declaration and
Bylaws); 515B.2-104 (Description of Units); 515B.2-108(d)
(Allocation of Interests); 515B.2-109(c) (Common Elements and
Limited Common Elements); 515B.2-112 (Subdivision or Conversion
of Units); 515B.2-113 (Alteration of Units); 515B.2-114
(Relocation of Boundaries Between Adjoining Units); 515B.2-115
(Minor Variations in Boundaries); 515B.2-118 (Amendment of
Declaration); 515B.2-119 (Termination of Common Interest
Community); 515B.3-102 (Powers of Unit Owners' Association);
515B.3-103(a), (b), and (g) (Board; Directors and Officers;
Period of Declarant Control); 515B.3-107 (Upkeep of Common
Interest Community); 515B.3-108 (Meetings); 515B.3-109
(Quorums); 515B.3-110 (Voting; Proxies); 515B.3-111 (Tort and
Contract Liability); 515B.3-112 (Conveyance or Encumbrance of
Common Elements); 515B.3-113 (Insurance); 515B.3-114 (Reserves;
Surplus Funds); 515B.3-115 (c), (e), (f), (g), (h), and (i)
(Assessments for Common Expenses); 515B.3-116 (Lien for
Assessments); 515B.3-117 (Other Liens); 515B.3-118 (Association
Records); 515B.3-119 (Association as Trustee); 515B.3-121
(Accounting Controls); 515B.4-107 (Resale of Units); 515B.4-108
(Purchaser's Right to Cancel Resale); and 515B.4-116 (Rights of
Action; Attorney's Fees). Section 515B.1-103 (Definitions)
shall apply to the extent necessary in construing any of the
sections referenced in this section. Sections 515B.1-105,
515B.1-106, 515B.1-107, 515B.1-116, 515B.2-103, 515B.2-104,
515B.2-118, 515B.3-102, 515B.3-110, 515B.3-111, 515B.3-113,
515B.3-116, 515B.3-117, 515B.3-118, 515B.3-121, 515B.4-107,
515B.4-108, and 515B.4-116 apply only with respect to events and
circumstances occurring on and after June 1, 1994. All other
sections referenced in this section apply only with respect to
events and circumstances occurring after July 31, 1999. A
section referenced in this section does not invalidate the
declarations, bylaws or condominium plats of condominiums
created before August 1, 1999. But all sections referenced in
this section prevail over the declarations, bylaws, CIC plats,
rules and regulations under them, of condominiums created before
August 1, 1999, except to the extent that this chapter defers to
the declarations, bylaws, CIC plats, or rules and regulations
issued under them.
(3) This chapter shall not apply to cooperatives and
planned communities created prior to June 1, 1994; except by
election pursuant to subsection (d), and except that sections
515B.1-116, subsections (a), (c), (d), (e), (f), and (h),
515B.4-107, and 515B.4-108, apply to all planned communities and
cooperatives regardless of when they are created, unless they
are exempt under subsection (e).
(c) This chapter shall not invalidate any amendment to the
declaration, bylaws or condominium plat of any condominium
created under chapter 515 or 515A if the amendment was recorded
before June 1, 1994. Any amendment recorded on or after June 1,
1994, shall be adopted in conformity with the procedures and
requirements specified by those instruments and by this
chapter. If the amendment grants to any person any rights,
powers or privileges permitted by this chapter, all correlative
obligations, liabilities and restrictions contained in this
chapter shall also apply to that person.
(d) Any condominium created under chapter 515, any planned
community or cooperative which would be exempt from this chapter
under subsection (e), or any planned community or cooperative
created prior to June 1, 1994, may elect to be subject to this
chapter, as follows:
(1) The election shall be accomplished by recording a
declaration or amended declaration, and a new or amended CIC
plat where required, and by approving bylaws or amended bylaws,
which conform to the requirements of this chapter, and which, in
the case of amendments, are adopted in conformity with the
procedures and requirements specified by the existing
declaration and bylaws of the common interest community, and by
any applicable statutes.
(2) In a condominium, the preexisting condominium plat
shall be the CIC plat and an amended CIC plat shall be required
only if the amended declaration or bylaws contain provisions
inconsistent with the preexisting condominium plat. The
condominium's CIC number shall be the apartment ownership number
or condominium number originally assigned to it by the recording
officer. In a cooperative in which the unit owners' interests
are characterized as real estate, a CIC plat shall be required.
In a planned community, the preexisting plat recorded pursuant
to chapter 505, 508, or 508A, or the part of the plat upon which
the common interest community is located, shall be the CIC plat.
(3) The amendment shall conform to the requirements of
comply with section 515B.2-118(d)(a)(3).
(4) Except as permitted by paragraph (3), no declarant,
affiliate of declarant, association, master association nor unit
owner may acquire, increase, waive, reduce or revoke any
previously existing warranty rights or causes of action that one
of said persons has against any other of said persons by reason
of exercising the right of election under this subsection.
(5) A common interest community which elects to be subject
to this chapter may, as a part of the election process, change
its form of ownership by complying with the requirements of
section 515B.2-123.
(e) Except as otherwise provided in this subsection, this
chapter shall not apply, except by election pursuant to
subsection (d), to the following:
(1) a planned community or cooperative which consists of 12
or fewer two units subject to the same declaration, which
utilizes a common interest community plat complying with section
515B.2-110(d)(1) and (2), which is not subject to any rights
to subdivide or convert units or to add additional real estate,
and which will is not be subject to a master association;
(2) a common interest community where the units consist
solely of separate parcels of real estate designed or utilized
for detached single family dwellings or agricultural purposes,
and where the association or a master association has no
obligation to maintain any building containing a dwelling or any
agricultural building;
(3) a cooperative where, at the time of creation of the
cooperative, the unit owners' interests in the dwellings as
described in the declaration consist solely of proprietary
leases having an unexpired term of fewer than 20 years,
including renewal options;
(4) planned communities utilizing a common interest
community plat complying with section 515B.2-110(d)(1) and (2)
and cooperatives, which are limited by the declaration to
nonresidential use; or
(5) real estate subject only to an instrument or
instruments filed primarily for the purpose of creating or
modifying rights with respect to access, utilities, parking,
ditches, drainage, or irrigation.
(f) Section 515B.1-106 shall apply to all common interest
communities.
Sec. 2. Minnesota Statutes 2004, section 515B.1-103, is
amended to read:
515B.1-103 [DEFINITIONS.]
In the declaration and bylaws, unless specifically provided
otherwise or the context otherwise requires, and in this chapter:
(1) "Additional real estate" means real estate that may be
added to a flexible common interest community.
(2) "Affiliate of a declarant" means any person who
controls, is controlled by, or is under common control with a
declarant.
(A) A person "controls" a declarant if the person (i) is a
general partner, officer, director, or employer of the
declarant, (ii) directly or indirectly or acting in concert with
one or more other persons, or through one or more subsidiaries,
owns, controls, holds with power to vote, or holds proxies
representing, more than 20 percent of the voting interest in the
declarant, (iii) controls in any manner the election of a
majority of the directors of the declarant, or (iv) has
contributed more than 20 percent of the capital of the declarant.
(B) A person "is controlled by" a declarant if the
declarant (i) is a general partner, officer, director, or
employer of the person, (ii) directly or indirectly or acting in
concert with one or more other persons, or through one or more
subsidiaries, owns, controls, holds with power to vote, or holds
proxies representing, more than 20 percent of the voting
interest in the person, (iii) controls in any manner the
election of a majority of the directors of the person, or (iv)
has contributed more than 20 percent of the capital of the
person.
(C) Control does not exist if the powers described in this
subsection are held solely as a security interest and have not
been exercised.
(3) "Allocated interests" means the following interests
allocated to each unit: (i) in a condominium, the undivided
interest in the common elements, the common expense liability,
and votes in the association; (ii) in a cooperative, the common
expense liability and the ownership interest and votes in the
association; and (iii) in a planned community, the common
expense liability and votes in the association.
(4) "Association" means the unit owners' association
organized under section 515B.3-101.
(5) "Board" means the body, regardless of name, designated
in the articles of incorporation, bylaws or declaration to act
on behalf of the association, or on behalf of a master
association when so identified.
(6) "CIC plat" means a common interest community plat
described in section 515B.2-110.
(7) "Common elements" means all portions of the common
interest community other than the units.
(8) "Common expenses" means expenditures made or
liabilities incurred by or on behalf of the association, or
master association when so identified, together with any
allocations to reserves.
(9) "Common expense liability" means the liability for
common expenses allocated to each unit pursuant to section
515B.2-108.
(10) "Common interest community" or "CIC" means contiguous
or noncontiguous real estate within Minnesota that is subject to
an instrument which obligates persons owning a separately
described parcel of the real estate, or occupying a part of the
real estate pursuant to a proprietary lease, by reason of their
ownership or occupancy, to pay for (i) real estate taxes levied
against; (ii) insurance premiums payable with respect to; (iii)
maintenance of; or (iv) construction, maintenance, repair or
replacement of improvements located on, one or more parcels or
parts of the real estate other than the parcel or part that the
person owns or occupies. Real estate which satisfies the
definition of a common interest community is a common interest
community whether or not it is subject to this chapter. Real
estate subject to a master association, regardless of when the
master association was formed, shall not collectively constitute
a separate common interest community unless so stated in the
master declaration recorded against the real estate pursuant to
section 515B.2-121, subsection (f)(1).
(11) "Condominium" means a common interest community in
which (i) portions of the real estate are designated as units,
(ii) the remainder of the real estate is designated for common
ownership solely by the owners of the units, and (iii) undivided
interests in the common elements are vested in the unit owners.
(12) "Conversion property" means real estate on which is
located a building that at any time within two years before
creation of the common interest community was occupied as a
residence for residential use wholly or partially by persons
other than purchasers and persons who occupy with the consent of
purchasers.
(13) "Cooperative" means a common interest community in
which the real estate is owned by an association, each of whose
members is entitled by virtue of the member's ownership interest
in the association to a proprietary lease.
(14) "Dealer" means a person in the business of selling
units for the person's own account.
(15) "Declarant" means:
(i) if the common interest community has been created, (A)
any person who has executed a declaration, or an amendment to a
declaration to add additional real estate, except secured
parties, persons whose interests in the real estate will not be
transferred to unit owners, or, in the case of a leasehold
common interest community, a lessor who possesses no special
declarant rights and who is not an affiliate of a declarant who
possesses special declarant rights, or (B) any person who
reserves, or succeeds under section 515B.3-104 to any special
declarant rights; or
(ii) any person or persons acting in concert who have
offered prior to creation of the common interest community to
transfer their interest in a unit to be created and not
previously transferred.
(16) "Declaration" means any instrument, however
denominated, including any amendment to the instrument, that
creates a common interest community.
(17) "Dispose" or "disposition" means a voluntary transfer
to a purchaser of any legal or equitable interest in the common
interest community, but the term does not include the transfer
or release of a security interest.
(18) "Flexible common interest community" means a common
interest community to which additional real estate may be added.
(19) "Leasehold common interest community" means a common
interest community in which all or a portion of the real estate
is subject to a lease the expiration or termination of which
will terminate the common interest community or reduce its size.
(20) "Limited common element" means a portion of the common
elements allocated by the declaration or by operation of section
515B.2-102(d) or (f) for the exclusive use of one or more but
fewer than all of the units.
(21) "Master association" means an entity created on or
after June 1, 1994, that directly or indirectly exercises any of
the powers set forth in section 515B.3-102 on behalf of one or
more members described in section 515B.2-121(b), (i), (ii) or
(iii), whether or not it also exercises those powers on behalf
of one or more property owners owner's associations described in
section 515B.2-121(b)(iv). A person (i) hired by an association
to perform maintenance, repair, accounting, bookkeeping or
management services, or (ii) granted authority under an
instrument recorded primarily for the purpose of creating rights
or obligations with respect to utilities, access, drainage, or
recreational amenities, is not, solely by reason of that
relationship, a master association.
(22) "Master declaration" means a written instrument,
however named, (i) recorded on or after June 1, 1994, against
property subject to powers exercised by a master association and
(ii) satisfying the requirements of complying with section
515B.2-121, subsection (f)(1).
(23) "Period of declarant control" means the time period
provided for in section 515B.3-103(c) during which the declarant
may appoint and remove officers and directors of the association.
(24) "Person" means an individual, corporation, limited
liability company, partnership, trustee under a trust, personal
representative, guardian, conservator, government, governmental
subdivision or agency, or other legal or commercial entity
capable of holding title to real estate.
(25) "Planned community" means a common interest community
that is not a condominium or a cooperative. A condominium or
cooperative may be a part of a planned community.
(26) "Proprietary lease" means an agreement with a
cooperative association whereby a member of the association is
entitled to exclusive possession of a unit in the cooperative.
(27) "Purchaser" means a person, other than a declarant,
who by means of a voluntary transfer acquires a legal or
equitable interest in a unit other than (i) a leasehold interest
of less than 20 years, including renewal options, or (ii) a
security interest.
(28) "Real estate" means any fee simple, leasehold or other
estate or interest in, over, or under land, including
structures, fixtures, and other improvements and interests that
by custom, usage, or law pass with a conveyance of land though
not described in the contract of sale or instrument of
conveyance. "Real estate" may include spaces with or without
upper or lower boundaries, or spaces without physical boundaries.
(29) "Residential use" means use as a dwelling, whether
primary, secondary or seasonal, but not transient use such as
hotels or motels.
(30) "Secured party" means the person owning a security
interest as defined in paragraph (31).
(31) "Security interest" means a perfected interest in real
estate or personal property, created by contract or conveyance,
which secures payment or performance of an obligation. The term
includes a mortgagee's interest in a mortgage, a vendor's
interest in a contract for deed, a lessor's interest in a lease
intended as security, a holder's interest in a sheriff's
certificate of sale during the period of redemption, an
assignee's interest in an assignment of leases or rents intended
as security, a lender's interest in a cooperative share loan, a
pledgee's interest in the pledge of an ownership interest, or
any other interest intended as security for an obligation under
a written agreement.
(32) "Special declarant rights" means rights reserved in
the declaration for the benefit of a declarant to:
(i) complete improvements indicated on the CIC plat,
planned by the declarant consistent with the disclosure
statement or authorized by the municipality in which the CIC is
located;
(ii) add additional real estate to a common interest
community;
(iii) subdivide or combine units, or convert units into
common elements, limited common elements and/or units;
(iv) maintain sales offices, management offices, signs
advertising the common interest community, and models;
(v) use easements through the common elements for the
purpose of making improvements within the common interest
community or any additional real estate;
(vi) create a master association and provide for the
exercise of authority by the master association over the common
interest community or its unit owners;
(vii) merge or consolidate a common interest community with
another common interest community of the same form of ownership;
or
(viii) appoint or remove any officer or director of the
association, or the master association where applicable, during
any period of declarant control.
(33) "Time share" means a right to occupy a unit or any of
several units during three or more separate time periods over a
period of at least three years, including renewal options,
whether or not coupled with an estate or interest in a common
interest community or a specified portion thereof.
(34) "Unit" means a physical portion of a common interest
community the boundaries of which are described in the common
interest community's declaration and which is intended for
separate ownership or separate occupancy pursuant to a
proprietary lease.
(35) "Unit identifier" means English letters or Arabic
numerals, or a combination thereof, which identify only one unit
in a common interest community and which meet the requirements
of section 515B.2-104.
(36) "Unit owner" means a declarant or other person who
owns a unit, a lessee under a proprietary lease, or a lessee of
a unit in a leasehold common interest community whose lease
expires simultaneously with any lease the expiration or
termination of which will remove the unit from the common
interest community, but does not include a secured party. In a
common interest community, the declarant is the unit owner of a
unit until that unit has been conveyed to another person.
Sec. 3. Minnesota Statutes 2004, section 515B.1-106, is
amended to read:
515B.1-106 [APPLICABILITY OF LOCAL REQUIREMENTS.]
(a) Except as provided in subsections (b) and (c), a
zoning, subdivision, building code, or other real estate use
law, ordinance, charter provision, or regulation may not
directly or indirectly prohibit the common interest community
form of ownership or impose any requirement upon a common
interest community, upon the creation or disposition of a common
interest community or upon any part of the common interest
community conversion process which it would not impose upon a
physically similar development under a different form of
ownership. Otherwise, no provision of this chapter invalidates
or modifies any provision of any zoning, subdivision, building
code, or other real estate use law, ordinance, charter
provision, or regulation.
(b) Subsection (a) shall not apply to any ordinance, rule,
regulation, charter provision or contract provision relating to
the financing of housing construction, rehabilitation, or
purchases provided by or through a housing finance program
established and operated pursuant to state or federal law by a
state or local agency or local unit of government.
(c) A statutory or home rule charter city, pursuant to an
ordinance or charter provision establishing standards to be
applied uniformly within its jurisdiction, may prohibit or
impose reasonable conditions upon the conversion of
buildings occupied wholly or partially for residential use to
the common interest community form of ownership only if there
exists within the city a significant shortage of suitable rental
dwellings available to low and moderate income individuals or
families or to establish or maintain the city's eligibility for
any federal or state program providing direct or indirect
financial assistance for housing to the city. Prior to the
adoption of an ordinance pursuant to the authority granted in
this subsection, the city shall conduct a public hearing. Any
ordinance or charter provision adopted pursuant to this
subsection shall not apply to any existing or proposed
conversion common interest community (i) for which a bona fide
loan commitment for a consideration has been issued by a lender
and is in effect on the date of adoption of the ordinance or
charter provision, or (ii) for which a notice of conversion or
intent to convert required by section 515B.4-111, containing a
termination of tenancy, has been given to at least 75 percent of
the tenants and subtenants in possession prior to the date of
adoption of the ordinance or charter provision.
(d) For purposes of providing marketable title, a statement
in the declaration that the common interest community is not
subject to an ordinance or that any conditions required under an
ordinance have been complied with shall be prima facie evidence
that the common interest community was not created in violation
of the ordinance.
(e) A violation of an ordinance or charter provision
adopted pursuant to the provisions of subsection (b) or (c)
shall not affect the validity of a common interest community.
This subsection shall not be construed to in any way limit the
power of a city to enforce the provisions of an ordinance or
charter provision adopted pursuant to subsection (b) or (c).
(f) Any ordinance or charter provision enacted hereunder
shall not be effective for a period exceeding 18 months.
Sec. 4. Minnesota Statutes 2004, section 515B.1-107, is
amended to read:
515B.1-107 [EMINENT DOMAIN.]
(a) If a unit is acquired by eminent domain, or if part of
a unit is acquired by eminent domain leaving the unit owner with
a remnant which may not practically or lawfully be used for any
material purpose permitted by the declaration, the award shall
compensate the unit owner and secured party in the unit as their
interests may appear, whether or not any common element interest
is acquired. Upon acquisition, unless the order or final
certificate otherwise provides, that unit's allocated interests
are automatically reallocated among the remaining units in
proportion to their respective allocated interests prior to the
taking, and the association shall promptly prepare, execute, and
record an amendment to the declaration reflecting the
allocations. Any remnant of a unit remaining after part of a
unit is taken under this subsection is thereafter a common
element.
