HF 3274

as introduced - 91st Legislature (2019 - 2020) Posted on 03/05/2020 03:46pm

A bill for an act
relating to real property; amending the Minnesota Common Interest Ownership
Act; creating a court approval process for proposed amendments to governing
documents of a common interest community; amending Minnesota Statutes 2018,
sections 515B.1-102; 515B.2-118.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, 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 Requirements); 515B.1-107 (Eminent Domain);
515B.1-108 (This Chapter Prevails; Supplemental Law); 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(f) (Common Elements and Limited Common Elements);
515B.2-112 (Subdivision, Combination, 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 of Directors, Officers, and 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 of, or Creation of Security Interests in, Common
Elements); 515B.3-113 (Insurance); 515B.3-114 (Replacement Reserves); 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, or to planned communities that were created on or after June 1, 1994, and
before August 1, 2006, and that consist of more than two but fewer than 13 units; except
by election pursuant to subsection (d), and except that sections 515B.1-116, subsections
(a), (c), (d), and (e), 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, or any planned community that was created
on or after June 1, 1994, and prior to August 1, 2006, and that consists of more than two
but fewer than 13 units, 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 or registered land survey recorded pursuant to chapter 505, 508, or 508A,
or the part of the plat or registered land survey upon which the common interest community
is located, shall be the CIC plat.

(3) The amendment shall comply with section 515B.2-118(a)(3) and (c); except that the
unanimous consent of the unit owners shall not be required for (i) a clarification of the unit
boundary description if the clarified boundary description is substantially consistent with
the preexisting CIC plat, or (ii) changes from common elements to limited common elements
that occur by operation of section 515B.2-109(c) and (d).

(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 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 which consists of two units, which utilizes a CIC plat complying
with section 515B.2-110(d)(1) and (2), or section 515B.2-1101(d)(1) and (2), which is not
subject to any rights to subdivide or convert units or to add additional real estate, and which
is not subject to a master association;

(2) a common interest community that consists solely of platted lots or other separate
parcels of real estate designed or utilized for detached single family dwellings or agricultural
purposes, with or without common property, where no association or master association
has an obligation to maintain any building containing a dwelling or any agricultural building
located or to be located on such platted lots or parcels; except that section 515B.4-101(e)
shall apply to the sale of such platted lots or parcels of real estate if the common interest
community is or will be subject to a master declaration;

(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 CIC plat complying with section 515B.2-110(d)(1)
and (2), or section 515B.2-1101(d)(1) and (2), and cooperatives, which are limited by the
declaration to nonresidential uses; 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.4-101(e) applies to any platted lot or other parcel of real estate that is
subject to a master declaration and is not subject to or is exempt from this chapter.

(g) Section 515B.1-106 new text begin and section 515B.2-118, subsections (a)(5), (a)(7), and (d), new text end shall
apply to all common interest communities.

(h) Sections 515B.1-103(33a), 515B.2-110, 515B.3-105, 515B.3-115, 515B.4-102, and
515B.4-115 apply only to common interest communities created before August 1, 2010.
Sections 515B.1-103(33b), 515B.2-1101, 515B.3-1051, 515B.3-1151, 515B.4-1021, and
515B.4-1151 apply only to common interest communities created on or after August 1,
2010.

(i) Section 515B.3-114 applies to common interest communities only for the association's
fiscal years commencing before January 1, 2012. Section 515B.3-1141 applies to common
interest communities only for the association's fiscal years commencing on or after January
1, 2012.

(j) Section 515B.3-104 applies only to transfers of special declarant rights that are
effective before August 1, 2010. Section 515B.3-1041, subsections (a) through (i), apply
only to transfers of special declarant rights that are effective on or after August 1, 2010.
Section 515B.3-1041, subsections (j) and (k), apply only to special declarant rights reserved
in a declaration that is first recorded on or after August 1, 2010.

Sec. 2.

Minnesota Statutes 2018, section 515B.2-118, is amended to read:

515B.2-118 AMENDMENT OF DECLARATION.

(a) new text begin Except as otherwise provided in subsection (d), new text end the declaration, including any CIC
plat, may be amended only by vote or written consent 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.2-114, or 515B.2-124.

(3) Except for amendments or supplemental declarations under subsection (a)(1) and
(2), and except as provided in sections 515B.1-102(d)(3) and 515B.2-106(a)(2), 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.
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 and all secured parties holding
security interests in units.

(4) In addition to any other requirements contained in this section, a declarant must
execute an amendment that eliminates or modifies any special declarant rights held by that
declarant.

(5) If any provision of this chapter, the declaration, the bylaws, or the articles of
incorporation requires the consent of a secured party holding a security interest in a unit as
a condition for the approval or effectiveness of an amendment to the declaration, the bylaws,
or the articles of incorporation, the consent is deemed to be granted if the secured party's
written refusal to consent is not received by the association within 60 days after the secured
party receives from the association notice and a copy of the amendment, by certified United
States mail, postage prepaid and return receipt requested. If the secured party has not
otherwise provided to the association an address for notice, the association shall send the
notice to the address, if any, set forth in the recorded instrument that evidences the security
interest. This subsection shall not apply to an amendment that affects the priority of a secured
party's security interest or the ability of a secured party to foreclose its security interest. In
such cases, the number or percentage of secured parties whose consent is required by the
instrument to be amended must consent to the amendment in writing.

