1.1                          A bill for an act 
  1.2             relating to real property; acquiring right-of-way from 
  1.3             common interest ownership communities; amending 
  1.4             Minnesota Statutes 2002, sections 515B.1-107; 
  1.5             515B.3-102; 515B.3-112. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2002, section 515B.1-107, is 
  1.8   amended to read: 
  1.9      515B.1-107 [EMINENT DOMAIN.] 
  1.10     (a) If a unit is acquired by eminent domain, or if part of 
  1.11  a unit is acquired by eminent domain leaving the unit owner with 
  1.12  a remnant which may not practically or lawfully be used for any 
  1.13  material purpose permitted by the declaration, the award shall 
  1.14  compensate the unit owner and secured party in the unit as their 
  1.15  interests may appear, whether or not any common element interest 
  1.16  is acquired.  Upon acquisition, unless the order or final 
  1.17  certificate otherwise provides, that unit's allocated interests 
  1.18  are automatically reallocated among the remaining units in 
  1.19  proportion to their respective allocated interests prior to the 
  1.20  taking, and the association shall promptly prepare, execute, and 
  1.21  record an amendment to the declaration reflecting the 
  1.22  allocations.  Any remnant of a unit remaining after part of a 
  1.23  unit is taken under this subsection is thereafter a common 
  1.24  element. 
  1.25     (b) Except as provided in subsection (a), if part of a unit 
  2.1   is acquired by eminent domain, the award shall compensate the 
  2.2   unit owner and secured party for the reduction in value of the 
  2.3   unit and its interest in the common elements, whether or not any 
  2.4   common elements are acquired.  Upon acquisition, unless the 
  2.5   order or final certificate otherwise provides, (i) that unit's 
  2.6   allocated interests are reduced in proportion to the reduction 
  2.7   in the size of the unit, or on any other basis specified in the 
  2.8   declaration and (ii) the portion of the allocated interests 
  2.9   divested from the partially acquired unit are automatically 
  2.10  reallocated to that unit and to the remaining units in 
  2.11  proportion to the respective allocated interests of those units 
  2.12  before the taking, with the partially acquired unit 
  2.13  participating in the reallocation on the basis of its reduced 
  2.14  allocated interests. 
  2.15     (c) If part of the common elements is acquired by eminent 
  2.16  domain, the association shall accept service of process on 
  2.17  behalf of all unit owners and the portion of the award 
  2.18  attributable to the common elements taken shall be paid to the 
  2.19  association.  Unless the declaration provides otherwise, any 
  2.20  portion of the award attributable to the acquisition of a 
  2.21  limited common element shall be equally divided among the owners 
  2.22  of the units to which that limited common element was allocated 
  2.23  at the time of acquisition and their secured parties, as their 
  2.24  interests may appear or as provided by the declaration. 
  2.25     (d) In any eminent domain proceeding the units shall be 
  2.26  treated as separate parcels of real estate for valuation 
  2.27  purposes, regardless of the number of units subject to the 
  2.28  proceeding. 
  2.29     (e) Any distribution to a unit owner from the proceeds of 
  2.30  an eminent domain award shall be subject to any limitations 
  2.31  imposed by the declaration or bylaws. 
  2.32     (f) The court order or final certificate containing the 
  2.33  final awards shall be recorded in every county in which any 
  2.34  portion of the common interest community is located. 
  2.35     Sec. 2.  Minnesota Statutes 2002, section 515B.3-102, is 
  2.36  amended to read: 
  3.1      515B.3-102 [POWERS OF UNIT OWNERS' ASSOCIATION.] 