(b) Except as provided in subsection (a), if part of a unit
is acquired by eminent domain, the award shall compensate the
unit owner and secured party for the reduction in value of the
unit and its interest in the common elements, whether or not any
common elements are acquired. Upon acquisition, unless the
order or final certificate otherwise provides, (i) that unit's
allocated interests are reduced in proportion to the reduction
in the size of the unit, or on any other basis specified in the
declaration and (ii) the portion of the allocated interests
divested from the partially acquired unit are automatically
reallocated to that unit and to the remaining units in
proportion to the respective allocated interests of those units
before the taking, with the partially acquired unit
participating in the reallocation on the basis of its reduced
allocated interests.
(c) If part of the common elements is acquired by eminent
domain, the portion of the award attributable to the common
elements taken shall be paid to the association. In an eminent
domain proceeding which seeks to acquire a part of the common
elements, jurisdiction may be acquired by service of process
upon the association. Unless the declaration provides
otherwise, any portion of the award attributable to the
acquisition of a limited common element shall be equally divided
among the owners of the units to which that limited common
element was allocated at the time of acquisition and their
secured parties, as their interests may appear or as provided by
the declaration.
(d) In any eminent domain proceeding the units shall be
treated as separate parcels of real estate for valuation
purposes, regardless of the number of units subject to the
proceeding.
(e) Any distribution to a unit owner from the proceeds of
an eminent domain award shall be subject to any limitations
imposed by the declaration or bylaws.
(f) The court order or final certificate containing the
final awards shall be recorded in every county in which any
portion of the common interest community is located.
Sec. 5. Minnesota Statutes 2004, section 515B.1-116, is
amended to read:
515B.1-116 [RECORDING.]
(a) A declaration, bylaws, any amendment to a declaration
or bylaws, and any other instrument affecting a common interest
community shall be entitled to be recorded. In those counties
which have a tract index, the county recorder shall enter the
declaration in the tract index for each unit or other tract
affected. The county recorder shall not enter the declaration
in the tract index for lands described as additional real
estate, unless such lands are added to the common interest
community pursuant to section 515B.2-111. The registrar of
titles shall file the declaration in accordance with section
508.351 or 508A.351. The registrar of titles shall not file the
declaration upon certificates of title for lands described as
additional real estate, unless such lands are added to the
common interest community pursuant to section 515B.2-111.
(b) The recording officer shall upon request promptly
assign a number (CIC number) to a common interest community to
be formed or to a common interest community resulting from the
merger of two or more common interest communities.
(c) Documents recorded pursuant to this chapter shall in
the case of registered land be filed, and references to the
recording of documents shall mean filed in the case of
registered land.
(d) Subject to any specific requirements of this chapter,
if a recorded document relating to a common interest
community or a master association purports to require a certain
vote or signatures approving any restatement or amendment of the
document by a certain number or percentage of unit owners or
secured parties, and if the amendment or restatement is to be
recorded pursuant to this chapter, an affidavit of the president
or secretary of the association stating that the required vote
or signatures have been obtained shall be attached to the
document to be recorded and shall constitute prima facie
evidence of the representations contained therein.
(e) If a common interest community is located on registered
land, the recording fee for any document affecting two or more
units shall be the then-current fee for registering the document
on the certificates of title for the first ten affected
certificates and one-third of the then-current fee for each
additional affected certificate. This provision shall not apply
to recording fees for deeds of conveyance, with the exception of
deeds given pursuant to sections 515B.2-119 and 515B.3-112. The
same fees shall apply to recording any document affecting two or
more units or other parcels of real estate subject to a master
declaration.
(f) Except as permitted under this subsection, a recording
officer shall not file or record a declaration creating a new
common interest community, unless the county treasurer has
certified that the property taxes payable in the current year
for the real estate included in the proposed common interest
community have been paid. This certification is in addition to
the certification for delinquent taxes required by section
272.12. In the case of preexisting common interest communities,
the recording officer shall accept, file, and record the
following instruments, without requiring a certification as to
the current or delinquent taxes on any of the units in the
common interest community: (i) a declaration subjecting the
common interest community to this chapter; (ii) a declaration
changing the form of a common interest community pursuant to
section 515B.2-123; or (iii) an amendment to or restatement of
the declaration, bylaws, or CIC plat. In order for an
instrument to be accepted and recorded under the preceding
sentence, the instrument must not create or change unit or
common area boundaries.
Sec. 6. Minnesota Statutes 2004, section 515B.2-101, is
amended to read:
515B.2-101 [CREATION OF COMMON INTEREST COMMUNITIES.]
(a) On and after June 1, 1994, a common interest community
may be created only as follows:
(1) A condominium may be created only by recording a
declaration.
(2) A cooperative may be created only by recording a
declaration and by recording a conveyance of the real estate
subject to that declaration to the association.
(3) A planned community which includes common elements may
be created only by simultaneously recording a declaration and a
conveyance of the common elements subject to that declaration to
the association.
(4) A planned community without common elements may be
created only by recording a declaration.
(b) Except as otherwise expressly provided in this chapter,
the declaration shall be executed by all persons whose interests
in the real estate will be conveyed to unit owners or to the
association, except vendors under contracts for deed, and by
every lessor of a lease the expiration or termination of which
will terminate the common interest community. The declaration
shall be recorded in every county in which any portion of the
common interest community is located. Failure of any party not
required to execute a declaration, but having a recorded
interest in the common interest community, to join in the
declaration shall have no effect on the validity of the common
interest community; provided that the party is not bound by the
declaration until that party acknowledges the existence of the
common interest community in a recorded instrument.
(c) In a condominium, a planned community utilizing a CIC
plat complying with section 515B.2-110(c), or real estate a
cooperative where the unit boundaries are delineated by
a physical structure, a declaration, or an amendment to a
declaration adding units, shall not be recorded unless all the
structural components of the structures containing the units and
the mechanical systems serving more than one unit in all
buildings containing the units thereby created, but not the
units, are substantially completed, as evidenced by a recorded
certificate executed by a registered engineer or architect.
(d) A project which (i) meets the definition of a "common
interest community" in section 515B.1-103(10), (ii) is created
after May 31, 1994, and (iii) is not exempt under section
515B.1-102(e), is subject to this chapter even if this or other
sections of the chapter have not been complied with, and the
declarant and all unit owners are bound by all requirements and
obligations of this chapter.
(e) The association shall be incorporated pursuant to
section 515B.3-101 and the CIC plat shall be recorded as and if
required by section 515B.2-110.
Sec. 7. Minnesota Statutes 2004, section 515B.2-102, is
amended to read:
515B.2-102 [UNIT BOUNDARIES.]
(a) The declaration shall describe the boundaries of the
units as provided in section 515B.2-105(5). The boundaries need
not be delineated by a physical structure. The unit may consist
of noncontiguous portions of the common interest community.
(b) In a condominium or, a cooperative, or a planned
community utilizing a CIC plat complying with section
515B.2-110(c), except as the declaration otherwise provides, if
the walls, floors, or ceilings of a unit are designated as its
boundaries, then the boundaries shall be the interior,
unfinished surfaces of the perimeter walls, floors and,
ceilings, doors, windows, and door and window frames of the unit.
All paneling, tiles, wallpaper, paint, floor covering, and any
other finishing materials applied to the interior surfaces of
the perimeter walls, floors or ceilings, are a part of the unit,
and all other portions of the perimeter walls, floors, or
ceilings, including perimeter doors and, windows, and their
door and window frames, are a part of the common elements.
(c) In a planned community, except as the declaration
otherwise provides utilizing a CIC plat complying with section
515B.2-110(d)(1) and (2), except as the declaration otherwise
provides, the unit boundaries shall be the boundary lines as
designated on a plat recorded pursuant to chapter 505 or on a
registered land survey filed lot lines designated on a plat
recorded pursuant to chapter 508 or 508A 505.
(d) If any chute, flue, duct, wire, pipe, conduit, bearing
wall, bearing column, or any other fixture serving fewer than
all units lies partially within and partially outside of
the designated boundaries of a the unit or units served, any
portion thereof serving only that unit or units is a limited
common element allocated solely to that unit or units, and any
portion thereof serving more than one unit or any portion of the
common elements is a part of the common elements.
(e) Subject to subsection (d), all spaces, interior
partitions, and other fixtures and improvements within the
boundaries of a unit are a part of the unit.
(f) Improvements such as shutters, awnings, window boxes,
doorsteps, stoops, porches, balconies, decks, patios, perimeter
doors and windows, and their frames, constructed as part of the
original construction to serve a single unit, and authorized
replacements and modifications thereof, if located wholly or
partially outside the unit's boundaries, are limited common
elements allocated exclusively to that unit.
Sec. 8. Minnesota Statutes 2004, section 515B.2-104, is
amended to read:
515B.2-104 [DESCRIPTION OF UNITS.]
(a) A description of a unit is legally sufficient if it
sets forth (i) the unit identifier of the unit, (ii) the number
assigned to the common interest community by the recording
officer, and (iii) the county in which the unit is located.
(b) If the CIC plat for a planned community complies with
chapter 505, 508, or 508A, then a description of a unit in the
planned community is legally sufficient if it is stated in terms
of a plat or registered land survey. In planned communities
whose CIC plats comply with section 515B.2-110(c), and in all
condominiums and cooperatives created under this chapter, a unit
identifier shall contain no more than six characters, only one
of which may be a letter.
(c) A description which conforms to the requirements of
complies with this section shall be deemed to include all
rights, obligations, and interests appurtenant to the unit which
were created by the declaration or bylaws, by a master
declaration, or by this chapter, whether or not those rights,
obligations, or interests are expressly described.
(d) If the CIC plat for a planned community complies with
section 515B.2-110(c) a description of the common elements is
legally sufficient if it sets forth (i) the words "common
elements," (ii) the number assigned to the common interest
community by the recording officer, and (iii) the county in
which the common elements are located. The common elements may
consist of separate parcels of real estate, in which case each
parcel shall be separately identified on the CIC plat and in any
recorded instrument referencing a separate parcel of the common
elements.
Sec. 9. Minnesota Statutes 2004, section 515B.2-105, is
amended to read:
515B.2-105 [DECLARATION CONTENTS; ALL COMMON INTEREST
COMMUNITIES.]
(a) The declaration shall contain:
(1) the number of the common interest community, whether
the common interest community is a condominium, planned
community or cooperative, and the name of the common interest
community, which shall appear at the top of the first page of
the declaration in the following format:
Common Interest Community No. ....
(Type of Common Interest Community)
(Name of Common Interest Community)
DECLARATION
(2) a statement as to whether the common interest community
is or is not subject to a master association;
(3) the name of the association, a statement that the
association has been incorporated and a reference to the statute
under which it was incorporated;
(4) a legally sufficient description of the real estate
included in the common interest community, a statement
identifying any appurtenant easement necessary for access to a
public street or highway, and a general reference to any other
appurtenant easements;
(5) a description of the boundaries of each unit created by
the declaration and the unit's unit identifier;
(6) in a planned community containing common elements, a
legally sufficient description of the common elements;
(7) in a cooperative, a statement as to whether the unit
owners' interests in all units and their allocated interests are
real estate or personal property;
(8) an allocation to each unit of the allocated interests
in the manner described in section 515B.2-108;
(9) a statement of (i) the total number of units and (ii)
which units will be restricted to residential use and which
units will be restricted to nonresidential use;
(10) a statement of the maximum number of units which may
be created by the subdivision or conversion of units owned by
the declarant pursuant to section 515B.2-112;
(11) any material restrictions on use, occupancy, or
alienation of the units, or on the sale price of a unit or on
the amount that may be received by an owner on sale,
condemnation or casualty loss to the unit or to the common
interest community, or on termination of the common interest
community; provided, that these requirements shall not affect
the power of the association to adopt, amend or revoke rules and
regulations pursuant to section 515B.3-102;
(12) a statement as to whether time shares are permitted;
and
(13) a statement as to whether the common interest
community includes any shoreland, as defined in section
103F.205, and, if the common interest community includes
shoreland, a statement that the common interest community may be
subject to county, township, or municipal ordinances or rules
affecting the development and use of the shoreland area; and
(14) all matters required by sections 515B.1-103(32),
Special Declarant Rights; 515B.2-107, Leaseholds; 515B.2-109,
Common Elements and Limited Common Elements; 515B.2-110, Common
Interest Community Plat; 515B.3-115, Assessments for Common
Expenses; and 515B.2-121, Master Associations.
(b) The declaration may contain any other matters the
declarant considers appropriate.
Sec. 10. Minnesota Statutes 2004, section 515B.2-106, is
amended to read:
515B.2-106 [DECLARATION OF FLEXIBLE COMMON INTEREST
COMMUNITIES.]
(a) The declaration for a flexible common interest
community shall include, in addition to the matters specified in
section 515B.2-105:
(1) a reservation of any rights to add additional real
estate;
(2) a statement of any time limit, not exceeding ten years
after the recording of the declaration, upon which any right
reserved under paragraph (1) will lapse, together with a
statement of any circumstances that will terminate the option
before the expiration of the time limit. If no time limit is
set forth in the declaration, the time limit shall be ten years
after the recording of the declaration; provided, that the time
limit may be extended by an amendment to the declaration
approved in writing by the declarant, and by the vote or written
agreement of unit owners, other than the declarant or an
affiliate of the declarant, to whose units are allocated at
least 67 percent of the votes in the association;
(3) a statement of any limitations on any rights reserved
under paragraph (1), other than limitations created by or
imposed pursuant to law;
(4) a legally sufficient description of the additional real
estate;
(5) a statement as to whether portions of any additional
real estate may be added at different times;
(6) a statement of (i) the maximum number of units, based
upon the declarant's good faith estimate, that may be created
within any additional real estate, and (ii) how many of those
units will be restricted to residential use;
(7) a statement that any buildings and units erected upon
the additional real estate, when and if added, will be
compatible with the other buildings and units in the common
interest community in terms of architectural style, quality of
construction, principal materials employed in construction, and
size, or a statement of any differences with respect to the
buildings or units, or a statement that no assurances are made
in those regards;
(8) a statement that all restrictions in the declaration
affecting use, occupancy, and alienation of units will apply to
units created in the additional real estate, when and if added,
or a statement of any differences with respect to the additional
units;
(9) a statement as to whether any assurances made in the
declaration regarding additional real estate pursuant to
paragraphs (5) through (8) will apply if the real estate is not
added to the common interest community.
(b) A declarant need not have an interest in the additional
real estate in order to identify it as such in the declaration,
and the recording officer shall index the declaration as
provided in section 515B.1-116(a). Identification of additional
real estate in the declaration does not encumber or otherwise
affect the title to the additional real estate.
Sec. 11. Minnesota Statutes 2004, section 515B.2-108, is
amended to read:
515B.2-108 [ALLOCATION OF INTERESTS.]
(a) The declaration shall allocate to each unit:
(1) in a condominium, a fraction or percentage of undivided
interests in the common elements and in the common expenses of
the association and a portion of the votes in the association;
(2) in a cooperative, an ownership interest in the
association, a fraction or percentage of the common expenses of
the association and a portion of the votes in the association;
and
(3) in a planned community, a fraction or percentage of the
common expenses of the association and a portion of the votes in
the association.
(b) The declaration shall state the formulas used to
establish allocations of interests. If the fractions or
percentages are all equal the declaration may so state in lieu
of stating the fractions or percentages. If equality is
designated by The declaration as the formula for the allocation
of votes, need not allocate votes do not attach to units that
are auxiliary to other units, such as garage units or storage
units. The allocations shall not discriminate in favor of units
owned by the declarant or an affiliate of the declarant, except
as provided in sections 515B.2-121 and 515B.3-115.
(c) If units may be added to the common interest community,
the declaration shall state the formulas to be used to
reallocate the allocated interests among all units included in
the common interest community after the addition shall be the
formulas stated in the declaration.
(d) The declaration may authorize special allocations: (i)
of unit owner votes among certain units or classes of units on
particular matters specified in the declaration, or (ii) of
common expenses among certain units or classes of units on
particular matters specified in the declaration. Special
allocations may only be used to address operational, physical or
administrative differences within the common interest
community. A declarant may not utilize special allocations for
the purpose of evading any limitation or obligation imposed on
declarants by this chapter nor may units constitute a class
because they are owned by a declarant.
(e) The sum of each category of allocated interests
allocated at any time to all the units must equal one if stated
as a fraction or 100 percent if stated as a percentage. In the
event of a discrepancy between an allocated interest and the
result derived from application of the pertinent formula, the
allocated interest prevails.
(f) In a condominium or planned community, the common
elements are not subject to partition, and any purported
conveyance, encumbrance, judicial sale, or other voluntary or
involuntary transfer of an undivided interest in the common
elements made without the unit to which that interest is
allocated is void. The granting of easements, licenses or
leases pursuant to section 515B.3-102 shall not constitute a
partition.
(g) In a cooperative, any purported conveyance,
encumbrance, judicial sale, or other voluntary or involuntary
transfer of an ownership interest in the association made
without the possessory interest in the unit to which that
interest is related is void.
Sec. 12. Minnesota Statutes 2004, section 515B.2-110, is
amended to read:
515B.2-110 [COMMON INTEREST COMMUNITY PLAT (CIC PLAT).]
(a) A CIC plat is required for condominiums and planned
communities, and cooperatives in which the unit owners'
interests are characterized as real estate. The CIC plat is a
part of the declaration in condominiums, in planned communities
utilizing a CIC plat complying with subsection (c), and in
cooperatives in which the unit owners' interests are
characterized as real estate, but need not be physically
attached to the declaration.
(1) In a condominium, or a cooperative in which the unit
owners' interests are characterized as real estate, the CIC plat
shall comply with subsection (c).
(2) In a planned community, a CIC plat which does not
comply with subsection (c) shall consist of all or part of a
subdivision plat or plats complying with subsections (d)(1) and
(d)(2). The CIC plat need not contain the number of the common
interest community and may be recorded at any time at or before
the time of recording of the declaration.; provided, that if the
CIC plat for the planned community complies with subsection (c),
the number of the common interest community shall be included
and the CIC plat shall be recorded at the time of recording of
the declaration.
(3) In a cooperative in which the unit owners' interests
are characterized as personal property, a CIC plat shall not be
required. In lieu of a CIC plat, the declaration or any
amendment to it creating, converting, or subdividing units in a
personal property cooperative shall include an exhibit
containing a scale drawing of each building, identifying the
building, and showing the perimeter walls of each unit created
or changed by the declaration or any amendment to it, including
the unit's unit identifier, and its location within the building
if the building contains more than one unit.
(b) The CIC plat, or supplemental or amended CIC plat, for
condominiums, for planned communities using a plat complying
with subsection (c), and for cooperatives in which the unit
owners' interests are characterized as real estate, shall
contain certifications by a registered licensed professional
land surveyor and registered licensed professional architect, as
to the parts of the CIC plat prepared by each, that (i) the CIC
plat accurately depicts all information required by this
section, and (ii) the work was undertaken by, or reviewed and
approved by, the certifying land surveyor or architect. The
portions of the CIC plat depicting the dimensions of the
portions of the common interest community described in
subsections (c)(8), (9), (10), and (12), may be prepared by
either a land surveyor or an architect. The other portions of
the CIC plat shall be prepared only by a land surveyor. A
certification of the CIC plat or supplemental CIC plat, or an
amendment to it, under this subsection by an architect is not
required if all parts of the CIC plat, supplemental CIC plat, or
amendment are prepared by a land surveyor. Certification by the
land surveyor or architect does not constitute a guaranty or
warranty of the nature, suitability, or quality of construction
of any improvements located or to be located in the common
interest community.