(6) 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.

new text begin (7) If any provision of this chapter, the declaration, the bylaws, or the articles of
incorporation requires the vote or consent of unit owners as a condition for the approval or
effectiveness of an amendment to the declaration, the bylaws, or the articles of incorporation,
the affirmative vote or consent of a unit owner is deemed to be granted if the association
sends notice and a copy of the amendment, by certified United States mail, postage prepaid
and return receipt requested, and (i) if a vote is conducted, the unit owner's vote is not cast
against the proposed amendment, or (ii) if consent is requested, the unit owner's written
refusal to consent is not received by the association within 60 days after notice is mailed.
This subsection shall not apply to any amendment that would require execution by the
association and certain unit owners pursuant to subsection (a)(2).
new text end

(b) No action to challenge the validity of an amendment or a supplemental declaration
may be brought more than two years after the amendment or supplemental declaration is
recorded.

(c) Every amendment to a declaration or supplemental 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, where
the limited common element is required by section 515B.2-110(c), to be shown on the CIC
plat, (iv) changes limited common elements to common elements if the limited common
elements are shown as limited common elements on the CIC plat, or (v) makes any other
change that creates an inconsistency between the declaration, as amended, and the CIC plat,
then an amendment to the CIC plat reflecting the change shall be recorded.

new text begin (d) The association may petition the district court of any county in which any portion
of the common interest community is located for an order reducing the percentage of
affirmative votes or consents necessary for an amendment to the declaration, bylaws, or
articles of incorporation, subject to the following qualifications:
new text end

new text begin (1) The petition shall describe the reason for the amendment, the approval requirements
based on the governing documents and applicable law, the effort that has been made to
solicit approval of the association members, the number of affirmative votes or consents
actually received, the number of negative votes or denials actually received, the number or
percentage of affirmative votes or consents required to effect the amendment, and other
matters the petitioner considers relevant to the court's determination. The petition shall also
contain, as exhibits thereto, copies of all of the following: (i) the governing documents; (ii)
the complete text of the amendment; (iii) copies of any notice and solicitation materials
utilized in the solicitation of member approvals; and (iv) any other documentation that the
petitioner believes will be useful to the court in deciding whether to grant the petition.
new text end

new text begin (2) Upon filing the petition, the association shall contact the court administrator to obtain
a hearing date not less than 90 days after the date of filing the petition.
new text end

new text begin (3) Not less than 15 days prior to the date of the hearing, the association shall serve a
copy of the petition, excluding the exhibits, and notice of the hearing date on all members
of the association in the same manner as service of a summons by personal service, or by
publication in circumstances in which service of a summons by publication would be allowed
under the Minnesota Rules of Civil Procedure. Notwithstanding the foregoing, to avoid
unnecessary expenses of service, the association may obtain from any member of the
association a signed waiver of service (i) acknowledging receipt of a copy of the petition,
excluding the exhibits, and notice of the hearing date, and (ii) waiving service thereof.
new text end

new text begin (4) The court may grant the petition if it finds all of the following:
new text end

new text begin (i) each member of the association was served with a copy of the petition, excluding the
exhibits, and notice of the hearing date not less than 15 days prior to the date of the hearing,
or waived service thereof, pursuant to subsection (d)(3);
new text end

new text begin (ii) each secured party that is entitled to notice of the proposed amendment under the
terms of the declaration, bylaws, or articles of incorporation, if any, either consented to the
amendment, is deemed to have consented to the amendment pursuant to subsection (a)(5),
or received a copy of the petition, excluding the exhibits, and notice of the hearing date not
less than 15 days prior to the date of the hearing;
new text end

new text begin (iii) the association conducted a vote or requested the consent of the members regarding
the proposed amendment in accordance with the declaration, the bylaws, the articles of
incorporation, this chapter, and any other applicable law;
new text end

new text begin (iv) a reasonably diligent effort was made to permit all eligible members to vote, or to
grant or deny consent, regarding the proposed amendment;
new text end

new text begin (v) the amendment was approved by the affirmative vote or consent of unit owners of
units to which at least 67 percent of the votes in the association are allocated, or if all of the
units are restricted to nonresidential use, by the affirmative vote or consent of unit owners
of units to which a majority of the votes in the association are allocated;
new text end

new text begin (vi) the amendment is reasonable; and
new text end

new text begin (vii) granting the petition is not improper for any reason stated in subsection (d)(6).
new text end

new text begin (5) If the court makes the findings required by subsection (d)(4), any order issued pursuant
to this section may confirm the amendment as being validly approved on the basis of the
affirmative votes or consents actually received, or the order may dispense with any
requirement relating to quorums or to the number or percentage of votes or consents needed
for approval of the amendment that would otherwise exist under the governing documents.
new text end

new text begin (6) Subsections (d)(1) to (5), inclusive, notwithstanding, the court shall not be empowered
by this subsection to approve any amendment that:
new text end

new text begin (i) would require execution by the association and certain unit owners pursuant to
subsection (a)(2), unless the association and unit owners execute the amendment;
new text end

new text begin (ii) would require the unanimous written consent of the unit owners pursuant to subsection
(a)(3);
new text end

new text begin (iii) would eliminate any special rights, preferences, or privileges designated in the
declaration as belonging to the declarant, without the consent of the declarant; or
new text end

new text begin (iv) would impair the security interest of a secured party without the approval of the
percentage of secured parties specified in the declaration, if the declaration requires the
approval of a specified percentage of secured parties.
new text end

new text begin (7) An amendment to a declaration is not effective pursuant to this subsection until the
court order and amendment have been recorded in every county in which a portion of the
common interest community is located. Upon recordation of the amendment and court order,
the declaration, as amended in accordance with this section, shall have the same force and
effect as if the amendment were adopted in compliance with every requirement imposed
by this chapter and the declaration.
new text end