  3.2      (a) Except as provided in subsection (b), and subject to 
  3.3   the provisions of the declaration or bylaws, the association 
  3.4   shall have the power to: 
  3.5      (1) adopt, amend and revoke rules and regulations not 
  3.6   inconsistent with the articles of incorporation, bylaws and 
  3.7   declaration, as follows:  (i) regulating the use of the common 
  3.8   elements; (ii) regulating the use of the units, and conduct of 
  3.9   unit occupants, which may jeopardize the health, safety or 
  3.10  welfare of other occupants, which involves noise or other 
  3.11  disturbing activity, or which may damage the common elements or 
  3.12  other units; (iii) regulating or prohibiting animals; (iv) 
  3.13  regulating changes in the appearance of the common elements and 
  3.14  conduct which may damage the common interest community; (v) 
  3.15  regulating the exterior appearance of the common interest 
  3.16  community, including, for example, balconies and patios, window 
  3.17  treatments, and signs and other displays, regardless of whether 
  3.18  inside a unit; (vi) implementing the articles of incorporation, 
  3.19  declaration and bylaws, and exercising the powers granted by 
  3.20  this section; and (vii) otherwise facilitating the operation of 
  3.21  the common interest community; 
  3.22     (2) adopt and amend budgets for revenues, expenditures and 
  3.23  reserves, and levy and collect assessments for common expenses 
  3.24  from unit owners; 
  3.25     (3) hire and discharge managing agents and other employees, 
  3.26  agents, and independent contractors; 
  3.27     (4) institute, defend, or intervene in litigation or 
  3.28  administrative proceedings (i) in its own name on behalf of 
  3.29  itself or two or more unit owners on matters affecting the 
  3.30  common elements or other matters affecting the common interest 
  3.31  community or, (ii) with the consent of the owners of the 
  3.32  affected units on matters affecting only those units; 
  3.33     (5) make contracts and incur liabilities; 
  3.34     (6) regulate the use, maintenance, repair, replacement and 
  3.35  modification of the common elements and the units; 
  3.36     (7) cause improvements to be made as a part of the common 
  4.1   elements, and, in the case of a cooperative, the units; 
  4.2      (8) acquire, hold, encumber, and convey in its own name any 
  4.3   right, title, or interest to real estate or personal property, 
  4.4   but (i) common elements in a condominium or planned community 
  4.5   may be conveyed or subjected to a security interest only 
  4.6   pursuant to section 515B.3-112, or (ii) part of a cooperative 
  4.7   may be conveyed, or all or part of a cooperative may be 
  4.8   subjected to a security interest, only pursuant to section 
  4.9   515B.3-112; 
  4.10     (9) grant public utility and transportation easements 
  4.11  through, over or under the common elements, and, subject to 
  4.12  approval by resolution of unit owners other than declarant or 
  4.13  its affiliates at a meeting duly called, grant other public or 
  4.14  private easements, leases and licenses through, over or under 
  4.15  the common elements; 
  4.16     (10) impose and receive any payments, fees, or charges for 
  4.17  the use, rental, or operation of the common elements, other than 
  4.18  limited common elements, and for services provided to unit 
  4.19  owners; 
  4.20     (11) impose charges for late payment of assessments and, 
  4.21  after notice and an opportunity to be heard, levy reasonable 
  4.22  fines for violations of the declaration, bylaws, and rules and 
  4.23  regulations of the association; 
  4.24     (12) impose reasonable charges for the review, preparation 
  4.25  and recordation of amendments to the declaration, resale 
  4.26  certificates required by section 515B.4-107, statements of 
  4.27  unpaid assessments, or furnishing copies of association records; 
  4.28     (13) provide for the indemnification of its officers and 
  4.29  directors, and maintain directors' and officers' liability 
  4.30  insurance; 
  4.31     (14) provide for reasonable procedures governing the 
  4.32  conduct of meetings and election of directors; 
  4.33     (15) exercise any other powers conferred by law, or by the 
  4.34  declaration, articles of incorporation or bylaws; and 
  4.35     (16) exercise any other powers necessary and proper for the 
  4.36  governance and operation of the association. 
  5.1      (b) Notwithstanding subsection (a) the declaration or 
  5.2   bylaws may not impose limitations on the power of the 
  5.3   association to deal with the declarant which are more 
  5.4   restrictive than the limitations imposed on the power of the 
  5.5   association to deal with other persons. 
  5.6      Sec. 3.  Minnesota Statutes 2002, section 515B.3-112, is 
  5.7   amended to read: 
  5.8      515B.3-112 [CONVEYANCE OR ENCUMBRANCE OF COMMON ELEMENTS.] 