(c) A CIC plat for a condominium, or a cooperative in which
the unit owners' interests are characterized as real estate,
shall show:
(1) the number of the common interest community, and the
boundaries, dimensions and a legally sufficient description of
the land included therein;
(2) the dimensions and location of all existing, material
structural improvements and roadways;
(3) the intended location and dimensions of any
contemplated common element improvements to be constructed
within the common interest community after the filing of the CIC
plat, labeled either "MUST BE BUILT" or "NEED NOT BE BUILT";
(4) the location and dimensions of any additional real
estate, labeled as such, and a legally sufficient description of
the additional real estate;
(5) the extent of any encroachments by or upon any portion
of the common interest community;
(6) the location and dimensions of all recorded easements
within the land included in the common interest community
serving or burdening any portion of the common interest
community land;
(7) the distance and direction between noncontiguous
parcels of real estate;
(8) the location and dimensions of limited common elements,
except that with respect to limited common elements described in
section 515B.2-102, subsections (d) and (f), only such material
limited common elements as porches, balconies, decks, patios,
and garages shall be shown;
(9) the location and dimensions of the front, rear, and
side boundaries of each unit and that unit's unit identifier;
(10) the location and dimensions of the upper and lower
boundaries of each unit with reference to an established or
assumed datum and that unit's unit identifier;
(11) a legally sufficient description of any real estate in
which the unit owners will own only an estate for years, labeled
as "leasehold real estate";
(12) any units which may be converted by the declarant to
create additional units or common elements identified separately.
(d) A CIC plat for a planned community either shall comply
with subsection (c), or it shall:
(1) satisfy the requirements of comply with chapter 505,
508, or 508A, as applicable; and
(2) satisfy comply with the platting requirements of any
governmental authority within whose jurisdiction the planned
community is located, subject to the limitations set forth in
section 515B.1-106.
(e) If a declarant adds additional real estate, the
declarant shall record a supplemental CIC plat or plats for the
real estate being added, conforming to the requirements of this
section which apply to the type of common interest community in
question. If less than all additional real estate is being
added, the supplemental CIC plat for a condominium, a planned
community whose CIC plat complies with subsection (c), or a
cooperative in which the unit owners' interests are
characterized as real estate, shall also show the location and
dimensions of the remaining portion.
(f) If, pursuant to section 515B.2-112, a declarant
subdivides or converts any unit into two or more units, common
elements or limited common elements, or combines two or more
units, the declarant shall record an amendment to the CIC plat
showing the location and dimensions of any new units, common
elements and or limited common elements thus created.
(g) A CIC plat which complies with subsection (c) is not
subject to chapter 505.
Sec. 13. Minnesota Statutes 2004, section 515B.2-111, is
amended to read:
515B.2-111 [EXPANSION OF FLEXIBLE COMMON INTEREST
COMMUNITY.]
(a) To add additional real estate pursuant to a right
reserved under section 515B.2-106(1) 515B.2-106(a)(1), the
declarant and all persons whose interests in the additional real
estate will be conveyed to unit owners or the association,
except vendors under a contract for deed, shall execute and
record an amendment to the a supplemental declaration as
provided in this section. The amendment to the supplemental
declaration shall be titled a "supplemental declaration," shall
be limited to matters authorized by this section, and shall
include:
(1) assign a unit identifier to each unit formed in the
additional a legally sufficient description of the real estate
added by the supplemental declaration;
(2) reallocate a description of the boundaries of each unit
created by the supplemental declaration, consistent with the
declaration, and the unit's unit identifier;
(3) in a planned community containing common elements, a
legally sufficient description of the common elements;
(4) a reallocation of the common element interests, votes
in the association, and common expense liabilities as
applicable, in compliance with the declaration and section
515B.2-108;
(3) describe (5) a description of any limited common
elements formed out of the additional real estate, designating
the unit to which each is allocated to the extent required by
section 515B.2-109;
(6) a statement as to whether or not the period of
declarant control has terminated, regardless of the reason for
such termination; and
(4) (7) contain such other provisions as may be reasonably
an attached affidavit attesting to the giving of the notice
required by the association; and subsection (b), if such notice
is required.
(5) conform to the applicable requirements of the
declaration and the act.
(b) If the period of declarant control has terminated, a
declarant shall give notice of its intention to add additional
real estate as follows: to the association (Attention:
president of the association) by a notice given in the manner
provided in section 515B.1-115 not less than 15 days prior to
recording the supplemental declaration which adds the additional
real estate. A copy of the supplemental declaration shall be
attached to the notice. The supplemental declaration may be in
proposed form; however, following notice, the supplemental
declaration shall not be changed so as to materially and
adversely affect the rights of unit owners or the association
unless a new 15-day notice is given in accordance with this
section.
(1) If the period of declarant control has expired, to the
association in the same manner as service of summons in a civil
action in district court at least 15 days prior to recording the
amendment. A copy of the amendment shall be attached to the
notice.
(2) If the period of declarant control has not expired, to
the unit owners by notice (one notice per unit) given in the
manner provided in section 515B.1-115, not less than 15 days
prior to recording the amendment, addressed to "Unit Owner
Entitled to Legal Notice" at each unit or to the unit owner at
such other address as may be designated by notice from the unit
owner. The declarant shall provide a copy of the amendment at
no cost to any unit owner within five business days of the unit
owner's request, and the notice shall include a statement to
that effect.
(3) Proof of notice to the association or the unit owners,
as the case may be, shall be attached to the recorded
amendment. Following service of notice, the amendment shall not
be changed so as to materially and adversely affect the rights
of unit owners or the association.
(c) A lien upon the additional real estate that is not also
upon the existing common interest community is a lien only upon
the units, and their respective interest in the common elements
(if any), that are created from the additional real estate.
Units within the common interest community as it existed prior
to expansion are transferred free of liens that existed only
upon the additional real estate, notwithstanding the fact that
the interest in the common elements is a portion of the entire
common interest community, including the additional real estate.
(d) If a supplemental declaration in a planned community
creates common elements, then a conveyance of the common
elements to the association shall be recorded simultaneously
with the supplemental declaration. If a supplemental
declaration adds additional real estate to a cooperative, then a
conveyance of the additional real estate to the association
shall be recorded simultaneously with the supplemental
declaration.
Sec. 14. Minnesota Statutes 2004, section 515B.2-112, is
amended to read:
515B.2-112 [SUBDIVISION, COMBINATION, OR CONVERSION OF
UNITS.]
(a) If the declaration so provides, (i) a unit owned by a
person other than a declarant one or more units may be
subdivided into two or more units or combined into a lesser
number of units, or (ii) a unit or units owned exclusively by a
declarant may be subdivided, combined, or converted into two one
or more units, limited common elements, common elements, or a
combination of units, limited common elements or common
elements, subject to subsections (b) and (c).
(b) If a the unit is or units are not owned exclusively
by a unit owner other than a declarant, the unit owner owners of
the units to be combined or subdivided shall prepare cause to be
prepared and submit submitted to the association for approval an
application for an amendment to the declaration and amended CIC
plat, for the purpose of subdividing or combining the unit or
units. The application shall contain, at a minimum, a general
description of the proposed subdivision or combination, and
shall specify in detail the matters required by paragraphs
(2) subsection (c)(2) and (3). The basis for disapproval of the
application by the association shall be limited to (i) health or
safety considerations, (ii) liability considerations for the
association and other unit owners, (iii) aesthetic changes to
the common elements or another unit, (iv) any material and
adverse impact on the common elements or another unit, or (v) a
failure to comply with the declaration, this chapter, or
governmental laws, ordinances, or regulations. The association
shall give written notice of its decision and required changes
to the unit owner or owners who made the application. The
association shall establish fair and reasonable procedures and
time frames for the submission and prompt processing of the
applications.
(c) If the an application under subsection (b) is approved,
the unit owner shall cause an amendment and amended CIC plat to
be prepared based upon the approved application. The amendment
shall:
(1) be executed by the association and by each unit owner
and any secured party with respect to the each unit to be
combined or subdivided;
(2) assign a unit identifier to each unit created resulting
from the subdivision or combination;
(3) reallocate the common element interest, votes in the
association, and common expense liability, as applicable,
formerly allocated to the unit or units to be combined or
subdivided among the unit or units created resulting from the
subdivision or combination on the basis of the formula described
in the declaration; and
(4) contain such other provisions as may be reasonably
required by the association; and
(5) conform to the requirements of the declaration and this
chapter. The basis for disapproval shall be limited to (i)
structural or safety considerations, (ii) liability
considerations for the association and other unit owners, (iii)
aesthetic considerations if the changes affect exterior portions
of a structure, or (iv) a failure to comply with the
declaration, this chapter, or governmental laws, ordinances or
regulations. The association shall give written notice of its
decision and/or required changes to the unit owner.
(d) If the association determines that the amendment
conforms and amended CIC plat conform to the approved
application, the declaration, and this chapter, the association
shall be obligated to execute the amendment and cooperate in its
recording cause the amendment and the amended CIC plat to be
recorded. The unit owner shall record the amendment and the
amended CIC plat and deliver a copy of the recorded amendment
and amended CIC plat to the association. The association may
require the unit owners executing the amendment to pay all fees
and costs for reviewing, preparing, and recording the amendment
and the amended CIC plat, and any other fees or costs incurred
by the association in connection therewith.
(c) (e) If a the unit is or units are owned
exclusively by a declarant, the declarant shall have the
authority to unilaterally prepare and record, at its expense, an
amendment and an amended CIC plat subdividing, combining, or
converting the unit or units. The amendment shall comply
with the requirements of subsection (b)(1) subsections (c)(1),
(2), (3), and (5) (4), and shall be limited to those provisions
necessary to accomplish the subdivision, combination, or
conversion unless the consent of unit owners required to amend
the declaration is obtained.
(d) If (f) The amended CIC plat shall show the resulting
common elements, limited common elements or units, as
subdivided, combined, or converted.
(g) A secured party joins in the amendment pursuant to this
section, its party's interest and remedies shall be deemed to
apply to the unit or units and the common element interests that
result from the subdivision or conversion combination of the
unit or units in which the secured party held a security
interest. If the secured party enforces any remedy, including
foreclosure of its lien, against any of the resulting
units created, all instruments and notices relating to the
foreclosure shall describe the subject property in terms of
the amendment and the amended descriptions CIC plat which
created the resulting units.
Sec. 15. Minnesota Statutes 2004, section 515B.2-113, is
amended to read:
515B.2-113 [ALTERATIONS OF UNITS.]
(a) Subject to the provisions of the declaration and
applicable law, a unit owner may, at the unit owner's expense,
make any improvements or alterations to the unit, provided: (i)
that they do not impair the structural integrity or mechanical
systems, affect the common elements, or impair the support of
any portion of the common interest community; (ii) that prior
arrangements are made with the association to ensure that other
unit owners are not disturbed; (iii) that the common elements
are not damaged; and (iv) that the common elements and other
units are protected against mechanics' liens.
(b) Subject to the provisions of applicable law, a unit
owner of a unit in residential use may, at the unit owner's
expense, make improvements or alterations to the unit as
necessary for the full enjoyment of the unit by any person
residing in the unit who has a handicap or disability, as
provided in the Fair Housing Amendments Act, United States Code,
title 42, section 3601, et seq., and the Minnesota Human Rights
Act, chapter 363A, and any amendments to those acts.
(c) The declaration, bylaws, rules, and regulations, or
agreements with the association may not prohibit the
improvements or alterations referred to in subsection (b), but
may reasonably regulate the type, style, and quality of the
improvements or alterations, as they relate to health, safety,
and architectural standards. In addition, improvements or
alterations made pursuant to subsection (b) must satisfy the
requirements of comply with subsection (a)(i), (ii), (iii), and
(iv).
(d) Notwithstanding any contrary provision of section
515B.1-102, subsection (b) applies to all common interest
communities subject to this chapter, chapter 515, or 515A. The
unit owner's rights under this section may not be waived.
(e) Subsection (b) does not apply to restrictions on
improvements or alterations imposed by statute, rule, or
ordinance.
(f) Subject to the provisions of the declaration and
applicable law, a unit owner may, at the unit owner's expense,
after acquiring title to an adjoining unit or an adjoining part
of an adjoining unit, with the prior written approval of the
association and first mortgagees of the affected units, remove
or alter any intervening partition or create apertures therein,
even if the partition is part of the common elements, if those
acts do not impair the structural integrity or mechanical
systems or lessen the support of any portion of the common
interest community. The adjoining unit owners shall have the
exclusive license to use the space occupied by the removed
partition, but the use shall not create an easement or vested
right. Removal of partitions or creation of apertures under
this paragraph is not an alteration of boundaries. The
association may require that the owner or owners of units
affected replace or restore any removed partition, that the unit
owner comply with subsection (a)(i), (ii) and (iii), and that
the unit owner pay all fees and costs incurred by the
association in connection with the alteration.
Sec. 16. Minnesota Statutes 2004, section 515B.2-118, is
amended to read:
515B.2-118 [AMENDMENT OF DECLARATION.]
(a) The declaration, including any CIC plat, may be amended
only by vote or written agreement of unit owners of units to
which at least 67 percent of the votes in the association are
allocated, or any greater or other requirement the declaration
specifies, subject to the following qualifications:
(1) A declarant may execute supplemental declarations or
amendments under section 515B.2-111 or 515B.2-112.
(2) The association and certain unit owners, as applicable,
may execute amendments under section 515B.2-107, 515B.2-109,
515B.2-112, 515B.2-113, 515B.2-114, 515B.2-119, 515B.2-122,
515B.2-123, or 515B.2-124.
(3) The unanimous written consent of the unit owners is
required for any amendment which (i) creates or increases
special declarant rights, (ii) increases the number of units,
(iii) changes the boundaries of any unit, (iv) changes the
allocated interests of a unit, (v) changes common elements to
limited common elements or units, (vi) changes the authorized
use of a unit from residential to nonresidential, or conversely,
or (vii) changes the characterization of the unit owner's
interest in a cooperative from real estate to personal property,
or conversely; unless the amendment is expressly permitted or
required by other provisions of this chapter. Where the
amendment involves the conversion of common elements into a unit
or units, the title to the unit or units created shall, upon
recording of the amendment, vest in the association free and
clear of the interests of the unit owners.
(4) The declaration may specify less than 67 percent for
approval of an amendment, but only if all of the units are
restricted to nonresidential use.
(b) No action to challenge the validity of an amendment
adopted by the association pursuant to this section may be
brought more than two years after the amendment is recorded.
(c) Every amendment to the declaration shall be recorded in
every county in which any portion of the common interest
community is located and is effective only when recorded. If an
amendment (i) changes the number of units, (ii) changes the
boundary of a unit, (iii) changes common elements to limited
common elements, or conversely, or (iv) makes any other change
that affects the CIC plat, then an amendment to the CIC plat
reflecting the change shall be recorded.
Sec. 17. Minnesota Statutes 2004, section 515B.2-119, is
amended to read:
515B.2-119 [TERMINATION OF COMMON INTEREST COMMUNITY.]
(a) Except as otherwise provided in this chapter, a common
interest community may be terminated only by agreement of unit
owners of units to which at least 80 percent of the votes in the
association are allocated, and 80 percent of the first
mortgagees of units (each mortgagee having one vote per unit
financed), or any larger percentage the declaration specifies.
The declaration may specify a smaller percentage only if all of
the units are restricted to nonresidential use.
(b) An agreement to terminate shall be evidenced by a
written agreement, executed in the same manner as a deed by the
number of unit owners and first mortgagees of units required by
subsection (a). The agreement shall specify a date after which
the agreement shall be void unless recorded before that date.
The agreement shall also specify a date by which the termination
of the common interest community and the winding up of its
affairs must be accomplished. A certificate of termination
executed by the association evidencing the termination shall be
recorded on or before the termination date, or the agreement to
terminate shall be revoked. The agreement to terminate, or a
memorandum thereof, and the certificate of termination shall be
recorded in every county in which a portion of the common
interest community is situated and is effective only upon
recording.
(c) In the case of a condominium or planned community
containing only units having upper and lower boundaries, a
termination agreement may provide that all of the common
elements and units of the common interest community must be sold
following termination. If, pursuant to the agreement, any real
estate in the common interest community is to be sold following
termination, the termination agreement shall set forth the
minimum terms of sale acceptable to the association.
(d) In the case of a condominium or planned community
containing any units not having upper and lower boundaries, a
termination agreement may provide for sale of the common
elements, but it may not require that the units be sold
following termination, unless the original declaration provided
otherwise or all unit owners whose units are to be sold consent
to the sale.
(e) The association, on behalf of the unit owners, shall
have authority to contract for the sale of real estate in a
common interest community pursuant to this section, subject to
the required approval. The agreement to terminate shall be
deemed to grant to the association a power of attorney coupled
with an interest to effect the conveyance of the real estate on
behalf of the holders of all interests in the units, including
without limitation the power to execute all instruments of
conveyance and related instruments. Until the sale has been
completed, all instruments in connection with the sale have been
executed and the sale proceeds distributed, the association
shall continue in existence with all powers it had before
termination.
(1) The instrument conveying or creating the interest in
the common interest community shall include as exhibits (i) an
affidavit of the secretary of the association certifying that
the approval required by this section has been obtained and (ii)
a schedule of the names of all unit owners in the common
interest community as of the date of the approval.
(2) Proceeds of the sale shall be distributed to unit
owners and secured parties as their interests may appear, in
accordance with subsections (h), (i), (j), and (k).
(3) Unless otherwise specified in the agreement of
termination, until the association has conveyed title to the
real estate, each unit owner and the unit owner's successors in
interest have an exclusive right to occupancy of the portion of
the real estate that formerly constituted the unit. During the
period of that occupancy, each unit owner and the unit owner's
successors in interest remain liable for all assessments and
other obligations imposed on unit owners by this chapter, the
declaration or the bylaws.
(f) The legal description of the real estate constituting
the common interest community shall, upon the date of recording
of the certificate of termination referred to in subsection (b),
be as follows:
(1) In a planned community utilizing a CIC plat complying
with section 515B.2-110(d)(1) and (2), the lot and block
description contained in the CIC plat, and any amendments
thereto, subject to any subsequent conveyance or taking of a fee
interest in any part of the property.
(2) In a condominium or cooperative, or a planned community
utilizing a CIC plat complying with section 515B.2-110(c), the
underlying legal description of the real estate as set forth in
the declaration creating the common interest community, and any
amendments thereto, subject to any subsequent conveyance or
taking of a fee interest in any part of the property.
(3) The legal description referred to in this subsection
shall apply upon the recording of the certificate of
termination. The recording officer for each county in which the
common interest community is located shall index the property
located in that county in its records under the legal
description required by this subsection from and after the date
of recording of the certificate of termination. In the case of
registered property, the registrar of titles shall cancel the
existing certificates of title with respect to the property and
issue one or more certificates of title for the property
utilizing the legal description required by this subsection.
(g) In a condominium or planned community, if the agreement
to terminate provides that the real estate constituting the
common interest community is not to be sold following
termination, title to the common elements and, in a common
interest community containing only units having upper and lower
boundaries described in the declaration, title to all the real
estate in the common interest community, vests in the unit
owners upon termination as tenants in common in proportion to
their respective interest as provided in subsection (k), and
liens on the units shift accordingly. While the tenancy in
common exists, each unit owner and the unit owner's successors
in interest have an exclusive right to occupancy of the portion
of the real estate that formerly constituted the unit.
