1999 Minnesota Statutes

     515B.3-104 Transfer of special declarant rights. 

    (a) A special declarant right created or reserved under 
 this chapter may be voluntarily transferred only by a separate 
 instrument evidencing the transfer recorded in every county in 
 which any part of the common interest community is located.  The 
 separate instrument shall be recorded against all units in the 
 common interest community, or in the case of a cooperative, 
 against the real estate owned by the cooperative.  The 
 instrument may provide for the conveyance of less than all of 
 the special declarant rights, and is not effective unless 
 executed by the transferor and transferee.  A deed in lieu of 
 foreclosure, or other conveyance arising out of a foreclosure or 
 cancellation, shall not be deemed a voluntary transfer within 
 the meaning of this section. 

    (b) Upon the voluntary transfer of any special declarant 
 right, the liability of a transferor declarant is as follows: 

    (1) A transferor is not relieved of any obligation or 
 liability arising before the transfer and remains liable for 
 warranty obligations imposed on the transferor by this chapter.  
 Lack of privity does not deprive any unit owner of standing to 
 maintain an action to enforce any obligation of the transferor. 

    (2) If a successor to any special declarant right is an 
 affiliate of a declarant, the transferor is jointly and 
 severally liable with the successor for any obligations or 
 liabilities of the successor relating to the common interest 
 community. 

    (3) If a transferor retains any special declarant rights, 
 but transfers other special declarant rights to a successor who 
 is not an affiliate of the declarant, the transferor is liable 
 for any obligations or liabilities imposed on a declarant by 
 this chapter or by the declaration relating to the retained 
 special declarant rights and arising before or after the 
 transfer. 

    (4) A transferor has no liability for any act or omission 
 or any breach of a contractual or warranty obligation arising 
 from the exercise of a special declarant right by a successor 
 declarant who is not an affiliate of the transferor. 

    (c) Upon the voluntary transfer of any special declarant 
 right, the liability of a successor declarant is as follows: 

    (1) A successor to any special declarant right who is an 
 affiliate of a declarant is subject to all obligations and 
 liabilities imposed on the transferor by this chapter or by the 
 declaration. 

    (2) A successor to any special declarant right who is not 
 an affiliate of a declarant is subject to all obligations and 
 liabilities imposed by this chapter or the declaration, except:  
 (i) misrepresentations by any previous declarant; (ii) warranty 
 obligations on improvements made by any previous declarant, or 
 made before the common interest community was created; (iii) 
 breach of any fiduciary obligation by any previous declarant or 
 the declarant's appointees to the board; (iv) any liability or 
 obligation imposed on the transferor as a result of the 
 transferor's acts or omissions after the transfer; and (v) any 
 liability arising out of a special declarant right which was not 
 transferred as provided in subsection (a). 

    (d) In case of foreclosure of a mortgage or cancellation of 
 a contract for deed or other security interest (or conveyance in 
 lieu thereof), sale by a trustee under an agreement creating a 
 security interest, tax sale, judicial sale, or sale under 
 bankruptcy code or receivership proceedings, of any units or 
 additional real estate, or interest therein, owned by a 
 declarant, a person acquiring title to the property or interests 
 succeeds to all special declarant rights related to the property 
 or interests held by that declarant and acquired by it unless (i)
 the mortgage instrument or other instrument creating the 
 security interest, (ii) the instrument conveying title or (iii) 
 a separate instrument signed by the person and recorded within 
 60 days after the person acquires title to the property or 
 interests, provides for transfer of less than all special 
 declarant rights.  The separate instrument need be recorded only 
 against the title to the units or interests other than those 
 being acquired under this subsection, or in the case of a 
 cooperative, against the real estate owned by the cooperative.  
 The declarant shall cease to have or exercise any special 
 declarant rights which are transferred.  If the person has 
 limited the transfer of certain special declarant rights as 
 provided in this subsection, then it and its successor's 
 liability shall be limited, as follows: 

    (1) If the person or its successor limits its rights and 
 liabilities only to maintain models, sales office and signs, and 
 if that party is not an affiliate of a declarant, it is not 
 subject to any liability or obligations as a declarant, except 
 the obligation to provide a disclosure statement and any 
 liability arising from that obligation, and it may not exercise 
 any other special declarant rights. 

    (2) If the person or its successor is not an affiliate of a 
 declarant, it may declare its intention in a recorded instrument 
 as provided in subsection (a) to acquire all special declarant 
 rights and hold those rights solely for transfer to another 
 person.  Thereafter, until the special declarant rights are 
 transferred to a person acquiring title to any unit owned by the 
 successor, or until a separate instrument is recorded permitting 
 exercise of all of those rights, that successor may not exercise 
 any of those rights other than the right to control the board of 
 directors in accordance with the provisions of section 
 515B.3-103 for the duration of any period of declarant control.  
 So long as any successor may not exercise its special declarant 
 rights under this subsection, it is not subject to any liability 
 or obligation as a declarant other than liability for its acts 
 and omissions under section 515B.3-103. 

    (e) Any attempted exercise by a purported successor to a 
 special declarant right which is not transferred as provided in 
 this section is void, and any purported successor attempting to 
 exercise that right shall be liable for any damages arising out 
 of its actions. 

    (f) Nothing in this section shall subject any successor to 
 a special declarant right to any claims against or other 
 obligations of a transferor declarant, other than claims and 
 obligations arising under this chapter, or the declaration or 
 bylaws. 

    HIST: 1993 c 222 art 3 s 4