  5.9      (a) In a condominium or planned community, unless the 
  5.10  declaration provides otherwise, portions of the common elements 
  5.11  may be conveyed or subjected to a security interest by the 
  5.12  association if persons entitled to cast at least 67 percent of 
  5.13  the votes in the association, including 67 percent of the votes 
  5.14  allocated to units not owned by a declarant, or any larger 
  5.15  percentage the declaration specifies, approve that action in 
  5.16  writing or at a meeting; but all unit owners of units to which 
  5.17  any limited common element is allocated must agree in order to 
  5.18  convey that limited common element or subject it to a security 
  5.19  interest.  The declaration may specify a smaller percentage only 
  5.20  if all of the units are restricted to nonresidential use. 
  5.21     (b) In a cooperative, unless the declaration provides 
  5.22  otherwise, part of a cooperative may be conveyed, or all or a 
  5.23  part subjected to a security interest, by the association if 
  5.24  persons entitled to cast at least 67 percent of the votes in the 
  5.25  association, including 67 percent of the votes allocated to 
  5.26  units in which the declarant has no interest, or any larger 
  5.27  percentage the declaration specifies, approves that action in 
  5.28  writing or at a meeting.  If fewer than all of the units or 
  5.29  limited common elements are to be conveyed or subjected to a 
  5.30  security interest, then all unit owners of those units, or the 
  5.31  units to which those limited common elements are allocated, must 
  5.32  agree in order to convey those units or limited common elements 
  5.33  or subject them to a security interest.  The declaration may 
  5.34  specify a smaller percentage only if all of the units are 
  5.35  restricted to nonresidential use.  Any purported conveyance or 
  5.36  other voluntary transfer of an entire cooperative is void, 
  6.1   unless made pursuant to section 515B.2-119. 
  6.2      (c) The association, on behalf of the unit owners, may 
  6.3   contract to convey or encumber an interest in the common 
  6.4   elements of a common interest community pursuant to this 
  6.5   subsection, subject to the required approval.  After the 
  6.6   approval has been obtained, the association shall have a power 
  6.7   of attorney coupled with an interest to effect the conveyance or 
  6.8   encumbrance on behalf of all unit owners in the common interest 
  6.9   community, including the power to execute deeds, mortgages, or 
  6.10  other instruments of conveyance or security.  The instrument 
  6.11  conveying or creating the interest in the common interest 
  6.12  community shall be recorded and shall include as exhibits (i) an 
  6.13  affidavit of the secretary of the association certifying that 
  6.14  the approval required by this section has been obtained and (ii) 
  6.15  a schedule of the names of all unit owners and units in the 
  6.16  common interest community as of the date of the approval. 
  6.17     (d) Except as provided in section 515B.3-102(a)(9), unless 
  6.18  made pursuant to this section, any purported conveyance, 
  6.19  encumbrance, or other voluntary transfer of common elements, or 
  6.20  of any part of a cooperative, is void. 
  6.21     (e) In the case of a conveyance involving a condominium, or 
  6.22  a cooperative in which the unit owners' interests are 
  6.23  characterized as real estate, the association shall record, 
  6.24  simultaneously with the recording of the instrument of 
  6.25  conveyance, an amended CIC plat showing the real estate 
  6.26  constituting the common interest community exclusive of the real 
  6.27  estate conveyed.  In all common interest communities, upon 
  6.28  recording of the instrument of conveyance, the declaration, and 
  6.29  all rights and obligations arising therefrom, shall be deemed 
  6.30  released and terminated as to the real estate 
  6.31  conveyed.  Conveyances to the state for transportation purposes 
  6.32  are exempt from the requirements of this paragraph. 
  6.33     (f) A conveyance or encumbrance of common elements, or of a 
  6.34  cooperative, pursuant to this section shall not deprive any unit 
  6.35  of its rights of support, reasonable access or utility services. 
  6.36     (g) Except as provided in subsection (a), or unless the 
  7.1   declaration otherwise provides, a conveyance or encumbrance of 
  7.2   common elements pursuant to this section does not affect the 
  7.3   priority or validity of preexisting encumbrances. 
  7.4      (h) Any proceeds of the conveyance or creation of a 
  7.5   security interest under this section are an asset of the 
  7.6   association. 
  7.7      (i) This section shall not apply to any conveyance or 
  7.8   encumbrance of any interest in a proprietary lease. 
  7.9      Sec. 4.  [EFFECTIVE DATE.] 
  7.10     Sections 1 to 3 are effective the day following final 
  7.11  enactment.