(h) The proceeds of any sale of real estate pursuant to
subsection (e), together with the assets of the association,
shall be held by the association as trustee for unit owners,
secured parties and other holders of liens on the units as their
interests may appear. Before distributing any proceeds, the
association shall have authority to deduct from the proceeds of
sale due with respect to the unit (i) unpaid assessments levied
by the association with respect to the unit, (ii) unpaid real
estate taxes or special assessments due with respect to the
unit, and (iii) the share of expenses of sale and winding up of
the association's affairs with respect to the unit.
(i) Following termination of a condominium or planned
community, creditors of the association holding liens on the
units perfected before termination may enforce those liens in
the same manner as any lien holder, in order of priority based
upon their times of perfection. All other creditors of the
association are to be treated as if they had perfected liens on
the units immediately before termination.
(j) In a cooperative, the declaration may provide that all
creditors of the association have priority over any interests of
unit owners and creditors of unit owners. In that event,
following termination, creditors of the association holding
liens on the cooperative which were perfected before termination
may enforce their liens in the same manner as any lien holder,
in order of priority based upon their times of perfection. All
other creditors of the association shall be treated as if they
had perfected a lien against the cooperative immediately before
termination. Unless the declaration provides that all creditors
of the association have that priority:
(1) the lien of each creditor of the association which was
perfected against the association before termination becomes,
upon termination, a lien against each unit owner's interest in
the unit as of the date the lien was perfected;
(2) any other creditor of the association is to be treated
upon termination as if the creditor had perfected a lien against
each unit owner's interest immediately before termination;
(3) the amount of the lien of an association's creditor
described in paragraphs (1) and (2) against each of the unit
owners' interest shall be proportionate to the ratio which each
unit's common expense liability bears to the common expense
liability of all of the units;
(4) the lien of each creditor of each unit owner which was
perfected before termination continues as a lien against that
unit owner's interest in the unit as of the date the lien was
perfected; and
(5) the assets of the association shall be distributed to
all unit owners and all lien holders as their interests may
appear in the order described in this section. Creditors of the
association are not entitled to payment from any unit owner in
excess of the amount of the creditor's lien against that unit
owner's interest.
(k) The respective interest of unit owners referred to in
subsections (e), (f), (g), (h) and (i) are as follows:
(1) Except as provided in paragraph (2), the respective
interests of unit owners are the fair market values of their
units, allocated interests, and any limited common elements
immediately before the termination, as determined by one or more
independent appraisers selected by the association. The
decision of the independent appraisers must be distributed to
the unit owners and becomes final unless disapproved within 30
days after distribution by unit owners of units to which 25
percent of the votes in the association are allocated. The
proportion of any unit's interest to that of all units is
determined by dividing the fair market value of that unit by the
total fair market values of all the units.
(2) If any unit or any limited common element is destroyed
to the extent that an appraisal of the fair market value thereof
before destruction cannot be made, the interests of all unit
owners are shall be measured by: (i) in a condominium,
their respective allocations of common element interests
immediately before the termination, (ii) in a cooperative, their
respective ownership interests immediately before the
termination, and (iii) in a planned community, their
respective allocations of common expense liabilities expenses
immediately before the termination.
(1) In a condominium or planned community, except as
provided in subsection (m), foreclosure or enforcement of a lien
or encumbrance against the entire common interest community does
not terminate, of itself, the common interest community, and
foreclosure or enforcement of a lien or encumbrance against a
portion of the common interest community does not withdraw that
portion from the common interest community.
(m) In a condominium or planned community, if a lien or
encumbrance against a portion of the real estate comprising the
common interest community has priority over the declaration and
the lien or encumbrance has not been partially released, the
parties foreclosing the lien or encumbrance, upon foreclosure,
may record an instrument excluding the real estate subject to
that lien or encumbrance from the common interest community.
(n) Following the termination of a common interest
community in accordance with this section, the board of
directors of the association shall cause the association to be
dissolved in accordance with law.
Sec. 18. Minnesota Statutes 2004, section 515B.2-121, is
amended to read:
515B.2-121 [MASTER ASSOCIATIONS.]
(a) A master association formed after June 1, 1994, shall
be organized as a Minnesota profit, nonprofit or cooperative
corporation. A master association shall be incorporated prior
to the delegation to it of any powers under this chapter.
(b) The members of the master association shall be any
combination of (i) unit owners of one or more common interest
communities, (ii) one or more associations, (iii) one or more
master associations, or (iv) owners of real estate or property
owners owner's associations not subject to this chapter in
combination with any other category of member. An association
or its members may be members of an entity created before June
1, 1994, which performs functions similar to those performed by
a master association regardless of whether the entity is subject
to this chapter.
(c) A master association shall be governed by a board of
directors. Except as expressly prohibited by the master
declaration, the master association's articles of incorporation
or bylaws, or other provisions of this chapter, the master
association board may act in all instances on behalf of the
master association. The directors of a master association shall
be elected or, if a nonprofit corporation, elected or appointed,
in a manner consistent with the requirements of the statute
under which the master association is formed and of the master
association's articles of incorporation and bylaws, and subject
to the following requirements:
(1) Except as set forth in subsections (2) and (3), the
members of the master association shall elect the board of
directors. A majority of the directors shall be members of the
master association or members of a member of the master
association, and shall be persons other than a declarant or
affiliate of a declarant. If the member is not a natural
person, it may designate a natural person to act on its behalf.
(2) The articles of incorporation or bylaws of the master
association may authorize a any person other than, whether or
not the person is a member of, or otherwise subject to, the
master association or a unit owner, including a declarant, to
appoint or elect one director.
(3) A master association's articles of incorporation may
suspend the members' right to elect or, in the case of a
nonprofit corporation, elect or appoint, the master
association's board of directors for a specified time period.
During this period, the person or persons who execute the master
declaration under subsection (f)(1), or their successors or
assigns, may appoint the directors. The period during which the
person or persons may appoint the directors begins when the
master declaration is recorded and terminates upon the earliest
of:
(i) the voluntary surrender of the right to appoint
directors;
(ii) the date ten years after the date the master
declaration is recorded;
(iii) the date, if any, in the articles of incorporation;
or
(iv) the date when at least 75 percent of the associations
that are members of the master association or whose members are
members of the master association are controlled by their
members. An association's members control the association when
they have the right to elect or appoint a majority of the
association's voting directors units and other parcels of real
estate which are referred to in subsection (f)(1)(vii) have been
conveyed to such persons for occupancy by the persons or their
tenants.
(4) The term of any director appointed under subsection (3)
expires 60 days after the right to appoint directors
terminates. The master association's board of directors shall
call an annual or special meeting of the master association's
members to elect or appoint successor directors within the
60-day period.
(5) The system for the election of directors shall be fair
and equitable and shall take into account the number of members
of each association any of whose powers are delegated to the
master association, the needs of the members of the master
association, the allocation of liability for master association
common expenses, and the types of common interest communities
and other real estate subject to the master association.
(d) The articles of incorporation or bylaws of the master
association may authorize special classes of directors and
allocations of director voting rights, as follows: (i) classes
of directors that are elected by different classes of members,
to address operational, physical, or administrative differences
within the master association, or (ii) class voting by the
classes of directors on specific issues affecting only a certain
class or classes of members or, units or other parcels of real
estate, or to otherwise protect the legitimate interests of such
class or classes. No person may utilize such special classes or
allocations for the purpose of evading any limitation imposed on
declarants by this chapter.
(e) The officers of a master association shall be elected,
appointed, or designated in a manner consistent with the statute
under which the master association is formed and consistent with
the master association articles of incorporation and bylaws.
(f) The creation and authority of a master association
shall be governed by the following requirements:
(1) A master declaration shall be recorded in connection
with the creation of a master association. The master
declaration shall be executed by the owners of the real estate
subjected to the master declaration. The master declaration
shall contain, at a minimum:
(i) the name of the master association;
(ii) a legally sufficient description of the real estate
which is subject to the master declaration and a legally
sufficient description of any other real estate which may be
subjected to the master declaration pursuant to subsection (g);
(iii) a statement as to whether the real estate subject to,
and which may be subjected to, the master declaration
collectively is or collectively will be a separate common
interest community;
(iv) a description of the members of the master
association;
(v) a description of the master association's powers. To
be exercised by the master association on behalf of its members
and on behalf of the members of its members in the case of
members that are common interest communities. The provisions of
the master declaration with respect to the grant and exercise of
powers for common interest communities subject to the master
association shall be consistent with the declarations of the
common interest communities that delegate powers to the master
association the extent described in the master declaration, a
master association has the powers with respect to the master
association's members and the property subject to the master
declaration that section 515B.3-102 grants to an association
with respect to the association's members and the property
subject to the declaration. A master association also has the
powers delegated to it by an association pursuant to subsection
(f)(2) or by a property owner's association not subject to the
chapter; provided (i) that the master declaration identifies the
powers and authorizes the delegation either expressly or by a
grant of authority to the board of the association or property
owner's association and (ii) that the master association board
has not refused the delegation pursuant to subsection (f)(4).
The provisions of the declarations of the common interest
communities, or the provisions of recorded instruments governing
other property subject to the master declaration, that delegate
powers to the master association shall be consistent with the
provisions of the master declaration that govern the delegation
of the powers;
(vi) a description of the formula formulas governing the
allocation of assessments and member voting rights, including
any special classes or allocations referred to in subsection
(d); and
(vii) a statement of the total number of units and other
parcels of real estate intended for residential use by a person
or the person's tenants that are (i) subject to the master
declaration as initially recorded and (ii) intended to be
created by the addition of real estate or by the subdivision of
units or other parcels of real estate; and
(viii) the requirements for amendment of the master
declaration, other than an amendment under subsection (g).
(2) The declaration of a common interest community subject
to the master association shall contain provisions delegating,
or authorizing the delegation of, powers to the master
association in accordance with subsection (f)(3). The
provisions of the declarations relating to the delegation shall
be consistent with the provisions of the master declaration
granting or reserving those powers to the master association.
(3) The declaration of a common interest community located
on property subject to a master declaration may:
(i) delegate any of the powers described in section
515B.3-102 to a the master association.; provided, that a
delegation of the powers described in section 515B.3-102(a)(2)
is effective only if expressly stated in the declaration; and
(ii) authorize the board to delegate any of the powers
described in section 515B.3-102, except for the powers described
in section 515B.3-102(a)(2), to a the master association.
(4) (3) With respect to any other property subject to a
master association, there need not be an instrument other than
the master declaration recorded against the property to empower
the master association to exercise powers with respect to the
property.
(5) (4) If a declaration or other recorded instrument
authorizes a the board or owner the board of a property owner's
association to delegate powers to a master association, the
master association board may refuse any delegation of powers
that does not comply with (i) this chapter, (ii) the declaration
or other recorded instrument, or (iii) the organizational
documents of the master association.
(6) (5) The failure of a declaration, a board or an owner
of property subject to a master association to properly delegate
some or all of the powers to the master association does not
affect the authority of the master association to exercise those
and other powers with respect to other common interest
communities or owners of properties that are subject to the
master association.
(g) The master declaration may authorize other real estate
to be subjected to the master declaration. The other real
estate shall be subjected to the master declaration by an
amendment executed by the owner of the other real estate and
approved in writing by the person who executed any other person
or persons required by the master declaration, if other than the
owner of the other real estate and recorded.
(h) Sections 515B.3-103(a), (b), and (g), 515B.3-108,
515B.3-109, 515B.3-110, and 515B.3-112 shall apply in the
conduct of the affairs of a master association. But the rights
of voting, notice, and other rights enumerated in those sections
apply only to persons who elect or appoint the board of a master
association, whether or not those persons are otherwise unit
owners within the meaning of this chapter.
(i) If so provided in the master declaration, a master
association may levy assessments for common expenses of the
master association against the property subject to the master
declaration, and have and foreclose liens securing the
assessments. The liens shall have the same priority against
secured parties, shall include the same fees and charges, and
may be foreclosed in the same manner, as assessment liens under
section 515B.3-116. The master association's lien shall have
priority as against the lien of an association or property
owner's association subject to the master association,
regardless of when the lien arose or was perfected.
(1) Master association common expenses shall be allocated
among the members of the master association in a fair and
equitable manner. If the members are include associations or
property owners' owner's associations, then the master
assessments may be allocated among and levied against the
associations or property owner's associations, or allocated
among and levied directly against the units or other parcels of
real estate owned by the members of the association or property
owner's association. If so provided in the master declaration,
master assessments levied against a member association or
property owner's association are allocated among and levied
against the units or other parcels of real estate owned by the
members of the association or property owner's association. If
applicable and appropriate, the formulas and principles
described in section 515B.2-108, subsections (b), (c), (d), and
(e), shall be used in making the allocations. The assessment
formulas and procedures described in the declarations of any
common interest communities or any instruments governing other
real estate subject to the master association shall not conflict
with the formulas and procedures described in the master
declaration.
(2) The master declaration may exempt from liability for
all or a portion of master association assessments any person
authorized by subsection (c)(3) to appoint the members of the
master association board for master association common expenses,
or any other person, and exempt any unit or other parcel of real
estate owned by the person from a lien for such common expenses
assessments, until a dwelling building constituting or located
within the unit or other parcel of real estate is substantially
completed. Substantial completion shall be evidenced by a
certificate of occupancy in a jurisdiction that issues that
certificate.
(j) A master association shall not be used, directly or
indirectly, to avoid or nullify any warranties or other
obligations for which a declarant of a common interest community
subject to the master association is responsible, or to
otherwise avoid the requirements of this chapter.
Sec. 19. Minnesota Statutes 2004, section 515B.2-123, is
amended to read:
515B.2-123 [CHANGE OF FORM OF COMMON INTEREST COMMUNITY.]
(a) The legal form of a condominium, planned community or
cooperative subject to this chapter may be changed to a
condominium or planned community, subject to any requirements
contained in the declaration or bylaws of the common interest
community, and the following requirements:
(1) Subject to paragraphs (2) and (3), the change of form
shall be approved in writing by the unit owners of units to
which at least 80 percent of the votes in the association are
allocated, and 80 percent of the first mortgagees of record of
the units (each mortgagee having one vote per unit financed).
The declaration or bylaws may specify a smaller percentage only
if all of the units are restricted to nonresidential use. The
approval shall include the approval of A declaration and bylaws
satisfying the requirements of complying with this chapter shall
be approved, subject to the foregoing approval standards, with
respect to the new common interest community.
(2) If the period of declarant control has not expired, the
change of form shall also be approved in writing by the
declarant.
(3) If the existing common interest community is a
cooperative, the change of form shall also be approved in
writing by (i) each holder of a blanket mortgage of record and
(ii) 80 percent of the secured parties holding interests in
share loans encumbering the cooperative units or memberships
(each secured party having one vote per share loan owned).
(b) Upon approval as provided in subsection (a), the
association in the existing common interest community shall have
authority to execute the declaration of the new common interest
community on behalf of the unit owners of, and all other persons
holding an interest in, the units or other property which is a
part of the existing common interest community, and to do all
other acts necessary to create the new common interest community.
(c) Upon approval as provided in subsection (a), the
association in the existing common interest community shall have
a power of attorney coupled with an interest to effect the
conveyance of the units or any other real estate owned by the
unit owners or the association, which is a part of the existing
common interest community, on behalf of the unit owners and all
other holders of interests in the common interest community,
including without limitation the power to execute all
instruments of conveyance and related instruments.
(d) In a change of legal form under this section, the
offer, conveyance or exchange of a unit in the new common
interest community to or with the person owning the unit in the
existing common interest community shall not be subject to
article 4 of this chapter.
(e) A change of legal form under this section shall not
affect any preexisting obligations or liabilities of a declarant
under any statute, or under the disclosure statement,
declaration or bylaws of the existing common interest
community. The declarant of the existing common interest
community shall continue to have the rights and obligations of a
declarant with respect to the offer and sale of units owned by
it or its affiliates in the new common interest community.
Sec. 20. Minnesota Statutes 2004, section 515B.2-124, is
amended to read:
515B.2-124 [SEVERANCE OF COMMON INTEREST COMMUNITY.]
(a) Unless the declaration provides otherwise, a part of a
common interest community containing one or more units, with or
without common elements, may be severed from the common interest
community, subject to the requirements of this section. Subject
to any additional requirements contained in the declaration, the
severance shall be approved in a written severance
agreement satisfying the requirements of complying with this
section, executed by:
(1) unit owners entitled to cast at least 67 percent of the
votes in the association, which approval shall include the
approval of unit owners entitled to cast a majority of the votes
allocated to units in the remaining common interest community
and the approval of unit owners entitled to cast a majority of
the votes allocated to units in the part of the common interest
community being severed;
(2) declarant until the earlier of five years after the
recording of the declaration or the time at which declarant no
longer owns an unsold unit; and
(3) in the case of a cooperative, all holders of mortgages
or contracts for deed on the entire real estate constituting the
cooperative.
(b) The declaration may specify a smaller percentage for
unit owner approval only if all of the units are restricted to
nonresidential use.
(c) The severance agreement shall specify a severance date
by which the severance of the common interest community shall be
accomplished, after which the severance agreement is void. The
severance agreement shall be deemed to grant to the association
a power of attorney coupled with an interest to effect the
severance of the common interest community on behalf of the unit
owners and the holders of all other interests in the units,
including without limit the power to execute the amendment to
the declaration, any instruments of conveyance, and all related
instruments.
(d) The severance agreement shall:
(1) Approve an amendment to the declaration complying with
this chapter, in substantially the same form to be recorded,
which, at a minimum (i) legally describes the real estate
constituting the remaining common interest community and the
real estate being severed, (ii) restates the number of units in
the remaining common interest community, (iii) reallocates the
interests of the unit owners in the remaining common interest
community among the remaining units in accordance with the
allocation formula set forth in the declaration, and (iv)
recites any easements to which the severed portion of the common
interest community remains subject.
(2) Approve an amendment to the articles of incorporation
and bylaws of the remaining common interest community, if
necessary.
(3) Authorize the association to execute and record the
amended declaration, articles of incorporation or bylaws on
behalf of the unit owners and all other persons holding an
interest in the remaining common interest community, and to take
other actions necessary to accomplish the severance of the
common interest community.
(4) Allocate the assets and liabilities of the association
between the association and (i) a new association formed
pursuant to subsection (g), or (ii) the owners of the units
being severed, subject to a lien against their interest in the
severed real estate or their share in the assets of the
association in favor of any person that held a security interest
in their unit.
(5) If the units that are being severed from the common
interest community will not be included in a new common interest
community that is (i) formed simultaneously with the severance
of the common interest community, and (ii) includes all of the
units and substantially all of the common elements being
severed, then the agreement shall contain the written consent of
holders of first mortgages on all units that are being severed,
and shall describe in detail the proposed disposition of all
real estate to be severed and all assets of the association
allocated to the severed units, and the distribution of the
proceeds of the disposition, if any.
(e) The severance agreement or a memorandum of it shall be
recorded in every county in which a part of the common interest
community is located. The recording of the severance agreement
or memorandum of it shall, from the date of recording,
constitute notice to all persons subsequently acquiring an
interest in the common interest community that the common
interest community is being severed, and that those persons
acquire their interests subject to the terms and conditions
contained in the severance agreement and the amendment to the
declaration.
(f) The amendment to the declaration of the remaining
common interest community shall be recorded on or before the
severance date or the severance agreement and the amendment to
the declaration is void as of the day after the severance date.
The recording of the amendment to the declaration shall complete
the severance of the common interest community and release the
severed part of the common interest community from the
declaration without further action by any person.
(g) If the unit owners whose units are being severed from
the common interest community intend to form a new common
interest community, then said unit owners shall unanimously, by
at least 80 percent of the votes allocated by the existing
declaration to said units, approve a new declaration, articles
of incorporation and bylaws to govern the new common interest
community no later than 60 days before the effective date of the
severance. The new declaration creating the new common interest
community shall be recorded simultaneously with the amendment to
the existing declaration. No later than 30 days before after
the effective date of the severance agreement, the unit owners
shall cause articles of incorporation creating the
association governing intended to govern the new common interest
community to be created by filing the articles of incorporation
of the association shall be filed with the secretary of state
and promptly thereafter the unit owners whose units are being
severed shall elect a board of directors to act on behalf of the
new association. The board of directors of the new association
shall coordinate the completion of the severance cooperate with
the board of directors of the existing association to complete
the severance. The existing association shall retain all
authority to act on behalf of the common interest community
until the amendment to the existing declaration is and the new
declaration are recorded.
(h) The legal descriptions of the real estate constituting
(i) the remaining common interest community, and (ii) the
severed portion of the common interest community shall, at the
time of recording of the amendment to the declaration referred
to in subsection (e), be as follows:
(1) In a planned community using a CIC plat that complies
with section 515B.2-110, subsection (d), the lot and block
descriptions contained in the CIC plat, and any amendments to
it, with respect to (i) the remaining common interest community,
and (ii) the severed portion of the common interest community.
(2) In a condominium, or cooperative or planned community
using a CIC plat that complies with section 515B.2-110,
subsection (c), (i) the CIC plat description relating to the
remaining common interest community, and (ii) the part of the
underlying legal description of the real estate in the
declaration creating the common interest community, and any
amendments to it, relating to the severed part of the common
interest community.
(3) The recording officer for each county in which the
common interest community is located shall index the property
located in that county in its records under the legal
descriptions required by this subsection as of the date of
recording of the amendment to the declaration. In the case of
registered property, the registrar of titles shall cancel the
existing certificates of title for the severed part of the
common interest community and issue certificates of title for
the property using the legal descriptions required by this
subsection.
(i) In a condominium or planned community, if the severed
part of the common interest community is not to be reconstituted
as a new common interest community following severance, title to
the common elements and, in a common interest community in which
all units have upper and lower boundaries described in the
declaration title to all the real estate in the severed part of
the common interest community, vests in the unit owners of the
units being severed, upon severance, as tenants in common in
proportion to their respective allocated interests in the
declaration, and liens on the units shift accordingly. While
the tenancy in common exists, each unit owner and the unit
owner's successors in interest have an exclusive right to
occupancy of the portion of the real estate that formerly
constituted the unit, and a nonexclusive easement across, over
and under any common elements contained in the severed portion
of the common interest community for enjoyment, access,
utilities, communication services, and other essential services,
as applicable.
(j) No common interest community shall be severed in such a
manner as to materially impair access, utility services,
communication services, or other essential services with respect
to either the remaining common interest community or the severed
part of the common interest community.
Sec. 21. Minnesota Statutes 2004, section 515B.3-101, is
amended to read:
515B.3-101 [ORGANIZATION OF UNIT OWNERS' ASSOCIATION.]
A common interest community shall be administered by a unit
owners' an association. The unit owners' association shall be
incorporated no later than the date the common interest
community is created. The membership of the association at all
times consists exclusively of all unit owners or, following
termination of the common interest community, of all former unit
owners entitled to distributions of proceeds under section
515B.2-119 or their heirs, successors, or assigns. The
association shall be organized as a Minnesota profit or
nonprofit corporation, or may, in the case of a cooperative, be
organized under chapter 308A. In the event of a conflict
between this chapter and any other chapter under which the
association is incorporated, this chapter shall control.
Sec. 22. Minnesota Statutes 2004, section 515B.3-102, is
amended to read:
515B.3-102 [POWERS OF UNIT OWNERS' ASSOCIATION.]
(a) Except as provided in subsection (b), and subject to
the provisions of the declaration or bylaws, the association
shall have the power to:
(1) adopt, amend and revoke rules and regulations not
inconsistent with the articles of incorporation, bylaws and
declaration, as follows: (i) regulating the use of the common
elements; (ii) regulating the use of the units, and conduct of
unit occupants, which may jeopardize the health, safety or
welfare of other occupants, which involves noise or other
disturbing activity, or which may damage the common elements or
other units; (iii) regulating or prohibiting animals; (iv)
regulating changes in the appearance of the common elements and
conduct which may damage the common interest community; (v)
regulating the exterior appearance of the common interest
community, including, for example, balconies and patios, window
treatments, and signs and other displays, regardless of whether
inside a unit; (vi) implementing the articles of incorporation,
declaration and bylaws, and exercising the powers granted by
this section; and (vii) otherwise facilitating the operation of
the common interest community;
(2) adopt and amend budgets for revenues, expenditures and
reserves, and levy and collect assessments for common expenses
from unit owners;
(3) hire and discharge managing agents and other employees,
agents, and independent contractors;
(4) institute, defend, or intervene in litigation or
administrative proceedings (i) in its own name on behalf of
itself or two or more unit owners on matters affecting the
common elements or other matters affecting the common interest
community or, (ii) with the consent of the owners of the
affected units on matters affecting only those units;
(5) make contracts and incur liabilities;
(6) regulate the use, maintenance, repair, replacement, and
modification of the common elements and the units;
(7) cause improvements to be made as a part of the common
elements, and, in the case of a cooperative, the units;
(8) acquire, hold, encumber, and convey in its own name any
right, title, or interest to real estate or personal property,
but (i) common elements in a condominium or planned community
may be conveyed or subjected to a security interest only
pursuant to section 515B.3-112, or (ii) part of a cooperative
may be conveyed, or all or part of a cooperative may be
subjected to a security interest, only pursuant to section
515B.3-112;
(9) grant easements for public utility easements utilities,
public rights-of-way or other public purposes, and cable
television or other communications, through, over or under the
common elements,; grant easements, leases, or licenses to unit
owners for purposes authorized by the declaration; and, subject
to approval by resolution of unit owners other than declarant or
its affiliates at a meeting duly called, grant other public or
private easements, leases, and licenses through, over or under
the common elements;
(10) impose and receive any payments, fees, or charges for
the use, rental, or operation of the common elements, other than
limited common elements, and for services provided to unit
owners;
(11) impose charges for late payment of assessments and,
after notice and an opportunity to be heard, levy reasonable
fines for violations of the declaration, bylaws, and rules and
regulations of the association;
(12) impose reasonable charges for the review, preparation
and recordation of amendments to the declaration, resale
certificates required by section 515B.4-107, statements of
unpaid assessments, or furnishing copies of association records;
(13) provide for the indemnification of its officers and
directors, and maintain directors' and officers' liability
insurance;
(14) provide for reasonable procedures governing the
conduct of meetings and election of directors;
(15) exercise any other powers conferred by law, or by the
declaration, articles of incorporation or bylaws; and
(16) exercise any other powers necessary and proper for the
governance and operation of the association.
(b) Notwithstanding subsection (a) the declaration or
bylaws may not impose limitations on the power of the
association to deal with the declarant which are more
restrictive than the limitations imposed on the power of the
association to deal with other persons.
Sec. 23. Minnesota Statutes 2004, section 515B.3-103, is
amended to read:
515B.3-103 [DUTY OF BOARD OF DIRECTORS, OFFICERS DURING,
AFTER AND DECLARANT CONTROL.]
(a) An association shall be governed by a board of
directors. Except as expressly prohibited by the declaration,
the articles of incorporation, bylaws, subsection (b), or other
provisions of this chapter, the board may act in all instances
on behalf of the association. In the performance of their
duties, the officers and directors are required to exercise (i)
if appointed by the declarant, the care required of fiduciaries
of the unit owners and (ii) if elected by the unit owners, the
care required of a director by section 302A.251 or 317A.251, as
applicable.
(b) The board may not act unilaterally to amend the
declaration, to terminate the common interest community, to
elect directors to the board, or to determine the
qualifications, powers and duties, or terms of office of
directors, but the board may fill vacancies in its membership
created other than by removal by the vote of the association
members for the unexpired portion of any term.
(c) Subject to subsection (d), The declaration may provide
for a period of declarant control of the association, during
which a declarant, or persons designated by the declarant, may
appoint and remove the officers and directors of the
association. The maximum period of declarant control may extend
from begins on the date of the first conveyance of a unit to a
unit owner other than a declarant for a period not
exceeding creation of the common interest community and
terminates upon the earliest of the following events: (i) five
years after the date of the first conveyance of a unit to a unit
owner other than a declarant in the case of a flexible common
interest community or three years in the case of any other
common interest community. Regardless of any longer period
provided in the declaration or elsewhere, a period of declarant
control shall terminate upon the earlier of (i) surrender of
control by the declarant or (ii) 60 days after, (ii) the
declarant's voluntary surrender of control by giving written
notice to the unit owners pursuant to section 515B.1-115, or
(iii) the conveyance of 75 percent of the units to unit owners
other than a declarant.
(d) Not later than 60 days after conveyance of The board
shall cause a meeting of the unit owners to be called, as
follows:
(1) If the period of declarant control has terminated
pursuant to subsection (c), a meeting of the unit owners shall
be called and held within 60 days after said termination, at
which the board shall be elected by all unit owners, including
declarant, subject to the requirements of subsection (e).
(2) If 50 percent of the units that may be created to unit
owners other than a declarant or an affiliate of a declarant, a
meeting of the unit owners shall be held a declarant is
authorized by the declaration to create have been conveyed prior
to the termination of the declarant control period, a meeting of
the unit owners shall be called and held within 60 days
thereafter, at which not less than 33-1/3 percent of the members
of the board shall be elected by unit owners other than a
declarant or an affiliate of a declarant.
(e) Following the termination of any period of declarant
control, the unit owners shall elect the board. All unit
owners, including the declarant and its affiliates, may cast the
votes allocated to any units owned by them. The board shall
thereafter be subject to the following requirements.
(1) A majority of the directors shall be unit owners other
than a declarant or an affiliate of a declarant, or a natural
person designated by a unit owner that is not a natural person.
The remaining directors need not be unit owners unless required
by the articles of incorporation or bylaws.
(2) Subject to the requirements of subsection (1), the
articles of incorporation or bylaws may authorize (i) the
appointment or election of one director, who need not be a unit
owner, by a declarant or by a person or persons other than a
unit owner, (ii) classes of directors, and (iii) the election of
certain directors by unit owners of a certain class or classes
of units. The articles of incorporation or bylaws shall not be
amended to change or terminate the authorization described in
(i) without the written consent of the declarant or other person
possessing the power to appoint or elect.
(3) Subject to the requirements of subsection (1), if
separate classes of directors are authorized under subsection
(2), the articles of incorporation or bylaws may authorize class
voting by classes of directors on specified issues affecting
only a certain class of units, or to protect the legitimate
interests of the class. A person shall not use special class
voting to evade any limit imposed on declarants by this chapter.
(4) The board shall elect the officers. The directors and
officers shall take office upon election.
(f) In determining whether the period of declarant control
has terminated under subsection (c), or whether unit owners
other than a declarant are entitled to elect members of the
board of directors under subsection (d), the percentage of the
units which has been conveyed shall be calculated based upon the
assumption that all units which the declarant has built or
reserved the right to build in the declaration are included in
the common interest community using as a numerator the number of
units conveyed and as a denominator the number of units subject
to the declaration plus the number of units which the declarant
is authorized by the declaration to create on any additional
real estate. The percentages referred to in subsections (c) and
(d) shall be calculated without reference to units that are
auxiliary to other units, such as garage units or storage
units. A person shall not use a master association or other
device to evade the requirements of this section.
(g) Except as otherwise provided in this subsection,
meetings of the board of directors must be open to the unit
owners. To the extent practicable, the board shall give
reasonable notice to the unit owners of the date, time, and
place of a board meeting. If the date, time, and place of
meetings are provided for in the declaration, articles, or
bylaws, announced at a previous meeting of the board, posted in
a location accessible to the unit owners and designated by the
board from time to time, or if an emergency requires immediate
consideration of a matter by the board, notice is not required.
"Notice" has the meaning given in section 317A.011, subdivision
14. Meetings may be closed to discuss the following:
(1) personnel matters;
(2) pending or potential litigation, arbitration or other
potentially adversarial proceedings, between unit owners,
between the board or association and unit owners, or other
matters in which any unit owner may have an adversarial
interest, if the board determines that closing the meeting is
necessary to discuss strategy or to otherwise protect the
position of the board or association or the privacy of a unit
owner or occupant of a unit; or
(3) criminal activity arising within the common interest
community if the board determines that closing the meeting is
necessary to protect the privacy of the victim or that opening
the meeting would jeopardize investigation of the activity.
Nothing in this subsection imposes a duty on the board to
provide special facilities for meetings. The failure to give
notice as required by this subsection shall not invalidate the
board meeting or any action taken at the meeting. The minutes
of any part of a meeting that is closed under this subsection
may be kept confidential at the discretion of the board.
Sec. 24. Minnesota Statutes 2004, section 515B.3-105, is
amended to read:
515B.3-105 [TERMINATION OF DECLARANT'S CONTRACTS, LEASES.]
(a) If entered into prior to expiration termination of the
period of declarant control pursuant to section 515B.3-103, (i)
any management contract, employment contract, or lease of
recreational facilities, units, or garages or other parking
facilities, (ii) any contract, lease, or license binding the
association, and to which a declarant or an affiliate of a
declarant is a party, or (iii) any contract, lease or license
binding the association or any unit owner other than the
declarant or an affiliate of the declarant which is not bona
fide or which was unconscionable to the unit owners at the time
entered into under the circumstances then prevailing, may be
terminated without penalty by the association at any time after
the expiration of declarant control upon not less than 90 days'
notice to the other party under the procedures described in this
section.
(b) If, during prior to expiration of the suspension period
described in section 515B.2-121, subsection (c), paragraph (3),
a contract, lease, or license of a type described in this
section subsection (a) is entered into by a person having
authority to appoint the directors of the master association and
is binding upon a the master association, then the master
association, and not any association, may terminate the
contract, lease, or license under the procedures described in
this section.
(c) Termination shall be upon no less than 90 days' notice.
Notice of termination shall be given by the association or
master association, as applicable, in accordance with section
515B.1-115; provided, that notice shall be effective only if
given within two years following the termination of the period
of declarant control or the suspension period described in
section 515B.2-121, subsection (c), paragraph (3), as applicable.
(d) This section does not apply to (i):
(1) any lease the termination of which would terminate the
common interest community, (ii) a proprietary lease, or (iii);
(2) in the case of a cooperative, a mortgage or contract
for deed encumbering all real estate constituting the common
interest community. owned by the association, except that if the
mortgage or contract for deed contains a contractual obligation
involving a type of contract, lease, or license which may be
terminated pursuant to subsection (a) or (b), then that
contractual obligation may be terminated pursuant to subsection
(c); or
(3) an agreement between a declarant or an affiliate of a
declarant, or a person having authority pursuant to section
515B.2-121(c)(3) to appoint the directors of the master
association, and any governmental entity, if such agreement is
necessary to obtain governmental approvals, provide financing
under any type of government program, or provide for
governmentally required access, conservation, drainage, or
utilities.
Sec. 25. Minnesota Statutes 2004, section 515B.3-106, is
amended to read:
515B.3-106 [BYLAWS; ANNUAL REPORT.]
(a) A common interest community shall have bylaws which
comply with this chapter and the requirements of the statute
under which the association is incorporated. The bylaws and any
amendments may be recorded, but need not be recorded to be
effective unless so provided in the bylaws.
(b) The bylaws shall provide that, in addition to any
statutory requirements:
(1) A meeting of the members shall be held at least once
each year, and a specified officer of the association shall give
notice of the meeting as provided in section 515B.3-108.
(2) An annual report shall be prepared by the association
and a copy of the report shall be provided to each unit owner at
or prior to the annual meeting.
(c) The annual report shall contain at a minimum:
(1) a statement of any capital expenditures in excess of
two percent of the current budget or $5,000, whichever is
greater, approved by the association for the current fiscal year
or succeeding two fiscal years;
(2) a statement of the balance in any reserve or
replacement fund;
(3) a copy of the statement of revenues and expenses for
the association's last fiscal year, and a balance sheet as of
the end of said fiscal year;
(4) a statement of the status of any pending litigation or
judgments to which the association is a party;
(5) a detailed description of the insurance coverage
provided by the association including a statement as to which,
if any, of the items referred to in section 515B.3-113,
subsection (b), are insured by the association; and
(6) a statement of the total past due assessments on all
units, current as of not more than 60 days prior to the date of
the meeting.
Sec. 26. Minnesota Statutes 2004, section 515B.3-110, is
amended to read:
515B.3-110 [VOTING; PROXIES.]
(a) At any meeting of the association an owner or the
holder of the owner's proxy shall be entitled to cast the vote
which is allocated to the unit. If there is more than one owner
of a unit, only one of the owners may cast the vote. If the
owners of a unit fail to agree and notify the association as to
who shall cast the vote, the vote shall not be cast. Any
provision in the articles of incorporation, bylaws, declaration,
or other document restricting a unit owner's right to vote, or
affecting quorum requirements, by reason of nonpayment of
assessments, or a purported violation of any provision of the
documents governing the common interest community, shall be void.
(b) If permitted by the articles or bylaws, votes allocated
to a unit may be cast pursuant to a proxy executed by the unit
owner entitled to cast the vote for that unit. The board may
specify the form of proxy and proxy rules, consistent with law.
(c) The entire vote on any single issue (except the
election of directors), may be by mailed ballots, subject to (i)
any prohibition or requirement contained in the articles of
incorporation, bylaws, or declaration and (ii) any requirements
of the statute under which the association is created. Such a
vote shall have the force and effect of a vote taken at a
meeting; provided, that the total votes cast are at least equal
to the votes required for a quorum. The board shall set a
voting period within which the ballots must be returned, which
period shall be not less than ten nor more than 30 days after
the date of mailing or hand delivery of the ballots to the
owners. The board of directors shall provide written notice of
the results of the vote to the members within 30 days after the
expiration of the voting period. All requirements in this
chapter, the declaration or the bylaws for a meeting of the
members, or being present in person, shall be deemed satisfied
by a vote taken by mail in compliance with the requirements of
this section.
(d) The articles of incorporation or bylaws may authorize
class voting by unit owners for directors or on specified issues
affecting the class. Class voting may only be used to address
operational, physical, or administrative differences within the
common interest community. A declarant shall not use class
voting to evade any limit imposed on declarants by this chapter
and units shall not constitute a class because they are owned by
a declarant.
(e) The declaration or bylaws may provide that votes on
specified matters affecting the common interest community be
cast by lessees or secured parties rather than unit owners;
provided that (i) the provisions of subsections (a), (b), and (c)
apply to those persons as if they were unit owners; (ii) unit
owners who have so delegated their votes to other persons may
not cast votes on those specified matters; (iii) lessees or
secured parties are entitled to notice of meetings, access to
records, and other rights respecting those matters as if they
were unit owners, and (iv) the lessee or secured party has filed
satisfactory evidence of its interest with the secretary of the
association prior to the meeting. Unit owners must also be
given notice, in the manner provided in section 515B.3-108(b),
of meetings at which lessees or secured parties are entitled to
vote.
(f) No votes allocated to a unit owned by the association
may be cast nor counted toward a quorum.
Sec. 27. Minnesota Statutes 2004, section 515B.3-112, is
amended to read:
515B.3-112 [CONVEYANCE OR ENCUMBRANCE OF, OR CREATION OF
SECURITY INTERESTS IN, COMMON ELEMENTS.]
(a) In a condominium or planned community, unless the
declaration provides otherwise, portions of the common elements
may be conveyed or subjected to a security interest by the
association if persons entitled to cast at least 67 percent of
the votes in the association, including 67 percent of the votes
allocated to units not owned by a declarant, or any larger
percentage the declaration specifies, approve that action in
writing or at a meeting; but all unit owners of units to which
any limited common element is allocated must agree in order to
convey that limited common element or subject it to a security
interest. The declaration may specify a smaller percentage only
if all of the units are restricted to nonresidential use.
(b) In a cooperative, unless the declaration provides
otherwise, part of a cooperative may be conveyed, or all or a
part subjected to a security interest, by the association if
persons entitled to cast at least 67 percent of the votes in the
association, including 67 percent of the votes allocated to
units in which the declarant has no interest, or any larger
percentage the declaration specifies, approves that action in
writing or at a meeting. If fewer than all of the units or
limited common elements are to be conveyed or subjected to a
security interest, then all unit owners of those units, or the
units to which those limited common elements are allocated, must
agree in order to convey those units or limited common elements
or subject them to a security interest. The declaration may
specify a smaller percentage only if all of the units are
restricted to nonresidential use. Any purported conveyance or
other voluntary transfer of an entire cooperative is void,
unless made pursuant to section 515B.2-119.
(c) The association, on behalf of the unit owners, may
contract to convey or encumber an interest in the common
elements of a common interest community pursuant to this
subsection, subject to the required approval. After the
approval has been obtained, the association shall have a power
of attorney coupled with an interest to effect the conveyance or
encumbrance on behalf of all unit owners in the common interest
community, including the power to execute deeds, mortgages, or
other instruments of conveyance or security. The instrument
conveying or creating the interest in the common interest
community shall be recorded and shall include as exhibits (i) an
affidavit of the secretary of the association certifying that
the approval required by this section has been obtained and (ii)
a schedule of the names of all unit owners and units in the
common interest community as of the date of the approval.
(d) Except as provided in section 515B.3-102(a)(9), Unless
made pursuant to this section, any purported conveyance,
encumbrance, creation of a security interest in or other
voluntary transfer of any interest in the common elements, or of
any part of a cooperative, is void. The grant of an easement,
lease, or license pursuant to section 515B.3-102(a)(9) is not
subject to this section.
(e) In the case of a conveyance involving a condominium, a
planned community utilizing a CIC plat complying with section
515B.2-110(c), or a cooperative in which the unit owners'
interests are characterized as real estate, the association
shall record, simultaneously with the recording of the
instrument of conveyance, an amended CIC plat showing the real
estate constituting the common interest community exclusive of
the real estate conveyed. In all common interest communities,
upon recording of the instrument of conveyance, the declaration,
and all rights and obligations arising therefrom, shall be
deemed released and terminated as to the real estate conveyed.
(f) A conveyance or encumbrance of common elements, or of a
cooperative, pursuant to this section shall not deprive any unit
of its rights of support, reasonable access or utility services.
(g) Except as provided in subsection (a), or unless the
declaration otherwise provides, a conveyance or encumbrance of
common elements pursuant to this section does not affect the
priority or validity of preexisting encumbrances.
(h) Any proceeds of the conveyance or creation of a
security interest under this section are an asset of the
association.
(i) This section shall not apply to any conveyance or
encumbrance of any interest in a proprietary lease.
Sec. 28. Minnesota Statutes 2004, section 515B.3-113, is
amended to read:
515B.3-113 [INSURANCE.]
(a) Commencing not later than the time of the first
conveyance of a unit to a unit owner other than a declarant, the
association shall maintain, to the extent reasonably available:
(1) subject to subsection (b), property insurance (i) on
the common elements and, in a planned community, also on
property that must become common elements, (ii) for broad form
covered causes of loss, and (iii) in a total amount of not less
than the full insurable replacement cost of the insured
property, less deductibles, at the time the insurance is
purchased and at each renewal date, exclusive of items normally
excluded from property policies; and
(2) commercial general liability insurance against claims
and liabilities arising in connection with the ownership,
existence, use or management of the property in an amount, if
any, specified by the common interest community instruments or
otherwise deemed sufficient in the judgment of the board,
insuring the board, the association, the management agent, and
their respective employees, agents and all persons acting as
agents. The declarant shall be included as an additional
insured in its capacity as a unit owner or board member. The
unit owners shall be included as additional insureds but only
for claims and liabilities arising in connection with the
ownership, existence, use or management of the common elements.
The insurance shall cover claims of one or more insured parties
against other insured parties.
(b) In the case of a common interest community that
contains units, or structures within units, sharing or having
contiguous walls, siding or roofs, the insurance maintained
under subsection (a)(1) shall include those units, or structures
within those units, and the common elements. The insurance need
not cover the following items within the units: (i) ceiling or
wall finishing materials, (ii) floor coverings, (iii) cabinetry,
(iv) finished millwork, (v) electrical or plumbing fixtures
serving a single unit, (vi) built-in appliances, or (vii) other
improvements and betterments, regardless of when installed. If
any improvements and betterments are covered, any increased cost
may be assessed by the association against the units affected.
The association may, in the case of a claim for damage to a unit
or units, (i) pay the deductible amount as a common expense,
(ii) assess the deductible amount against the units affected in
any reasonable manner, or (iii) require the unit owners of the
units affected to pay the deductible amount directly.
(c) If the insurance described in subsections (a) and (b)
is not reasonably available, the association shall promptly
cause notice of that fact to be hand delivered or sent prepaid
by United States mail to all unit owners. The declaration may
require the association to carry any other insurance, and the
association in any event may carry any other insurance it
considers appropriate to protect the association, the unit
owners or officers, directors or agents of the association.
(d) Insurance policies carried pursuant to subsections (a)
and (b) shall provide that:
(1) each unit owner and secured party is an insured person
under the policy with respect to liability arising out of the
unit owner's interest in the common elements or membership in
the association;
(2) the insurer waives its right to subrogation under the
policy against any unit owner of the condominium or members of
the unit owner's household and against the association and
members of the board of directors;
(3) no act or omission by any unit owner or secured party,
unless acting within the scope of authority on behalf of the
association, shall void the policy or be a condition to recovery
under the policy; and
(4) if at the time of a loss under the policy there is
other insurance in the name of a unit owner covering the same
property covered by the policy, the association's policy is
primary insurance.
(e) Any loss covered by the property policy under
subsection (a)(1) shall be adjusted by and with the
association. The insurance proceeds for that loss shall be
payable to the association, or to an insurance trustee
designated by the association for that purpose. The insurance
trustee or the association shall hold any insurance proceeds in
trust for unit owners and secured parties as their interests may
appear. The proceeds shall be disbursed first for the repair or
restoration of the damaged common elements and units. Unit
owners and secured parties are not entitled to receive any
portion of the proceeds unless If there is a surplus of proceeds
after the common elements and units have been completely
repaired or restored or the common interest community is
terminated, the board of directors may retain the surplus for
use by the association or distribute the surplus among the
owners on an equitable basis as determined by the board.
(f) Unit owners may obtain insurance for personal benefit
in addition to insurance carried by the association.
(g) An insurer that has issued an insurance policy under
this section shall issue certificates or memoranda of insurance,
upon request, to any unit owner or secured party. The insurance
may not be canceled until 60 days after notice of the proposed
cancellation has been mailed to the association, each unit owner
and each secured party for an obligation to whom certificates of
insurance have been issued.
(h) Any portion of the common interest community which is
damaged or destroyed as the result of a loss covered by the
association's insurance shall be promptly repaired or replaced
by the association unless (i) the common interest community is
terminated and the association votes not to repair or replace
all or part thereof, (ii) repair or replacement would be illegal
under any state or local health or safety statute or ordinance,
or (iii) 80 percent of the unit owners, including every unit
owner and holder of a first mortgage on a unit or assigned
limited common element which will not be rebuilt, vote not to
rebuild. Subject to subsection (b), the cost of repair or
replacement of the common elements in excess of insurance
proceeds and reserves shall be paid as a common expense, and the
cost of repair of a unit in excess of insurance proceeds shall
be paid by the respective unit owner.
(i) If less than the entire common interest community is
repaired or replaced, (i) the insurance proceeds attributable to
the damaged common elements shall be used to restore the damaged
area to a condition compatible with the remainder of the common
interest community, (ii) the insurance proceeds attributable to
units and limited common elements which are not rebuilt shall be
distributed to the owners of those units, including units to
which the limited common elements were assigned, and the secured
parties of those units, as their interests may appear, and (iii)
the remainder of the proceeds shall be distributed to all the
unit owners and secured parties as their interests may appear in
proportion to their common element interest in the case of a
condominium or in proportion to their common expense liability
in the case of a planned community or cooperative.
(j) If the unit owners and holders of first mortgages vote
not to rebuild a unit, that unit's entire common element
interest, votes in the association, and common expense liability
are automatically reallocated upon the vote as if the unit had
been condemned under section 515B.1-107, and the association
shall promptly prepare, execute and record an amendment to the
declaration reflecting the reallocations. Notwithstanding the
provisions of this subsection, if the common interest community
is terminated, insurance proceeds not used for repair or
replacement shall be distributed in the same manner as sales
proceeds pursuant to section 515B.2-119.
(k) The provisions of this section may be varied or waived
in the case of a common interest community in which all units
are restricted to nonresidential use.
Sec. 29. Minnesota Statutes 2004, section 515B.3-114, is
amended to read:
515B.3-114 [RESERVES; SURPLUS FUNDS.]
(a) The annual budgets of the association shall provide
from year to year, on a cumulative basis, for adequate reserve
funds to cover the replacement of those parts of the
common elements and limited common elements interest community
which the association is obligated to maintain, repair, or
replace. These reserve requirements shall not apply to a common
interest community which is restricted to nonresidential use.
(b) Unless the declaration provides otherwise, any surplus
funds that the association has remaining after payment of or
provision for common expenses and reserves shall be (i) credited
to the unit owners to reduce their future common expense
assessments or (ii) credited to reserves, or any combination
thereof, as determined by the board of directors.
Sec. 30. Minnesota Statutes 2004, section 515B.3-115, is
amended to read:
515B.3-115 [ASSESSMENTS FOR COMMON EXPENSES.]
(a) The obligation of a unit owner to pay common expense
assessments shall be as follows:
(1) If a common expense assessment has not been levied, the
declarant shall pay all accrued operating expenses of the common
interest community, and shall fund the replacement reserve
component of the common expenses as required by subsection (b).
(2) If a common expense assessment has been levied, all
unit owners including the declarant shall pay the assessments
allocated to their units, subject to subsection (b). the
following:
(i) If the declaration so provides, a declarant's
liability, and the assessment lien, for the common expense
assessments, exclusive of replacement reserves, on any unit
owned by the declarant may be limited to 25 percent or more of
any assessment, exclusive of replacement reserves, until the
unit or any building located in the unit is substantially
completed. Substantial completion shall be evidenced by a
certificate of occupancy in any jurisdiction that issues the
certificate.
(ii) If the declaration provides for a reduced assessment
pursuant to paragraph (2)(i), the declarant shall be obligated,
within 60 days following the termination of the period of the
declarant control, to make up any operating deficit incurred by
the association during the period of declarant control.
(3) Notwithstanding subsections (a)(1), (a)(2), and (b), if
the association maintains the exteriors of the buildings
constituting or contained within the units, that part of any
assessment that is allocated to replacement reserves referred to
in section 515B.3-114 shall be fully levied against a unit,
including any unit owned by a declarant, on the earlier of
substantial completion of the exterior of (i) the building
containing the unit or (ii) any building located within the unit.
(b) Subject to subsection (a)(3), if the declaration so
provides, a declarant's liability, and the assessment lien, for
assessments, other than replacement reserves, on any unit owned
by the declarant may be limited to 25 percent or any greater
percentage of any assessment levied, until the unit or any
building located in it The replacement reserve component of the
common expenses shall be funded for each unit in accordance with
the projected annual budget required by section 515B.4-102(23);
provided, that the funding of replacement reserves with respect
to a unit shall commence no later than the date that the unit or
any building located within the unit boundaries is substantially
completed. Substantial completion shall be evidenced by a
certificate of occupancy in any jurisdiction that issues the
certificate.
(c) After an assessment has been levied by the association,
assessments shall be levied at least annually, based upon a
budget approved at least annually by the association.
(d) Except as modified by subsections (a)(1) and (2), (e),
(f), and (g), all common expenses shall be assessed against all
the units in accordance with the allocations established by the
declaration pursuant to section 515B.2-108.
(e) Unless otherwise required by the declaration:
(1) any common expense associated with the maintenance,
repair, or replacement of a limited common element shall be
assessed against the units to which that limited common element
is assigned, equally, or in any other proportion the declaration
provides;
(2) any common expense or portion thereof benefiting fewer
than all of the units may be assessed exclusively against the
units benefited, equally, or in any other proportion the
declaration provides;
(3) the costs of insurance may be assessed in proportion to
risk or coverage, and the costs of utilities may be assessed in
proportion to usage;
(4) reasonable attorneys fees and costs incurred by the
association in connection with (i) the collection of assessments
and, (ii) the enforcement of this chapter, the articles, bylaws,
declaration, or rules and regulations, against a unit owner, may
be assessed against the unit owner's unit; and
(5) fees, charges, late charges, fines and interest may be
assessed as provided in section 515B.3-116(a).
(f) Assessments levied under section 515B.3-116 to pay a
judgment against the association may be levied only against the
units in the common interest community at the time the judgment
was entered, in proportion to their common expense liabilities.
(g) If any damage to the common elements or another unit is
caused by the act or omission of any unit owner, or occupant of
a unit, or their invitees, the association may assess the costs
of repairing the damage exclusively against the unit owner's
unit to the extent not covered by insurance.
(h) Subject to any shorter period specified by the
declaration or bylaws, if any installment of an assessment
becomes more than 60 days past due, then the association may,
upon ten days' written notice to the unit owner, declare the
entire amount of the assessment immediately due and payable in
full.
(i) If common expense liabilities are reallocated for any
purpose authorized by this chapter, common expense assessments
and any installment thereof not yet due shall be recalculated in
accordance with the reallocated common expense liabilities.
(j) An assessment against fewer than all of the units must
be levied within three years after the event or circumstances
forming the basis for the assessment, or shall be barred.
Sec. 31. Minnesota Statutes 2004, section 515B.3-116, is
amended to read:
515B.3-116 [LIEN FOR ASSESSMENTS.]
(a) The association has a lien on a unit for any assessment
levied against that unit from the time the assessment becomes
due. If an assessment is payable in installments, the full
amount of the assessment is a lien from the time the first
installment thereof becomes due. Unless the declaration
otherwise provides, fees, charges, late charges, fines and
interest charges pursuant to section 515B.3-102(a)(10), (11) and
(12) are liens, and are enforceable as assessments, under this
section.
(b) A lien under this section is prior to all other liens
and encumbrances on a unit except (i) liens and encumbrances
recorded before the declaration and, in a cooperative, liens and
encumbrances which the association creates, assumes, or takes
subject to, (ii) any first mortgage encumbering the fee simple
interest in the unit, or, in a cooperative, any first security
interest encumbering only the unit owner's interest in the unit,
and (iii) liens for real estate taxes and other governmental
assessments or charges against the unit, and (iv) a master
association lien under section 515B.2-121(i). If a first
mortgage on a unit is foreclosed, the first mortgage was
recorded after June 1, 1994, and no owner redeems during the
owner's period of redemption provided by chapter 580, 581, or
582, the holder of the sheriff's certificate of sale from the
foreclosure of the first mortgage shall take title to the unit
subject to a lien in favor of the association for unpaid
assessments for common expenses levied pursuant to section
515B.3-115(a), (e)(1) to (3), (f), and (i) which became due,
without acceleration, during the six months immediately
preceding the first day following the end of the owner's period
of redemption. If a first security interest encumbering a unit
owner's interest in a cooperative unit which is personal
property is foreclosed, the secured party or the purchaser at
the sale shall take title to the unit subject to unpaid
assessments for common expenses levied pursuant to section
515B.3-115(a), (e)(1) to (3), (f), and (i) which became due,
without acceleration, during the six months immediately
preceding the first day following either the disposition date
pursuant to section 336.9-610 or the date on which the
obligation of the unit owner is discharged pursuant to section
336.9-622. This subsection shall not affect the priority of
mechanics' liens.
(c) Recording of the declaration constitutes record notice
and perfection of any lien under this section, and no further
recordation of any notice of or claim for the lien is required.
(d) Proceedings to enforce an assessment lien shall be
instituted within three years after the last installment of the
assessment becomes payable, or shall be barred.
(e) The unit owner of a unit at the time an assessment is
due shall be personally liable to the association for payment of
the assessment levied against the unit. If there are multiple
owners of the unit, they shall be jointly and severally liable.
(f) This section does not prohibit actions to recover sums
for which subsection (a) creates a lien nor prohibit an
association from taking a deed in lieu of foreclosure. The
commencement of an action to recover the sums is not an election
of remedies if it is dismissed before commencement of
foreclosure of the lien provided for by this section.
(g) The association shall furnish to a unit owner or the
owner's authorized agent upon written request of the unit owner
or the authorized agent a statement setting forth the amount of
unpaid assessments currently levied against the owner's unit.
If the unit owner's interest is real estate, the statement shall
be in recordable form. The statement shall be furnished within
ten business days after receipt of the request and is binding on
the association and every unit owner.
(h) The association's lien may be foreclosed as provided in
this subsection.
(1) In a condominium or planned community, the
association's lien may be foreclosed in a like manner as a
mortgage containing a power of sale pursuant to chapter 580, or
by action pursuant to chapter 581. The association shall have a
power of sale to foreclose the lien pursuant to chapter 580.
(2) In a cooperative whose unit owners' interests are real
estate, the association's lien shall be foreclosed in a like
manner as a mortgage on real estate as provided in paragraph (1).
(3) In a cooperative whose unit owners' interests in the
units are personal property, the association's lien shall be
foreclosed in a like manner as a security interest under article
9 of chapter 336. In any disposition pursuant to section
336.9-610 or retention pursuant to sections 336.9-620 to
336.9-622, the rights of the parties shall be the same as those
provided by law, except (i) notice of sale, disposition, or
retention shall be served on the unit owner 90 days prior to
sale, disposition, or retention, (ii) the association shall be
entitled to its reasonable costs and attorney fees not exceeding
the amount provided by section 582.01, subdivision 1a, (iii) the
amount of the association's lien shall be deemed to be adequate
consideration for the unit subject to disposition or retention,
notwithstanding the value of the unit, and (iv) the notice of
sale, disposition, or retention shall contain the following
statement in capital letters with the name of the association or
secured party filled in:
"THIS IS TO INFORM YOU THAT BY THIS NOTICE (fill in name of
association or secured party) HAS BEGUN PROCEEDINGS UNDER
MINNESOTA STATUTES, CHAPTER 515B, TO FORECLOSE ON YOUR INTEREST
IN YOUR UNIT FOR THE REASON SPECIFIED IN THIS NOTICE. YOUR
INTEREST IN YOUR UNIT WILL TERMINATE 90 DAYS AFTER SERVICE OF
THIS NOTICE ON YOU UNLESS BEFORE THEN:
(a) THE PERSON AUTHORIZED BY (fill in the name of
association or secured party) AND DESCRIBED IN THIS NOTICE TO
RECEIVE PAYMENTS RECEIVES FROM YOU:
(1) THE AMOUNT THIS NOTICE SAYS YOU OWE; PLUS
(2) THE COSTS INCURRED TO SERVE THIS NOTICE ON YOU; PLUS
(3) $500 TO APPLY TO ATTORNEYS FEES ACTUALLY EXPENDED OR
INCURRED; PLUS
(4) ANY ADDITIONAL AMOUNTS FOR YOUR UNIT BECOMING DUE TO
(fill in name of association or secured party) AFTER THE DATE OF
THIS NOTICE; OR
(b) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE
FORECLOSURE OF YOUR RIGHTS TO YOUR UNIT BE SUSPENDED UNTIL YOUR
CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING, OR
SETTLEMENT. YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND
GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES.
IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS
WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR OWNERSHIP
RIGHTS IN YOUR UNIT WILL TERMINATE AT THE END OF THE PERIOD, YOU
WILL LOSE ALL THE MONEY YOU HAVE PAID FOR YOUR UNIT, YOU WILL
LOSE YOUR RIGHT TO POSSESSION OF YOUR UNIT, YOU MAY LOSE YOUR
RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE, AND
YOU WILL BE EVICTED. IF YOU HAVE ANY QUESTIONS ABOUT THIS
NOTICE, CONTACT AN ATTORNEY IMMEDIATELY."
(4) In any foreclosure pursuant to chapter 580, 581, or
582, the rights of the parties shall be the same as those
provided by law, except (i) the period of redemption for unit
owners shall be six months from the date of sale or a lesser
period authorized by law, (ii) in a foreclosure by advertisement
under chapter 580, the foreclosing party shall be entitled to
costs and disbursements of foreclosure and attorneys fees
authorized by the declaration or bylaws, notwithstanding the
provisions of section 582.01, subdivisions 1 and 1a, (iii) in a
foreclosure by action under chapter 581, the foreclosing party
shall be entitled to costs and disbursements of foreclosure and
attorneys fees as the court shall determine, and (iv) the amount
of the association's lien shall be deemed to be adequate
consideration for the unit subject to foreclosure,
notwithstanding the value of the unit.
(i) If a holder of a sheriff's certificate of sale, prior
to the expiration of the period of redemption, pays any past due
or current assessments, or any other charges lienable as
assessments, with respect to the unit described in the sheriff's
certificate, then the amount paid shall be a part of the sum
required to be paid to redeem under section 582.03.
(j) In a cooperative, following foreclosure if the unit
owner fails to redeem before the expiration of the redemption
period in a foreclosure of the association's assessment lien,
the association may bring an action for eviction against the
unit owner and any persons in possession of the unit, and in
that case section 504B.291 shall not apply.
(k) An association may assign its lien rights in the same
manner as any other secured party.
Sec. 32. Minnesota Statutes 2004, section 515B.3-117, is
amended to read:
515B.3-117 [OTHER LIENS.]
(a) Except in a cooperative and except as otherwise
provided in this chapter or in a security instrument, an
individual unit owner may have the unit owner's unit released
from a lien if the unit owner pays the lienholder the portion of
the amount which the lien secures that is attributable to the
unit. Upon the receipt of payment, the lienholder shall
promptly deliver to the unit owner a recordable partial
satisfaction and release of lien releasing the unit from the
lien. The release shall be deemed to include a release of any
rights in the common elements appurtenant to the unit. The
portion of the amount which a lien secures that is attributable
to the unit shall be equal to the total amount which the lien
secures multiplied by a percentage calculated by dividing the
common expense liability attributable to the unit by the common
expense liability attributable to all units against which the
lien has been recorded, or in the case of a lien under
subsection (b), the units against which the lien is permitted or
required to be recorded. At the request of a lien claimant or
unit owners, the association shall provide a written statement
of the percentage of common expense liability attributable to
all units. After a unit owner's payment pursuant to this
section, the association may not assess the unit for any common
expense incurred thereafter in connection with the satisfaction
or defense against the lien.
(b) Labor performed or materials furnished for the
improvement of a unit shall be the basis for the recording of a
lien against that unit pursuant to the provisions of chapter 514
but shall not be the basis for the recording of a lien against
the common elements. Labor performed or materials furnished for
the improvement of common elements, for which a lien may be
recorded under chapter 514, if duly authorized by the
association, shall be deemed to be performed or furnished with
the express consent of each unit owner, and shall be perfected
by recording a lien against all the units in the common interest
community pursuant to the provisions of chapter 514, but shall
not be the basis for the recording of a lien against the common
elements except in the case of a condominium on registered land,
in which case a lien must be filed pursuant to section 508.351,
subdivision 3, or 508A.351, subdivision 3. Where a lien is
recorded against the units for labor performed or material
furnished for the improvement of common elements, the
association shall be deemed to be the authorized agent of the
unit owners for purposes of receiving the notices required under
sections 514.011 and 514.08, subdivision 1, clause (2).
(c) A security interest in a cooperative whose unit owners'
interests in the units are personal property shall be perfected
by recording a financing statement in the UCC filing section of
the office of the recording officer for the county in which the
unit is located central filing system operated by the Office of
the Secretary of State. In any disposition by a secured party
pursuant to section 336.9-610 or retention pursuant to sections
336.9-620 to 336.9-622, the rights of the parties shall be the
same as those provided by law, subject to the exceptions and
requirements set forth in section 515B.3-116(h)(3), and except
that the unit owner has the right to reinstate the debt owing to
the secured party by paying to the secured party, prior to the
effective date of the disposition or retention, the amount which
would be required to reinstate the debt under section 580.30 if
the unit were wholly real estate.
Sec. 33. Minnesota Statutes 2004, section 515B.3-120, is
amended to read:
515B.3-120 [DECLARANT DUTIES; TURNOVER OF RECORDS.]
(a) During any period of declarant control pursuant to
section 515B.3-103(c), declarant and any of its representatives
who are acting as officers or directors of the association shall:
(1) cause the association to be operated and administered
in accordance with its articles of incorporation and bylaws, the
declaration and applicable law;
(2) be subject to all fiduciary obligations and obligations
of good faith applicable to any persons serving a corporation in
that capacity;
(3) cause the association's funds to be maintained in a
separate bank account or accounts solely in the association's
name, from and after the date of creation of the association;
and
(4) cause the association to maintain complete and accurate
records in compliance with section 515B.3-118.
(b) At such time as any period of declarant control
terminates, declarant shall cause to be delivered to the board
elected by the unit owners exclusive control of all funds of the
association, all contracts and agreements to which are binding
on the association was or is a party, all corporate records of
the association including financial records, copies of all CIC
plats and supplementary CIC plats, personal property owned or
represented to be owned by the association, assignments of all
declarant's rights and interests under the warranties if not in
the name of the association, and, to the extent they are in the
control or possession of the declarant, copies of all plans and
specifications in its control or possession relating to the
common interest community buildings and related
improvements which are part of the common elements, and
operating manuals and warranty materials relating to any
equipment or personal property utilized in the operation of the
common interest community. The declarant's obligation to turn
over the foregoing items shall continue to include additional
new or changed items in its possession or control.
(c) A declarant in control person entitled to appoint the
directors of a master association pursuant to section
515B.2-121(c)(3), and the master association's officers and
directors, shall be subject to the same duties and obligations
with respect to the master association as are described in
subsections (a), and (b) and (c), to the extent
applicable. The period of declarant control of the master
association shall terminate as provided in section
515B.2-121(f). A master association may not be used to
circumvent or avoid any obligation or restriction imposed on a
declarant or its affiliates by this chapter.
Sec. 34. Minnesota Statutes 2004, section 515B.4-101, is
amended to read:
515B.4-101 [APPLICABILITY; DELIVERY OF DISCLOSURE
STATEMENT.]
(a) Sections 515B.4-101 through 515B.4-118 apply to all
units subject to this chapter, except as provided in subsection
(c) or as modified or waived by written agreement of purchasers
of a unit which is restricted to nonresidential use.
(b) Subject to subsections (a) and (c), a declarant who
offers a unit to a purchaser shall deliver to the purchaser a
current disclosure statement which complies with the
requirements of section 515B.4-102. The disclosure statement
shall include any material amendments to the disclosure
statement made prior to the conveyance of the unit to the
purchaser. The declarant shall be liable to the purchaser to
whom it delivered the disclosure statement for any false or
misleading statement set forth therein or for any omission of a
material fact therefrom.
(c) Neither a disclosure statement nor a resale disclosure
certificate need be prepared or delivered in the case of:
(1) a gratuitous transfer;
(2) a transfer pursuant to a court order;
(3) a transfer to a government or governmental agency;
(4) a transfer to a secured party by foreclosure or deed in
lieu of foreclosure;
(5) an option to purchase a unit, until exercised;
(6) a transfer to a person who "controls" or is "controlled
by," the grantor as those terms are defined with respect to a
declarant under section 515B.1-103(2);
(7) a transfer by inheritance;
(8) a transfer of special declarant rights under section
515B.3-104; or
(9) a transfer in connection with a change of form of
common interest community under section 515B.2-123.
(d) A purchase agreement for a unit shall contain the
following notice: "The following notice is required by
Minnesota Statutes. The purchaser is entitled to receive a
disclosure statement or resale disclosure certificate, as
applicable. The disclosure statement or resale disclosure
certificate contains important information regarding the common
interest community and the purchaser's cancellation rights."
(e) A purchase agreement for the sale, to the initial
occupant, of a platted lot or other parcel of real estate (i)
which is subject to a master declaration, (ii) which is intended
for residential occupancy, and (iii) which does not and is not
intended to constitute a unit, shall contain the following
notice: "The following notice is required by Minnesota
Statutes: The real estate to be conveyed under this agreement
is or will be subject to a master association as defined in
Minnesota Statutes, chapter 515B. The master association is
obligated to provide to the purchaser, pursuant to Minnesota
Statutes, section 515B.4-102(c), upon the purchaser's request, a
statement containing the information required by Minnesota
Statutes, section 515B.4-102(a)(20), with respect to the master
association, prior to the time that the purchaser signs a
purchase agreement for the real estate. The statement contains
important information regarding the master association and the
purchaser's obligations thereunder." A claim by a purchaser
based upon a failure to include the foregoing notice in a
purchase agreement:
(1) shall be limited to legal, and not equitable, remedies;
(2) shall be barred unless it is commenced within the time
period specified in section 515B.4-115(a); or
(3) may be waived by a separate written document signed by
the seller and purchaser.
Sec. 35. Minnesota Statutes 2004, section 515B.4-102, is
amended to read:
515B.4-102 [DISCLOSURE STATEMENT; GENERAL PROVISIONS.]
(a) A disclosure statement shall fully and accurately
disclose:
(1) the name and, if available, the number of the common
interest community;
(2) the name and principal address of the declarant;
(3) the number of units which the declarant has the right
to include in the common interest community and a statement that
the common interest community is either a condominium,
cooperative, or planned community;
(4) a general description of the common interest community,
including, at a minimum, (i) the number of buildings, (ii) the
number of dwellings per building, (iii) the type of
construction, (iv) whether the common interest community
involves new construction or rehabilitation, (v) whether any
building was wholly or partially occupied, for any purpose,
before it was added to the common interest community and the
nature of the occupancy, and (vi) a general description of any
roads, trails, or utilities that are located on the common
elements and that the association or a master association will
be required to maintain;
(5) declarant's schedule of commencement and completion of
construction of any buildings and other improvements that the
declarant is obligated to build pursuant to section 515B.4-117;
(6) any expenses or services, not reflected in the budget,
that the declarant pays or provides, which may become a common
expense; the projected common expense attributable to each of
those expenses or services; and an explanation of declarant's
limited assessment liability under section 515B.3-115,
subsection (b);
(7) any initial or special fee due from the purchaser to
the declarant or the association at closing, together with a
description of the purpose and method of calculating the fee;
(8) identification of any liens, defects, or encumbrances
which will continue to affect the title to a unit or to any real
property owned by the association after the contemplated
conveyance;
(9) a description of any financing offered or arranged by
the declarant;
(10) a statement as to whether application has been made
for any project approvals for the common interest community from
the Federal National Mortgage Association (FNMA), Federal Home
Loan Mortgage Corporation (FHLMC), Department of Housing and
Urban Development (HUD) or Department of Veterans Affairs (VA),
and which, if any, such final approvals have been received;
(11) the terms of any warranties provided by the declarant,
including copies of chapter 327A, and sections 515B.4-112
through 515B.4-115, and any other applicable statutory
warranties, and a statement of any limitations on the
enforcement of the applicable warranties or on damages;
(12) a statement that: (i) within ten days after the
receipt of a disclosure statement, a purchaser may cancel any
contract for the purchase of a unit from a declarant; provided,
that the right to cancel terminates upon the purchaser's
voluntary acceptance of a conveyance of the unit from the
declarant or by the purchaser agreeing to modify or waive the
right to cancel in the manner provided by section 515B.4-106,
paragraph (a); (ii) if a purchaser receives a disclosure
statement more than ten days before signing a purchase
agreement, the purchaser cannot cancel the purchase agreement;
and (iii) if a declarant obligated to deliver a disclosure
statement fails to deliver a disclosure statement which
substantially complies with this chapter to a purchaser to whom
a unit is conveyed, the declarant shall be liable to the
purchaser as provided in section 515B.4-106(d);
(13) a statement disclosing to the extent of the
declarant's or an affiliate of a declarant's actual knowledge,
after reasonable inquiry, any unsatisfied judgments or lawsuits
to which the association is a party, and the status of those
lawsuits which are material to the common interest community or
the unit being purchased;
(14) a statement (i) describing the conditions under which
earnest money will be held in and disbursed from the escrow
account, as set forth in section 515B.4-109, (ii) that the
earnest money will be returned to the purchaser if the purchaser
cancels the contract pursuant to section 515B.4-106, and (iii)
setting forth the name and address of the escrow agent;
(15) a detailed description of the insurance coverage
provided by the association for the benefit of unit owners,
including a statement as to which, if any, of the items referred
to in section 515B.3-113, subsection (b), are insured by the
association;
(16) any current or expected fees or charges, other than
assessments for common expenses, to be paid by unit owners for
the use of the common elements or any other improvements or
facilities;
(17) the financial arrangements, including any
contingencies, which have been made to provide for completion of
all improvements that the declarant is obligated to build
pursuant to section 515B.4-118, or a statement that no such
arrangements have been made;
(18) in a cooperative: (i) whether the unit owners will be
entitled for federal and state tax purposes, to deduct payments
made by the association for real estate taxes and interest paid
to the holder of a security interest encumbering the
cooperative; and (ii) a statement as to the effect on the unit
owners if the association fails to pay real estate taxes or
payments due the holder of a security interest encumbering the
cooperative; and (iii) the principal amount and a general
description of the terms of any blanket mortgage, contract for
deed, or other blanket security instrument encumbering the
cooperative property;
(19) a statement: (i) that real estate taxes for the unit
or any real property owned by the association are not delinquent
or, if there are delinquent real estate taxes, describing the
property for which the taxes are delinquent, stating the amount
of the delinquent taxes, interest and penalties, and stating the
years for which taxes are delinquent, and (ii) setting forth the
amount of real estate taxes, including the amount of any special
assessment certified for payment with the real estate taxes, due
and payable with respect to the unit in the year in which the
disclosure statement is given, if real estate taxes have been
separately assessed against the unit;
(20) if the association or the purchaser of the unit will
be a member of a master association, a statement to that effect,
and all of the following information with respect to the master
association: (i) a copy of the master declaration, if any
(other than any CIC plat), the articles of incorporation,
bylaws, and rules and regulations for the master association,
together with any amendments thereto; (ii) the name, address and
general description of the master association, including a
general description of any other association, unit owners, or
other persons which are or may become members; (iii) a
description of any nonresidential use permitted on any property
subject to the master association; (iv) a statement as to the
estimated maximum number of associations, unit owners or other
persons which may become members of the master association, and
the degree and period of control of the master association by a
declarant or other person; (v) a description of any facilities
intended for the benefit of the members of the master
association and not located on property owned or controlled by a
member or the master association; (vi) the financial
arrangements, including any contingencies, which have been made
to provide for completion of the facilities referred to in
subsection (v), or a statement that no arrangements have been
made; (vii) any current balance sheet of the master association
and a projected or current annual budget, as applicable, which
budget shall include with respect to the master association
those items in paragraph (23), clauses (i) through (iv) (iii),
and the projected monthly common expense assessment for each
type of unit, lot, or other parcel of real estate which is or is
planned to be subject to assessment; (viii) a description of any
expenses or services not reflected in the budget, paid for or
provided by a declarant or a person executing the master
declaration, which may become an expense of the master
association in the future; (ix) a description of any powers
delegated to and accepted by the master association pursuant to
section 515B.2-121(f)(2); (x) identification of any liens,
defects or encumbrances that will continue to affect title to
property owned or operated by the master association for the
benefit of its members; (xi) the terms of any warranties
provided by any person for construction of facilities in which
the members of the master association have or may have an
interest, and any known defects in the facilities which would
violate the standards described in section 515B.4-112(b); (xii)
a statement disclosing, to the extent of the declarant's
knowledge, after inquiry of the master association, any
unsatisfied judgments or lawsuits to which the master
association is a party, and the status of those lawsuits which
are material to the master association; (xiii) a description of
any insurance coverage provided for the benefit of its members
by the master association; and (xiv) any current or expected
fees or charges, other than assessments by the master
association, to be paid by members of the master association for
the use of any facilities intended for the benefit of the
members;
(21) a statement as to whether the unit will be
substantially completed at the time of conveyance to a
purchaser, and if not substantially completed, who is
responsible to complete and pay for the construction of the
unit;
(22) a copy of the declaration and any amendments thereto,
(exclusive of the CIC plat), any other recorded covenants,
conditions restrictions, and reservations affecting the common
interest community; the articles of incorporation, bylaws and
any rules or regulations of the association; any agreement
excluding or modifying any implied warranties; any agreement
reducing the statute of limitations for the enforcement of
warranties; any contracts or leases to be signed by purchaser at
closing; and a brief narrative description of any (i) contracts
or leases that are or may be subject to cancellation by the
association under section 515B.3-105 and (ii) any material
agreements entered into between the declarant and a governmental
entity that affect the common interest community; and
(23) any current a balance sheet for the association,
current within 90 days; a projected annual budget for the
association for the year in which the first unit is conveyed to
a purchaser, and thereafter the current annual budget of the
association; and a statement identifying the party responsible
for the preparation of the budget. The budget shall assume that
all units intended to be included in the common interest
community, based upon the declarant's good faith estimate, have
been subjected to the declaration; provided, that additional
budget portrayals based upon a lesser number of units are
permitted. The budget shall include, without limitation: (i) a
statement of the amount included in the budget as a reserve for
maintenance, repair and replacement; (ii) a statement of any
other reserves; (iii) the projected common expense for each
category of expenditures for the association; and (iv) the
projected monthly common expense assessment for each type of
unit; and (v) a footnote or other reference to those components
of the common interest community the maintenance, repair, or
replacement of which the budget assumes will be funded by
assessments under section 515B.3-115(e) rather than by
assessments included in the association's annual budget, and a
statement referencing section 515B.3-115(e)(1) or (2) as the
source of funding. If, based upon the association's then
current budget, the monthly common expense assessment for the
unit at the time of conveyance to the purchaser is anticipated
to exceed the monthly assessment stated in the budget, a
statement to such effect shall be included.
(b) A declarant shall promptly amend the disclosure
statement to reflect any material change in the information
required by this chapter.
(c) The master association, within ten days after a request
by a declarant, or any a holder of declarant rights, or a
purchaser referred to in section 515B.4-101(e), or the
authorized representative of any of them, shall furnish the
information required to be provided by subsection (a)(20). A
declarant or other person who provides information pursuant to
subsection (a)(20) is not liable to the purchaser for any
erroneous information if the declarant or other person: (i) is
not an affiliate of or related in any way to a person authorized
to appoint the master association board pursuant to section
515B.2-121(c)(3), and (ii) has no actual knowledge that the
information is incorrect.
Sec. 36. Minnesota Statutes 2004, section 515B.4-105, is
amended to read:
515B.4-105 [COMMON INTEREST COMMUNITY WITH BUILDING ONCE
OCCUPIED.]
The disclosure statement of a common interest community
containing any building that was at any time before the creation
of the common interest community wholly or partially occupied,
for any purpose, by persons other than purchasers or persons who
occupied with the consent of purchasers, shall contain, in
addition to the information required by sections 515B.4-102,
515B.4-103 and 515B.4-104:
(1) a professional opinion prepared by a registered
professional architect or engineer, licensed in this state,
describing the present current condition of all structural
components, and mechanical and electrical installations,
material to the use and enjoyment of the building, to the extent
reasonably ascertainable without disturbing the improvements or
dismantling the equipment, which will be in place or be
operational at the time of conveyance of the first unit to a
person other than a declarant;
(2) a statement by the declarant of the expected useful
life of each item reported on in paragraph (1) or a statement
that no representations are made in that regard; and
(3) a list of any outstanding notices of uncured violations
of building code or other municipal regulations, together with
the estimated cost of curing those violations.
Sec. 37. Minnesota Statutes 2004, section 515B.4-106, is
amended to read:
515B.4-106 [PURCHASER'S RIGHT TO CANCEL.]
(a) A person required to deliver a disclosure statement
pursuant to section 515B.4-101(b) shall provide at least one of
the purchasers of the unit with a copy of the disclosure
statement and all amendments thereto before conveyance of the
unit. If a purchaser is not given a disclosure statement more
than five ten days before execution of the purchase agreement,
the purchaser may, before conveyance, cancel the purchase
agreement within five ten days after first receiving the
disclosure statement. If a purchaser is given the disclosure
statement more than five ten days before execution of the
purchase agreement, the purchaser may not cancel the purchase
agreement pursuant to this section. Except as expressly
provided in this chapter, The five-day ten-day rescission period
cannot be waived may be modified or waived, in writing, by
agreement of the purchaser of a unit only after the purchaser
has received and had an opportunity to review the disclosure
statement. The person required to deliver a disclosure
statement may not condition the sale of the unit on the
purchaser agreeing to modify or waive the purchaser's ten-day
right of rescission, may not contractually obligate the
purchaser to modify or waive the purchaser's ten-day right of
rescission, and may not include a modification or waiver of the
ten-day right of rescission in any purchase agreement for the
unit. To be effective, a modification or waiver of a
purchaser's ten-day right of rescission must be evidenced by an
instrument separate from the purchase agreement signed by the
purchaser more than three days after the purchaser signs the
purchase agreement.
(b) If an amendment to the disclosure statement materially
and adversely affects a purchaser, then the purchaser shall have
five ten days after delivery of the amendment to cancel the
purchase agreement in accordance with this section. The ten-day
rescission period may be modified or waived, in writing, by
agreement of the purchaser of a unit only after the purchaser
has received and had an opportunity to review the disclosure
statement. To be effective, a modification or waiver of a
purchaser's ten-day right of rescission under this section must
be evidenced by a written instrument separate from the purchase
agreement signed by the purchaser more than three days after the
purchaser receives the amendment.
(c) If a purchaser elects to cancel a purchase agreement
pursuant to this section, the purchaser may do so by giving
notice thereof pursuant to section 515B.1-115. Cancellation is
without penalty, and all payments made by the purchaser before
cancellation shall be refunded promptly. Notwithstanding
anything in this section to the contrary, the purchaser's
cancellation rights under this section terminate upon the
purchaser's acceptance of a conveyance of the unit.
(d) If a declarant obligated to deliver a disclosure
statement fails to deliver to the purchaser a disclosure
statement which substantially complies with this chapter, the
declarant shall be liable to the purchaser in the amount of
$1,000, in addition to any damages or other amounts recoverable
under this chapter or otherwise. Any action brought under this
subsection shall be commenced within the time period specified
in section 515B.4-115, subsection (a).
Sec. 38. Minnesota Statutes 2004, section 515B.4-107, is
amended to read:
515B.4-107 [RESALE OF UNITS.]
(a) In the event of a resale of a unit by a unit owner
other than a declarant, unless exempt under section
515B.4-101(c), the unit owner shall furnish to a purchaser,
before execution of any purchase agreement for a unit or
otherwise before conveyance, the following documents relating to
the association or to the master association, if applicable:
(1) copies of the declaration (other than any CIC plat),
the articles of incorporation and bylaws, any rules and
regulations, and any amendments thereto or supplemental
declarations;
(2) the organizational and operating documents relating to
the master association, if any; and
(3) a resale disclosure certificate from the association
dated not more than 90 days prior to the date of the purchase
agreement or the date of conveyance, whichever is earlier,
containing the information set forth in subsection (b).
(b) The resale disclosure certificate must be in
substantially the following form:
COMMON INTEREST COMMUNITY
RESALE DISCLOSURE CERTIFICATE
Name of Common Interest Community:..............................
Name of Association:............................................
Address of Association:.........................................
Unit Number(s) (include principal unit and any garage, storage,
or other auxiliary unit(s)):.....................................
The following information is furnished by the association
named above according to Minnesota Statutes, section 515B.4-107.
1. There is no right of first refusal or other restraint
on the free alienability of the above unit(s) contained in the
declaration, bylaws, rules and regulations, or any amendment to
them, except as follows:........................................
................................................................
................................................................
................................................................
2. The following periodic installments of common expense
assessments and special assessments are payable with respect to
the above unit(s):
a. Annual assessment
installments: $....... Due: .............
b. Special assessment
installments: $....... Due: .............
c. Unpaid assessments, fines, or other charges:
(1) Annual $.......
(2) Special $.......
(3) Fines $.......
(4) Other Charges $.......
d. The association has/has not (strike one) approved
a plan for levying certain common expense
assessments against fewer than all the units
according to Minnesota Statutes, section 515B.3-115,
subsection (e). If a plan is approved, a description
of the plan is attached to this certificate.
3. In addition to the amounts due under paragraph 2, the
following additional fees or charges other than assessments are
payable by unit owners (include late payment charges, user fees,
etc.):..........................................................
................................................................
................................................................
4. There are no extraordinary expenditures approved by the
association, and not yet assessed, for the current and two
succeeding fiscal years, except as follows:.....................
................................................................
................................................................
5. The association has reserved the following amounts for
maintenance, repair, or replacement:............................
................................................................
................................................................
The following portions of these reserves are designated for the
following specified projects or uses:...........................
................................................................
6. The following documents are furnished with this
certificate according to statute:
a. The most recent regularly prepared balance sheet and
income and expense statement of the association.
b. The current budget of the association.
7. There are no unsatisfied judgments against the
association, except as follows (identify creditor and amount):..
................................................................
................................................................
8. There are no pending lawsuits to which the association
is a party, except as follows (identify and summarize status):..
................................................................
................................................................
................................................................
9. Description of insurance coverages:
a. The association provides the following insurance
coverage for the benefit of unit owners: (Reference may be made
to applicable sections of the declaration or bylaws; however,
any additional coverages should be described in this space)
................................................................
................................................................
................................................................
b. The following described fixtures, decorating items, or
construction items within the unit referred to in Minnesota
Statutes, section 515B.3-113, subsection (b), are insured by the
association (check as applicable):
..._____Ceiling or wall finishing materials
..._____Floor coverings
..._____Cabinetry
..._____Finished millwork
..._____Electrical or plumbing fixtures serving a single unit
..._____Built-in appliances
..._____Improvements and betterments as originally constructed
..._____Additional improvements and betterments installed by
unit owners
10. The board of directors of the association has not
notified the unit owner (i) that any alterations or improvements
to the unit or to the limited common elements assigned to it
violate any provision of the declaration; or (ii) that the unit
is in violation of any governmental statute, ordinance, code, or
regulation, except as follows:...................................
.................................................................
11. The remaining term of any leasehold estate affecting
the common interest community and the premises governing any
extension or renewal of it are as follows:......................
................................................................
................................................................
12. In addition to the above, the following matters
affecting the unit or the unit owner's obligations with respect
to the unit are deemed material. ..............................
................................................................
I hereby certify that the foregoing information and
statements are true and correct as of .............
(Date)
By: .......................
Title: .....................
(Association representative)
Address:....................
Phone Number:...............
RECEIPT
In addition to the foregoing information furnished by the
association, the unit owner is obligated to furnish to the
purchaser before execution of any purchase agreement for a unit
or otherwise before conveyance, copies of the following
documents relating to the association or to the master
association (as applicable): the declaration (other than any
common interest community plat), articles of incorporation,
bylaws, rules and regulations (if any), and any amendments to
these documents. Receipt of the foregoing documents, and the
resale disclosure certificate, is acknowledged by the
undersigned buyer(s).
Dated: ............ .........................
(Buyer)
.........................
(Buyer)
(c) If the association is subject to a master association
to which has been delegated the association's powers under
section 515B.3-102(a)(2), then the financial information
required to be disclosed under subsection (b) may be disclosed
on a consolidated basis.
(d) The association, within ten days after a request by a
unit owner, or the unit owner's authorized representative, shall
furnish the certificate required in subsection (a). The
association may charge a reasonable fee for furnishing the
certificate and any association documents related thereto. A
unit owner providing a certificate pursuant to subsection (a) is
not liable to the purchaser for any erroneous information
provided by the association and included in the certificate.
(e) A purchaser is not liable for any unpaid common expense
assessments, including special assessments, if any, not set
forth in the certificate required in subsection (a). A
purchaser is not liable for the amount by which the annual or
special assessments exceed the amount of annual or special
assessments stated in the certificate for assessments payable in
the year in which the certificate was given, except to the
extent of any increases subsequently approved in accordance with
the declaration or bylaws. A unit owner is not liable to a
purchaser for the failure of the association to provide the
certificate, or a delay by the association in providing the
certificate in a timely manner.
Sec. 39. Minnesota Statutes 2004, section 515B.4-108, is
amended to read:
515B.4-108 [PURCHASER'S RIGHT TO CANCEL RESALE.]
(a) Unless a purchaser is given the information required to
be delivered by section 515B.4-107, by a delivery method
described in that section, more than five ten days prior to the
execution of the purchase agreement for the unit the purchaser
may, prior to the conveyance, cancel the purchase agreement
within five ten days after receiving the information. Except as
expressly provided in this chapter, the five-day rescission
period cannot be waived. The ten-day rescission period may be
modified or waived, in writing, by agreement of the purchaser of
a unit only after the purchaser has received and had an
opportunity to review the information required to be delivered
by section 515B.4-107. The person required to deliver the
information required to be delivered by section 515B.4-107 may
not condition the sale of the unit on the purchaser agreeing to
modify or waive the purchaser's ten-day right of rescission, may
not contractually obligate the purchaser to modify or waive the
purchaser's ten-day right of rescission, and may not include a
modification or waiver of the ten-day right of rescission in any
purchase agreement for the unit. To be effective, a
modification or waiver of a purchaser's ten-day right of
rescission must be evidenced by an instrument separate from the
purchase agreement signed by the purchaser more than three days
after the purchaser signs the purchase agreement.
(b) A purchaser who elects to cancel a purchase agreement
pursuant to subsection (a), may do so by hand delivering notice
thereof or mailing notice by postage prepaid United States mail
to the seller or the agent. Cancellation is without penalty and
all payments made by the purchaser shall be refunded promptly.
Sec. 40. Minnesota Statutes 2004, section 515B.4-109, is
amended to read:
515B.4-109 [ESCROW DEPOSITS.]
All earnest money paid or deposits made in connection with
the purchase or reservation of units from or with a declarant
shall be deposited in an escrow account controlled jointly by
the declarant and the purchaser, or controlled by a licensed
title insurance company or agent thereof, an attorney
representing either the declarant or the purchaser, a licensed
real estate broker or, an independent bonded escrow company, or
a governmental agency or instrumentality. The escrow account
shall be in an institution whose deposits are insured by a
governmental agency or instrumentality. The money or deposits
shall be held in the escrow account until (i) delivered to the
declarant at closing; (ii) delivered to the declarant because of
the purchaser's default under a reservation agreement or a
contract to purchase the unit; (iii) delivered to the purchaser
pursuant to the provisions of section 515B.4-106 or the
provisions of a reservation agreement or a contract to purchase;
or (iv) delivered for payment of construction costs pursuant to
a written agreement between the declarant and the purchaser.
Sec. 41. Minnesota Statutes 2004, section 515B.4-111, is
amended to read:
515B.4-111 [CONVERSION PROPERTY.]
(a) A unit owner of a unit occupied for residential use in
a common interest community containing conversion property shall
not, for a period of one year following the recording of the
declaration creating the common interest community, require any
occupant of the unit to vacate the unit unless the unit owner
gives notice to the occupant in the manner described in this
section. The notice shall be given no later than 120 days
before the occupant is required to vacate the unit. The notice
shall be sufficient as to all occupants of a unit if it is hand
delivered or mailed to the unit to be vacated, addressed to the
occupants thereof. If the holder of the lessee's interest in
the unit has given the unit owner an address different than that
of the unit, then the notice shall also be given to the holder
of the lessee's interest at the designated address. The notice
shall satisfy comply with the following requirements:
(1) The notice shall set forth generally the rights
conferred by this section.
(2) The notice shall have attached to the notice intended
for the holder of the lessee's interest a form of purchase
agreement setting forth the terms of sale contemplated by
subsection (d) and a statement of any significant restrictions
on the use and occupancy of the unit to be imposed by the
declarant.
(3) The notice shall state that the occupants of the
residential unit may demand to be given 60 additional days
before being required to vacate, if any of them, or any person
residing with them, is (i) 62 years of age or older, (ii) a
person with a disability as defined in section 268A.01, or (iii)
a minor child on the date the notice is given. This demand must
be in writing, contain reasonable proof of qualification, and be
given to the declarant within 30 days after the notice of
conversion is delivered or mailed.
(4) The notice shall be contained in an envelope upon which
the following shall be boldly printed: "Notice of Conversion."
(b) Notwithstanding subsection (a), an occupant may be
required to vacate a unit upon less than 120 days' notice by
reason of nonpayment of rent, utilities or other monetary
obligations, violations of law, waste, or conduct that disturbs
other occupants' peaceful enjoyment of the premises. The terms
of the tenancy may not be altered during the notice period,
except that the holder of the lessee's interest or other party
in possession may vacate and terminate the tenancy upon one
month's written notice to the declarant. Nothing in this
section prevents the unit owner and any occupant from agreeing
to a right of occupancy on a month-to-month basis beyond the
120-day notice period, or to an earlier termination of the right
of occupancy.
(c) No repair work or remodeling may be commenced or
undertaken in the occupied units or common areas of the building
during the notice period, unless reasonable precautions are
taken to ensure the safety and security of the occupants.
(d) For 60 days after delivery or mailing of the notice
described in subsection (a), the holder of the lessee's interest
in the unit on the date the notice is mailed or delivered shall
have an option to purchase that unit on the terms set forth in
the purchase agreement attached to the notice. The purchase
agreement shall contain no terms or provisions which violate any
state or federal law relating to discrimination in housing. If
the holder of the lessee's interest fails to purchase the unit
during that 60-day period, the unit owner 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 holder. This subsection does
not apply to any unit in a conversion building if that unit will
be restricted exclusively to nonresidential use or if the
boundaries of the converted unit do not substantially conform to
the boundaries of the residential unit before conversion.
(e) If a unit owner, in violation of subsection (b),
conveys a unit to a purchaser for value who has no knowledge of
the violation, the recording of the deed conveying the unit or,
in a cooperative, the conveyance of the right to possession of
the unit, extinguishes any right a holder of a lessee's interest
who is not in possession of the unit may have under subsection
(d) to purchase that unit, but the conveyance does not affect
the right of the holder to recover damages from the unit owner
for a violation of subsection (d).
(f) If a notice of conversion specifies a date by which a
unit or proposed unit must be vacated or otherwise complies with
the provisions of chapter 504B, the notice also constitutes a
notice to vacate specified by that statute.
(g) Nothing in this section permits a unit owner to
terminate a lease in violation of its terms.
(h) Failure to give notice as required by this section is a
defense to an action for possession until a notice complying
with this section is given and the applicable notice period
terminates.
Sec. 42. Minnesota Statutes 2004, section 515B.4-115, is
amended to read:
515B.4-115 [STATUTE OF LIMITATIONS FOR WARRANTIES.]
(a) A judicial proceeding for breach of an obligation
arising under section 515B.4-101(e) or 515B.4-106(d), shall be
commenced within six months after the conveyance of the unit or
other parcel of real estate.
(b) A judicial proceeding for breach of an obligation
arising under section 515B.4-112 or 515B.4-113 shall be
commenced within six years after the cause of action accrues,
but the parties may agree to reduce the period of limitation to
not less than two years. An agreement reducing the period of
limitation shall be binding on the purchaser's successor assigns.
With respect to a unit that may be occupied for residential use,
an agreement to reduce the period of limitation must be
evidenced by an instrument separate from the purchase agreement
signed by the purchaser.
(c) Subject to subsection (d), a cause of action under
section 515B.4-112 or 515B.4-113, regardless of the purchasers
lack of knowledge of the breach, accrues:
(1) as to a unit, at the earlier of the time of conveyance
of the unit by the declarant to a bona fide purchaser of the
unit other than an affiliate of a declarant, or the time the
purchaser enters into possession of the unit; and
(2) as to each common element, the latest of (i) the time
the common element is completed, (ii) the time the first unit in
the common interest community is conveyed to a bona fide
purchaser, or if the common element is located on property that
is additional real estate at the time the first unit therein is
conveyed to a bona fide purchaser, or (iii) the termination of
the period of declarant control.
(d) If a warranty 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.
Presented to the governor May 24, 2005
Signed by the governor May 27, 2005, 3:35 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes