1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to real property; amending the Minnesota 1.3 Common Interest Ownership Act; amending Minnesota 1.4 Statutes 2004, sections 515B.1-102; 515B.1-103; 1.5 515B.1-106; 515B.1-107; 515B.1-116; 515B.2-101; 1.6 515B.2-102; 515B.2-104; 515B.2-106; 515B.2-108; 1.7 515B.2-110; 515B.2-111; 515B.2-112; 515B.2-113; 1.8 515B.2-118; 515B.2-119; 515B.2-121; 515B.2-123; 1.9 515B.2-124; 515B.3-101; 515B.3-102; 515B.3-103; 1.10 515B.3-105; 515B.3-106; 515B.3-110; 515B.3-112; 1.11 515B.3-113; 515B.3-114; 515B.3-115; 515B.3-116; 1.12 515B.3-117; 515B.3-120; 515B.4-101; 515B.4-102; 1.13 515B.4-105; 515B.4-106; 515B.4-107; 515B.4-108; 1.14 515B.4-109; 515B.4-111; 515B.4-115. 1.15 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.16 Section 1. Minnesota Statutes 2004, section 515B.1-102, is 1.17 amended to read: 1.18 515B.1-102 [APPLICABILITY.] 1.19 (a) Except as provided in this section, this chapter, and 1.20 not chapters 515 and 515A, applies to all common interest 1.21 communities created within this state on and after June 1, 1994. 1.22 (b) The applicability of this chapter to common interest 1.23 communities created prior to June 1, 1994, shall be as follows: 1.24 (1) This chapter shall apply to condominiums created under 1.25 chapter 515A with respect to events and circumstances occurring 1.26 on and after June 1, 1994; provided (i) that this chapter shall 1.27 not invalidate the declarations, bylaws or condominium plats of 1.28 those condominiums, and (ii) that chapter 515A, and not this 1.29 chapter, shall govern all rights and obligations of a declarant 1.30 of a condominium created under chapter 515A, and the rights and 2.1 claims of unit owners against that declarant. 2.2 (2) The following sections in this chapter apply to 2.3 condominiums created under chapter 515: 515B.1-104 (Variation 2.4 by Agreement); 515B.1-105 (Separate Titles and Taxation); 2.5 515B.1-106 (Applicability of Local Ordinances, Regulations, and 2.6 Building Codes); 515B.1-107 (Eminent Domain); 515B.1-108 2.7 (Supplemental General Principles of Law Applicable); 515B.1-109 2.8 (Construction Against Implicit Repeal); 515B.1-112 2.9 (Unconscionable Agreement or Term of Contract); 515B.1-113 2.10 (Obligation of Good Faith); 515B.1-114 (Remedies to be Liberally 2.11 Administered); 515B.1-115 (Notice); 515B.1-116 (Recording); 2.12 515B.2-103 (Construction and Validity of Declaration and 2.13 Bylaws); 515B.2-104 (Description of Units); 515B.2-108(d) 2.14 (Allocation of Interests); 515B.2-109(c) (Common Elements and 2.15 Limited Common Elements); 515B.2-112 (Subdivision or Conversion 2.16 of Units); 515B.2-113 (Alteration of Units); 515B.2-114 2.17 (Relocation of Boundaries Between Adjoining Units); 515B.2-115 2.18 (Minor Variations in Boundaries); 515B.2-118 (Amendment of 2.19 Declaration); 515B.2-119 (Termination of Common Interest 2.20 Community); 515B.3-102 (Powers of Unit Owners' Association); 2.21 515B.3-103(a), (b), and (g) (Board; Directors and Officers; 2.22 Period of Declarant Control); 515B.3-107 (Upkeep of Common 2.23 Interest Community); 515B.3-108 (Meetings); 515B.3-109 2.24 (Quorums); 515B.3-110 (Voting; Proxies); 515B.3-111 (Tort and 2.25 Contract Liability); 515B.3-112 (Conveyance or Encumbrance of 2.26 Common Elements); 515B.3-113 (Insurance); 515B.3-114 (Reserves; 2.27 Surplus Funds); 515B.3-115 (c), (e), (f), (g), (h), and (i) 2.28 (Assessments for Common Expenses); 515B.3-116 (Lien for 2.29 Assessments); 515B.3-117 (Other Liens); 515B.3-118 (Association 2.30 Records); 515B.3-119 (Association as Trustee); 515B.3-121 2.31 (Accounting Controls); 515B.4-107 (Resale of Units); 515B.4-108 2.32 (Purchaser's Right to Cancel Resale); and 515B.4-116 (Rights of 2.33 Action; Attorney's Fees). Section 515B.1-103 (Definitions) 2.34 shall apply to the extent necessary in construing any of the 2.35 sections referenced in this section. Sections 515B.1-105, 2.36 515B.1-106, 515B.1-107, 515B.1-116, 515B.2-103, 515B.2-104, 3.1 515B.2-118, 515B.3-102, 515B.3-110, 515B.3-111, 515B.3-113, 3.2 515B.3-116, 515B.3-117, 515B.3-118, 515B.3-121, 515B.4-107, 3.3 515B.4-108, and 515B.4-116 apply only with respect to events and 3.4 circumstances occurring on and after June 1, 1994. All other 3.5 sections referenced in this section apply only with respect to 3.6 events and circumstances occurring after July 31, 1999. A 3.7 section referenced in this section does not invalidate the 3.8 declarations, bylaws or condominium plats of condominiums 3.9 created before August 1, 1999. But all sections referenced in 3.10 this section prevail over the declarations, bylaws, CIC plats, 3.11 rules and regulations under them, of condominiums created before 3.12 August 1, 1999, except to the extent that this chapter defers to 3.13 the declarations, bylaws, CIC plats, or rules and regulations 3.14 issued under them. 3.15 (3) This chapter shall not apply to cooperatives and 3.16 planned communities created prior to June 1, 1994; except by 3.17 election pursuant to subsection (d), and except that sections 3.18 515B.1-116, subsections (a), (c), (d), (e), (f), and (h), 3.19 515B.4-107, and 515B.4-108, apply to all planned communities and 3.20 cooperatives regardless of when they are created, unless they 3.21 are exempt under subsection (e). 3.22 (c) This chapter shall not invalidate any amendment to the 3.23 declaration, bylaws or condominium plat of any condominium 3.24 created under chapter 515 or 515A if the amendment was recorded 3.25 before June 1, 1994. Any amendment recorded on or after June 1, 3.26 1994, shall be adopted in conformity with the procedures and 3.27 requirements specified by those instruments and by this 3.28 chapter. If the amendment grants to any person any rights, 3.29 powers or privileges permitted by this chapter, all correlative 3.30 obligations, liabilities and restrictions contained in this 3.31 chapter shall also apply to that person. 3.32 (d) Any condominium created under chapter 515, any planned 3.33 community or cooperative which would be exempt from this chapter 3.34 under subsection (e), or any planned community or cooperative 3.35 created prior to June 1, 1994, may elect to be subject to this 3.36 chapter, as follows: 4.1 (1) The election shall be accomplished by recording a 4.2 declaration or amended declaration, and a new or amended CIC 4.3 plat where required, and by approving bylaws or amended bylaws, 4.4 which conform to the requirements of this chapter, and which, in 4.5 the case of amendments, are adopted in conformity with the 4.6 procedures and requirements specified by the existing 4.7 declaration and bylaws of the common interest community, and by 4.8 any applicable statutes. 4.9 (2) In a condominium, the preexisting condominium plat 4.10 shall be the CIC plat and an amended CIC plat shall be required 4.11 only if the amended declaration or bylaws contain provisions 4.12 inconsistent with the preexisting condominium plat. The 4.13 condominium's CIC number shall be the apartment ownership number 4.14 or condominium number originally assigned to it by the recording 4.15 officer. In a cooperative in which the unit owners' interests 4.16 are characterized as real estate, a CIC plat shall be required. 4.17 In a planned community, the preexisting plat recorded pursuant 4.18 to chapter 505, 508, or 508A, or the part of the plat upon which 4.19 the common interest community is located, shall be the CIC plat. 4.20 (3) The amendment shall
conform to the requirements of4.21 comply with section 515B.2-118 (d)(a)(3). 4.22 (4) Except as permitted by paragraph (3), no declarant, 4.23 affiliate of declarant, association, master association nor unit 4.24 owner may acquire, increase, waive, reduce or revoke any 4.25 previously existing warranty rights or causes of action that one 4.26 of said persons has against any other of said persons by reason 4.27 of exercising the right of election under this subsection. 4.28 (5) A common interest community which elects to be subject 4.29 to this chapter may, as a part of the election process, change 4.30 its form of ownership by complying with the requirements of4.31 section 515B.2-123. 4.32 (e) Except as otherwise provided in this subsection, this 4.33 chapter shall not apply, except by election pursuant to 4.34 subsection (d), to the following: 4.35 (1) a planned community or cooperativewhich consists of 124.36 or fewertwo units subject to the same declaration, which 5.1 utilizes a common interest community plat complying with section 5.2 515B.2-110(d)(1) and (2), which is not subject to any rights 5.3 to subdivide or convert units or to add additional real estate, 5.4 and which willis not besubject to a master association; 5.5 (2) a common interest community where the units consist 5.6 solely of separate parcels of real estate designed or utilized 5.7 for detached single family dwellings or agricultural purposes, 5.8 and where the association or a master association has no 5.9 obligation to maintain any building containing a dwelling or any 5.10 agricultural building; 5.11 (3) a cooperative where, at the time of creation of the 5.12 cooperative, the unit owners' interests in the dwellings as 5.13 described in the declaration consist solely of proprietary 5.14 leases having an unexpired term of fewer than 20 years, 5.15 including renewal options; 5.16 (4) planned communities utilizing a common interest 5.17 community plat complying with section 515B.2-110(d)(1) and (2) 5.18 and cooperatives, which are limited by the declaration to 5.19 nonresidential use; or 5.20 (5) real estate subject only to an instrument or 5.21 instruments filed primarily for the purpose of creating or 5.22 modifying rights with respect to access, utilities, parking, 5.23 ditches, drainage, or irrigation. 5.24 (f) Section 515B.1-106 shall apply to all common interest 5.25 communities. 5.26 Sec. 2. Minnesota Statutes 2004, section 515B.1-103, is 5.27 amended to read: 5.28 515B.1-103 [DEFINITIONS.] 5.29 In the declaration and bylaws, unless specifically provided 5.30 otherwise or the context otherwise requires, and in this chapter: 5.31 (1) "Additional real estate" means real estate that may be 5.32 added to a flexible common interest community. 5.33 (2) "Affiliate of a declarant" means any person who 5.34 controls, is controlled by, or is under common control with a 5.35 declarant. 5.36 (A) A person "controls" a declarant if the person (i) is a 6.1 general partner, officer, director, or employer of the 6.2 declarant, (ii) directly or indirectly or acting in concert with 6.3 one or more other persons, or through one or more subsidiaries, 6.4 owns, controls, holds with power to vote, or holds proxies 6.5 representing, more than 20 percent of the voting interest in the 6.6 declarant, (iii) controls in any manner the election of a 6.7 majority of the directors of the declarant, or (iv) has 6.8 contributed more than 20 percent of the capital of the declarant. 6.9 (B) A person "is controlled by" a declarant if the 6.10 declarant (i) is a general partner, officer, director, or 6.11 employer of the person, (ii) directly or indirectly or acting in 6.12 concert with one or more other persons, or through one or more 6.13 subsidiaries, owns, controls, holds with power to vote, or holds 6.14 proxies representing, more than 20 percent of the voting 6.15 interest in the person, (iii) controls in any manner the 6.16 election of a majority of the directors of the person, or (iv) 6.17 has contributed more than 20 percent of the capital of the 6.18 person. 6.19 (C) Control does not exist if the powers described in this 6.20 subsection are held solely as a security interest and have not 6.21 been exercised. 6.22 (3) "Allocated interests" means the following interests 6.23 allocated to each unit: (i) in a condominium, the undivided 6.24 interest in the common elements, the common expense liability, 6.25 and votes in the association; (ii) in a cooperative, the common 6.26 expense liability and the ownership interest and votes in the 6.27 association; and (iii) in a planned community, the common 6.28 expense liability and votes in the association. 6.29 (4) "Association" means the unit owners' association 6.30 organized under section 515B.3-101. 6.31 (5) "Board" means the body, regardless of name, designated 6.32 in the articles of incorporation, bylaws or declaration to act 6.33 on behalf of the association, or on behalf of a master 6.34 association when so identified. 6.35 (6) "CIC plat" means a common interest community plat 6.36 described in section 515B.2-110. 7.1 (7) "Common elements" means all portions of the common 7.2 interest community other than the units. 7.3 (8) "Common expenses" means expenditures made or 7.4 liabilities incurred by or on behalf of the association, or 7.5 master association when so identified, together with any 7.6 allocations to reserves. 7.7 (9) "Common expense liability" means the liability for 7.8 common expenses allocated to each unit pursuant to section 7.9 515B.2-108. 7.10 (10) "Common interest community" or "CIC" means contiguous 7.11 or noncontiguous real estate within Minnesota that is subject to 7.12 an instrument which obligates persons owning a separately 7.13 described parcel of the real estate, or occupying a part of the 7.14 real estate pursuant to a proprietary lease, by reason of their 7.15 ownership or occupancy, to pay for (i) real estate taxes levied 7.16 against; (ii) insurance premiums payable with respect to; (iii) 7.17 maintenance of; or (iv) construction, maintenance, repair or 7.18 replacement of improvements located on, one or more parcels or 7.19 parts of the real estate other than the parcel or part that the 7.20 person owns or occupies. Real estate which satisfies the 7.21 definition of a common interest community is a common interest 7.22 community whether or not it is subject to this chapter. Real 7.23 estate subject to a master association, regardless of when the 7.24 master association was formed, shall not collectively constitute 7.25 a separate common interest community unless so stated in the 7.26 master declaration recorded against the real estate pursuant to 7.27 section 515B.2-121, subsection (f)(1). 7.28 (11) "Condominium" means a common interest community in 7.29 which (i) portions of the real estate are designated as units, 7.30 (ii) the remainder of the real estate is designated for common 7.31 ownership solely by the owners of the units, and (iii) undivided 7.32 interests in the common elements are vested in the unit owners. 7.33 (12) "Conversion property" means real estate on which is 7.34 located a building that at any time within two years before 7.35 creation of the common interest community was occupied as a7.36 residencefor residential use wholly or partially by persons 8.1 other than purchasers and persons who occupy with the consent of 8.2 purchasers. 8.3 (13) "Cooperative" means a common interest community in 8.4 which the real estate is owned by an association, each of whose 8.5 members is entitled by virtue of the member's ownership interest 8.6 in the association to a proprietary lease. 8.7 (14) "Dealer" means a person in the business of selling 8.8 units for the person's own account. 8.9 (15) "Declarant" means: 8.10 (i) if the common interest community has been created, (A) 8.11 any person who has executed a declaration, or an amendment to a 8.12 declaration to add additional real estate, except secured 8.13 parties, persons whose interests in the real estate will not be 8.14 transferred to unit owners, or, in the case of a leasehold 8.15 common interest community, a lessor who possesses no special 8.16 declarant rights and who is not an affiliate of a declarant who 8.17 possesses special declarant rights, or (B) any person who 8.18 reserves, or succeeds under section 515B.3-104 to any special 8.19 declarant rights; or 8.20 (ii) any person or persons acting in concert who have 8.21 offered prior to creation of the common interest community to 8.22 transfer their interest in a unit to be created and not 8.23 previously transferred. 8.24 (16) "Declaration" means any instrument, however 8.25 denominated, including any amendment to the instrument,that 8.26 creates a common interest community. 8.27 (17) "Dispose" or "disposition" means a voluntary transfer 8.28 to a purchaser of any legal or equitable interest in the common 8.29 interest community, but the term does not include the transfer 8.30 or release of a security interest. 8.31 (18) "Flexible common interest community" means a common 8.32 interest community to which additional real estate may be added. 8.33 (19) "Leasehold common interest community" means a common 8.34 interest community in which all or a portion of the real estate 8.35 is subject to a lease the expiration or termination of which 8.36 will terminate the common interest community or reduce its size. 9.1 (20) "Limited common element" means a portion of the common 9.2 elements allocated by the declaration or by operation of section 9.3 515B.2-102(d) or (f) for the exclusive use of one or more but 9.4 fewer than all of the units. 9.5 (21) "Master association" means an entity created on or 9.6 after June 1, 1994, that directly or indirectly exercises any of 9.7 the powers set forth in section 515B.3-102 on behalf of one or 9.8 more members described in section 515B.2-121(b), (i), (ii) or 9.9 (iii), whether or not it also exercises those powers on behalf 9.10 of one or more property ownersowner's associations described in 9.11 section 515B.2-121(b)(iv). A person (i) hired by an association 9.12 to perform maintenance, repair, accounting, bookkeeping or 9.13 management services, or (ii) granted authority under an 9.14 instrument recorded primarily for the purpose of creating rights 9.15 or obligations with respect to utilities, access, drainage, or 9.16 recreational amenities, is not, solely by reason of that 9.17 relationship, a master association. 9.18 (22) "Master declaration" means a written instrument, 9.19 however named, (i) recorded on or after June 1, 1994, against 9.20 property subject to powers exercised by a master association and 9.21 (ii) satisfying the requirements ofcomplying with section 9.22 515B.2-121, subsection (f)(1). 9.23 (23) "Period of declarant control" means the time period 9.24 provided for in section 515B.3-103(c) during which the declarant 9.25 may appoint and remove officers and directors of the association. 9.26 (24) "Person" means an individual, corporation, limited 9.27 liability company, partnership, trustee under a trust, personal 9.28 representative, guardian, conservator, government, governmental 9.29 subdivision or agency, or other legal or commercial entity 9.30 capable of holding title to real estate. 9.31 (25) "Planned community" means a common interest community 9.32 that is not a condominium or a cooperative. A condominium or 9.33 cooperative may be a part of a planned community. 9.34 (26) "Proprietary lease" means an agreement with a 9.35 cooperative association whereby a member of the association is 9.36 entitled to exclusive possession of a unit in the cooperative. 10.1 (27) "Purchaser" means a person, other than a declarant, 10.2 who by means of a voluntary transfer acquires a legal or 10.3 equitable interest in a unit other than (i) a leasehold interest 10.4 of less than 20 years, including renewal options, or (ii) a 10.5 security interest. 10.6 (28) "Real estate" means any fee simple, leasehold or other 10.7 estate or interest in, over, or under land, including 10.8 structures, fixtures, and other improvements and interests that 10.9 by custom, usage, or law pass with a conveyance of land though 10.10 not described in the contract of sale or instrument of 10.11 conveyance. "Real estate" may include spaces with or without 10.12 upper or lower boundaries, or spaces without physical boundaries. 10.13 (29) "Residential use" means use as a dwelling, whether 10.14 primary, secondary or seasonal, but not transient use such as 10.15 hotels or motels. 10.16 (30) "Secured party" means the person owning a security 10.17 interest as defined in paragraph (31). 10.18 (31) "Security interest" means a perfected interest in real 10.19 estate or personal property, created by contract or conveyance, 10.20 which secures payment or performance of an obligation. The term 10.21 includes a mortgagee's interest in a mortgage, a vendor's 10.22 interest in a contract for deed, a lessor's interest in a lease 10.23 intended as security, a holder's interest in a sheriff's 10.24 certificate of sale during the period of redemption, an 10.25 assignee's interest in an assignment of leases or rents intended 10.26 as security, a lender's interest in a cooperative share loan, a 10.27 pledgee's interest in the pledge of an ownership interest, or 10.28 any other interest intended as security for an obligation under 10.29 a written agreement. 10.30 (32) "Special declarant rights" means rights reserved in 10.31 the declaration for the benefit of a declarant to: 10.32 (i) complete improvements indicated on the CIC plat, 10.33 planned by the declarant consistent with the disclosure 10.34 statement or authorized by the municipality in which the CIC is 10.35 located; 10.36 (ii) add additional real estate to a common interest 11.1 community; 11.2 (iii) subdivide or combine units, or convert units into 11.3 common elements, limited common elements and/or units; 11.4 (iv) maintain sales offices, management offices, signs 11.5 advertising the common interest community, and models; 11.6 (v) use easements through the common elements for the 11.7 purpose of making improvements within the common interest 11.8 community or any additional real estate; 11.9 (vi) create a master association and provide for the 11.10 exercise of authority by the master association over the common 11.11 interest community or its unit owners; 11.12 (vii) merge or consolidate a common interest community with 11.13 another common interest community of the same form of ownership; 11.14 or 11.15 (viii) appoint or remove any officer or director of the 11.16 association, or the master association where applicable, during 11.17 any period of declarant control. 11.18 (33) "Time share" means a right to occupy a unit or any of 11.19 several units during three or more separate time periods over a 11.20 period of at least three years, including renewal options, 11.21 whether or not coupled with an estate or interest in a common 11.22 interest community or a specified portion thereof. 11.23 (34) "Unit" means a physical portion of a common interest 11.24 community the boundaries of which are described in the common 11.25 interest community's declaration and which is intended for 11.26 separate ownership or separate occupancy pursuant to a 11.27 proprietary lease. 11.28 (35) "Unit identifier" means English letters or Arabic 11.29 numerals, or a combination thereof, which identify only one unit 11.30 in a common interest community and which meet the requirements 11.31 of section 515B.2-104. 11.32 (36) "Unit owner" means a declarant or other person who 11.33 owns a unit, a lessee under a proprietary lease, or a lessee of 11.34 a unit in a leasehold common interest community whose lease 11.35 expires simultaneously with any lease the expiration or 11.36 termination of which will remove the unit from the common 12.1 interest community, but does not include a secured party. In a 12.2 common interest community, the declarant is the unit owner of a 12.3 unit until that unit has been conveyed to another person. 12.4 Sec. 3. Minnesota Statutes 2004, section 515B.1-106, is 12.5 amended to read: 12.6 515B.1-106 [APPLICABILITY OF LOCAL REQUIREMENTS.] 12.7 (a) Except as provided in subsections (b) and (c), a 12.8 zoning, subdivision, building code, or other real estate use 12.9 law, ordinance, charter provision, or regulation may not 12.10 directly or indirectly prohibit the common interest community 12.11 form of ownership or impose any requirement upon a common 12.12 interest community, upon the creation or disposition of a common 12.13 interest community or upon any part of the common interest 12.14 community conversion process which it would not impose upon a 12.15 physically similar development under a different form of 12.16 ownership. Otherwise, no provision of this chapter invalidates 12.17 or modifies any provision of any zoning, subdivision, building 12.18 code, or other real estate use law, ordinance, charter 12.19 provision, or regulation. 12.20 (b) Subsection (a) shall not apply to any ordinance, rule, 12.21 regulation, charter provision or contract provision relating to 12.22 the financing of housing construction, rehabilitation, or 12.23 purchases provided by or through a housing finance program 12.24 established and operated pursuant to state or federal law by a 12.25 state or local agency or local unit of government. 12.26 (c) A statutory or home rule charter city, pursuant to an 12.27 ordinance or charter provision establishing standards to be 12.28 applied uniformly within its jurisdiction, may prohibit or 12.29 impose reasonable conditions upon the conversion of 12.30 buildings occupied wholly or partially for residential use to 12.31 the common interest community form of ownership only if there 12.32 exists within the city a significant shortage of suitable rental 12.33 dwellings available to low and moderate income individuals or 12.34 families or to establish or maintain the city's eligibility for 12.35 any federal or state program providing direct or indirect 12.36 financial assistance for housing to the city. Prior to the 13.1 adoption of an ordinance pursuant to the authority granted in 13.2 this subsection, the city shall conduct a public hearing. Any 13.3 ordinance or charter provision adopted pursuant to this 13.4 subsection shall not apply to any existing or proposed 13.5 conversion common interest community (i) for which a bona fide 13.6 loan commitment for a consideration has been issued by a lender 13.7 and is in effect on the date of adoption of the ordinance or 13.8 charter provision, or (ii) for which a notice of conversion or 13.9 intent to convert required by section 515B.4-111, containing a 13.10 termination of tenancy, has been given to at least 75 percent of 13.11 the tenants and subtenants in possession prior to the date of 13.12 adoption of the ordinance or charter provision. 13.13 (d) For purposes of providing marketable title, a statement 13.14 in the declaration that the common interest community is not 13.15 subject to an ordinance or that any conditions required under an 13.16 ordinance have been complied with shall be prima facie evidence 13.17 that the common interest community was not created in violation 13.18 of the ordinance. 13.19 (e) A violation of an ordinance or charter provision 13.20 adopted pursuant to the provisions of subsection (b) or (c) 13.21 shall not affect the validity of a common interest community. 13.22 This subsection shall not be construed to in any way limit the 13.23 power of a city to enforce the provisions of an ordinance or 13.24 charter provision adopted pursuant to subsection (b) or (c). 13.25 (f) Any ordinance or charter provision enacted hereunder 13.26 shall not be effective for a period exceeding 18 months. 13.27 Sec. 4. Minnesota Statutes 2004, section 515B.1-107, is 13.28 amended to read: 13.29 515B.1-107 [EMINENT DOMAIN.] 13.30 (a) If a unit is acquired by eminent domain, or if part of 13.31 a unit is acquired by eminent domain leaving the unit owner with 13.32 a remnant which may not practically or lawfully be used for any 13.33 material purpose permitted by the declaration, the award shall 13.34 compensate the unit owner and secured party in the unit as their 13.35 interests may appear, whether or not any common element interest 13.36 is acquired. Upon acquisition, unless the order or final 14.1 certificate otherwise provides, that unit's allocated interests 14.2 are automatically reallocated among the remaining units in 14.3 proportion to their respective allocated interests prior to the 14.4 taking, and the association shall promptly prepare, execute, and 14.5 record an amendment to the declaration reflecting the 14.6 allocations. Any remnant of a unit remaining after part of a 14.7 unit is taken under this subsection is thereafter a common 14.8 element. 14.9 (b) Except as provided in subsection (a), if part of a unit 14.10 is acquired by eminent domain, the award shall compensate the 14.11 unit owner and secured party for the reduction in value of the 14.12 unit and its interest in the common elements, whether or not any 14.13 common elements are acquired. Upon acquisition, unless the 14.14 order or final certificate otherwise provides, (i) that unit's 14.15 allocated interests are reduced in proportion to the reduction 14.16 in the size of the unit, or on any other basis specified in the 14.17 declaration and (ii) the portion of the allocated interests 14.18 divested from the partially acquired unit are automatically 14.19 reallocated to that unit and to the remaining units in 14.20 proportion to the respective allocated interests of those units 14.21 before the taking, with the partially acquired unit 14.22 participating in the reallocation on the basis of its reduced 14.23 allocated interests. 14.24 (c) If part of the common elements is acquired by eminent 14.25 domain, the portion of the award attributable to the common 14.26 elements taken shall be paid to the association. In an eminent 14.27 domain proceeding which seeks to acquire a part of the common 14.28 elements, jurisdiction may be acquired by service of process 14.29 upon the association. Unless the declaration provides 14.30 otherwise, any portion of the award attributable to the 14.31 acquisition of a limited common element shall be equally divided 14.32 among the owners of the units to which that limited common 14.33 element was allocated at the time of acquisition and their 14.34 secured parties, as their interests may appear or as provided by 14.35 the declaration. 14.36 (d) In any eminent domain proceeding the units shall be 15.1 treated as separate parcels of real estate for valuation 15.2 purposes, regardless of the number of units subject to the 15.3 proceeding. 15.4 (e) Any distribution to a unit owner from the proceeds of 15.5 an eminent domain award shall be subject to any limitations 15.6 imposed by the declaration or bylaws. 15.7 (f) The court order or final certificate containing the 15.8 final awards shall be recorded in every county in which any 15.9 portion of the common interest community is located. 15.10 Sec. 5. Minnesota Statutes 2004, section 515B.1-116, is 15.11 amended to read: 15.12 515B.1-116 [RECORDING.] 15.13 (a) A declaration, bylaws, any amendment to a declaration 15.14 or bylaws, and any other instrument affecting a common interest 15.15 community shall be entitled to be recorded. In those counties 15.16 which have a tract index, the county recorder shall enter the 15.17 declaration in the tract index for each unit or other tract 15.18 affected. The county recorder shall not enter the declaration 15.19 in the tract index for lands described as additional real 15.20 estate, unless such lands are added to the common interest 15.21 community pursuant to section 515B.2-111. The registrar of 15.22 titles shall file the declaration in accordance with section 15.23 508.351 or 508A.351. The registrar of titles shall not file the 15.24 declaration upon certificates of title for lands described as 15.25 additional real estate, unless such lands are added to the 15.26 common interest community pursuant to section 515B.2-111. 15.27 (b) The recording officer shall upon request promptly 15.28 assign a number (CIC number) to a common interest community to 15.29 be formed or to a common interest community resulting from the 15.30 merger of two or more common interest communities. 15.31 (c) Documents recorded pursuant to this chapter shall in 15.32 the case of registered land be filed, and references to the 15.33 recording of documents shall mean filed in the case of 15.34 registered land. 15.35 (d) Subject to any specific requirements of this chapter, 15.36 if a recorded document relating to a common interest 16.1 community or a master association purports to require a certain 16.2 vote or signatures approving any restatement or amendment of the 16.3 document by a certain number or percentage of unit owners or 16.4 secured parties, and if the amendment or restatement is to be 16.5 recorded pursuant to this chapter, an affidavit of the president 16.6 or secretary of the association stating that the required vote 16.7 or signatures have been obtained shall be attached to the 16.8 document to be recorded and shall constitute prima facie 16.9 evidence of the representations contained therein. 16.10 (e) If a common interest community is located on registered 16.11 land, the recording fee for any document affecting two or more 16.12 units shall be the then-current fee for registering the document 16.13 on the certificates of title for the first ten affected 16.14 certificates and one-third of the then-current fee for each 16.15 additional affected certificate. This provision shall not apply 16.16 to recording fees for deeds of conveyance, with the exception of 16.17 deeds given pursuant to sections 515B.2-119 and 515B.3-112. The 16.18 same fees shall apply to recording any document affecting two or 16.19 more units or other parcels of real estate subject to a master 16.20 declaration. 16.21 (f) Except as permitted under this subsection, a recording 16.22 officer shall not file or record a declaration creating a new 16.23 common interest community, unless the county treasurer has 16.24 certified that the property taxes payable in the current year 16.25 for the real estate included in the proposed common interest 16.26 community have been paid. This certification is in addition to 16.27 the certification for delinquent taxes required by section 16.28 272.12. In the case of preexisting common interest communities, 16.29 the recording officer shall accept, file, and record the 16.30 following instruments, without requiring a certification as to 16.31 the current or delinquent taxes on any of the units in the 16.32 common interest community: (i) a declaration subjecting the 16.33 common interest community to this chapter; (ii) a declaration 16.34 changing the form of a common interest community pursuant to 16.35 section 515B.2-123; or (iii) an amendment to or restatement of 16.36 the declaration, bylaws, or CIC plat. In order for an 17.1 instrument to be accepted and recorded under the preceding 17.2 sentence, the instrument must not create or change unit or 17.3 common area boundaries. 17.4 Sec. 6. Minnesota Statutes 2004, section 515B.2-101, is 17.5 amended to read: 17.6 515B.2-101 [CREATION OF COMMON INTEREST COMMUNITIES.] 17.7 (a) On and after June 1, 1994, a common interest community 17.8 may be created only as follows: 17.9 (1) A condominium may be created only by recording a 17.10 declaration. 17.11 (2) A cooperative may be created only by recording a 17.12 declaration and by recording a conveyance of the real estate 17.13 subject to that declaration to the association. 17.14 (3) A planned community which includes common elements may 17.15 be created only by simultaneously recording a declaration and a 17.16 conveyance of the common elements subject to that declaration to 17.17 the association. 17.18 (4) A planned community without common elements may be 17.19 created only by recording a declaration. 17.20 (b) Except as otherwise expressly provided in this chapter, 17.21 the declaration shall be executed by all persons whose interests 17.22 in the real estate will be conveyed to unit owners or to the 17.23 association, except vendors under contracts for deed, and by 17.24 every lessor of a lease the expiration or termination of which 17.25 will terminate the common interest community. The declaration 17.26 shall be recorded in every county in which any portion of the 17.27 common interest community is located. Failure of any party not 17.28 required to execute a declaration, but having a recorded 17.29 interest in the common interest community, to join in the 17.30 declaration shall have no effect on the validity of the common 17.31 interest community; provided that the party is not bound by the 17.32 declaration until that party acknowledges the existence of the 17.33 common interest community in a recorded instrument. 17.34 (c) In a condominium, a planned community utilizing a CIC 17.35 plat complying with section 515B.2-110(c), or real estatea 17.36 cooperative where the unit boundaries are delineated by 18.1 a physicalstructure, a declaration, or an amendment to a 18.2 declaration adding units, shall not be recorded unless allthe 18.3 structural components of the structures containing the units and 18.4 the mechanical systems serving more than one unit in all18.5 buildings containing the units thereby created, but not the 18.6 units, are substantially completed, as evidenced by a recorded 18.7 certificate executed by a registered engineer or architect. 18.8 (d) A project which (i) meets the definition of a "common 18.9 interest community" in section 515B.1-103(10), (ii) is created 18.10 after May 31, 1994, and (iii) is not exempt under section 18.11 515B.1-102(e), is subject to this chapter even if this or other 18.12 sections of the chapter have not been complied with, and the 18.13 declarant and all unit owners are bound by all requirements and 18.14 obligations of this chapter. 18.15 (e) The association shall be incorporated pursuant to 18.16 section 515B.3-101 and the CIC plat shall be recorded as and if 18.17 required by section 515B.2-110. 18.18 Sec. 7. Minnesota Statutes 2004, section 515B.2-102, is 18.19 amended to read: 18.20 515B.2-102 [UNIT BOUNDARIES.] 18.21 (a) The declaration shall describe the boundaries of the 18.22 units as provided in section 515B.2-105(5). The boundaries need 18.23 not be delineated by a physical structure. The unit may consist 18.24 of noncontiguous portions of the common interest community. 18.25 (b) In a condominium or, a cooperative, or a planned 18.26 community utilizing a CIC plat complying with section 18.27 515B.2-110(c), except as the declaration otherwise provides, if 18.28 the walls, floors, or ceilings of a unit are designated as its 18.29 boundaries, then the boundaries shall be the interior, 18.30 unfinished surfaces of the perimeter walls, floors and, 18.31 ceilings, doors, windows, and door and window frames of the unit. 18.32 All paneling, tiles, wallpaper, paint, floor covering, and any 18.33 other finishing materials applied to the interior surfaces of 18.34 the perimeter walls, floors or ceilings, are a part of the unit, 18.35 and all other portions of the perimeter walls, floors, or18.36 ceilings, including perimeterdoors and, windows, and their19.1 door and window frames, are a part of the common elements. 19.2 (c) In a planned community , except as the declaration19.3 otherwise providesutilizing a CIC plat complying with section 19.4 515B.2-110(d)(1) and (2), the unit boundaries shall be 19.5 the boundary lines as designated on a plat recorded pursuant to19.6 chapter 505 or on a registered land survey filedlot lines 19.7 designated on a plat recorded pursuant to chapter 508 or19.8 508A505. 19.9 (d) If any chute, flue, duct, wire, pipe, conduit, bearing 19.10 wall, bearing column, or any other fixture serving fewer than 19.11 all units lies partially within and partially outside of 19.12 the designatedboundaries of athe unit or units served, any 19.13 portion thereof serving only that unit or units is a limited 19.14 common element allocated solely to that unit or units, and any 19.15 portion thereof serving more than one unit orany portion of the 19.16 common elements is a part of the common elements. 19.17 (e) Subject to subsection (d), all spaces, interior 19.18 partitions, and other fixtures and improvements within the 19.19 boundaries of a unit are a part of the unit. 19.20 (f) Improvements such as shutters, awnings, window boxes, 19.21 doorsteps, stoops, porches, balconies, decks, patios, perimeter 19.22 doors and windows, and their frames, constructed as part of the 19.23 original construction to serve a single unit, and authorized 19.24 replacements and modifications thereof, if located wholly or 19.25 partially outside the unit's boundaries, are limited common 19.26 elements allocated exclusively to that unit. 19.27 Sec. 8. Minnesota Statutes 2004, section 515B.2-104, is 19.28 amended to read: 19.29 515B.2-104 [DESCRIPTION OF UNITS.] 19.30 (a) A description of a unit is legally sufficient if it 19.31 sets forth (i) the unit identifier of the unit, (ii) the number 19.32 assigned to the common interest community by the recording 19.33 officer, and (iii) the county in which the unit is located. 19.34 (b) If the CIC plat for a planned community complies with 19.35 chapter 505, 508, or 508A, then a description of a unit in the 19.36 planned community is legally sufficient if it is stated in terms 20.1 of a plat or registered land survey. In planned communities 20.2 whose CIC plats comply with section 515B.2-110(c), and in all 20.3 condominiums and cooperatives created under this chapter, a unit 20.4 identifier shall contain no more than six characters, only one 20.5 of which may be a letter. 20.6 (c) A description which conforms to the requirements of20.7 complies with this section shall be deemed to include all 20.8 rights, obligations, and interests appurtenant to the unit which 20.9 were created by the declaration or bylaws, by a master 20.10 declaration, or by this chapter, whether or not those rights, 20.11 obligations, or interests are expressly described. 20.12 (d) If the CIC plat for a planned community complies with 20.13 section 515B.2-110(c) a description of the common elements is 20.14 legally sufficient if it sets forth (i) the words "common 20.15 elements," (ii) the number assigned to the common interest 20.16 community by the recording officer, and (iii) the county in 20.17 which the common elements are located. The common elements may 20.18 consist of separate parcels of real estate, in which case each 20.19 parcel shall be separately identified on the CIC plat and in any 20.20 recorded instrument referencing a separate parcel of the common 20.21 elements. 20.22 Sec. 9. Minnesota Statutes 2004, section 515B.2-106, is 20.23 amended to read: 20.24 515B.2-106 [DECLARATION OF FLEXIBLE COMMON INTEREST 20.25 COMMUNITIES.] 20.26 (a) The declaration for a flexible common interest 20.27 community shall include, in addition to the matters specified in 20.28 section 515B.2-105: 20.29 (1) a reservation of any rights to add additional real 20.30 estate; 20.31 (2) a statement of any time limit, not exceeding ten years 20.32 after the recording of the declaration, upon which any right 20.33 reserved under paragraph (1) will lapse, together with a 20.34 statement of any circumstances that will terminate the option 20.35 before the expiration of the time limit. If no time limit is 20.36 set forth in the declaration, the time limit shall be ten years 21.1 after the recording of the declaration; provided, that the time 21.2 limit may be extended by an amendment to the declaration 21.3 approved in writing by the declarant, and by the vote or written 21.4 agreement of unit owners, other than the declarant or an 21.5 affiliate of the declarant, to whose units are allocated at 21.6 least 67 percent of the votes in the association; 21.7 (3) a statement of any limitations on any rights reserved 21.8 under paragraph (1), other than limitations created by or 21.9 imposed pursuant to law; 21.10 (4) a legally sufficient description of the additional real 21.11 estate; 21.12 (5) a statement as to whether portions of any additional 21.13 real estate may be added at different times; 21.14 (6) a statement of (i) the maximum number of units, based 21.15 upon the declarant's good faith estimate, that may be created 21.16 within any additional real estate, and (ii) how many of those 21.17 units will be restricted to residential use; 21.18 (7) a statement that any buildings and units erected upon 21.19 the additional real estate, when and if added, will be 21.20 compatible with the other buildings and units in the common 21.21 interest community in terms of architectural style, quality of 21.22 construction, principal materials employed in construction, and 21.23 size, or a statement of any differences with respect to the 21.24 buildings or units, or a statement that no assurances are made 21.25 in those regards; 21.26 (8) a statement that all restrictions in the declaration 21.27 affecting use, occupancy, and alienation of units will apply to 21.28 units created in the additional real estate, when and if added, 21.29 or a statement of any differences with respect to the additional 21.30 units; 21.31 (9) a statement as to whether any assurances made in the 21.32 declaration regarding additional real estate pursuant to 21.33 paragraphs (5) through (8) will apply if the real estate is not 21.34 added to the common interest community. 21.35 (b) A declarant need not have an interest in the additional 21.36 real estate in order to identify it as such in the declaration, 22.1 and the recording officer shall index the declaration as 22.2 provided in section 515B.1-116(a). Identification of additional 22.3 real estate in the declaration does not encumber or otherwise 22.4 affect the title to the additional real estate. 22.5 Sec. 10. Minnesota Statutes 2004, section 515B.2-108, is 22.6 amended to read: 22.7 515B.2-108 [ALLOCATION OF INTERESTS.] 22.8 (a) The declaration shall allocate to each unit: 22.9 (1) in a condominium, a fraction or percentage of undivided 22.10 interests in the common elements and in the common expenses of 22.11 the association and a portion of the votes in the association; 22.12 (2) in a cooperative, an ownership interest in the 22.13 association, a fraction or percentage of the common expenses of 22.14 the association and a portion of the votes in the association; 22.15 and 22.16 (3) in a planned community, a fraction or percentage of the 22.17 common expenses of the association and a portion of the votes in 22.18 the association. 22.19 (b) The declaration shall state the formulas used to 22.20 establish allocations of interests. If the fractions or 22.21 percentages are all equal the declaration may so state in lieu 22.22 of stating the fractions or percentages. If equality is22.23 designated byThe declaration as the formula for the allocation22.24 of votes,need not allocate votes do not attachto units that 22.25 are auxiliary to other units, such as garage units or storage 22.26 units. The allocations shall not discriminate in favor of units 22.27 owned by the declarant or an affiliate of the declarant, except 22.28 as provided in sections 515B.2-121 and 515B.3-115. 22.29 (c) If units may be added to the common interest community, 22.30 the declaration shall statethe formulas to beused to 22.31 reallocate the allocated interests among all units included in 22.32 the common interest community after the addition shall be the 22.33 formulas stated in the declaration. 22.34 (d) The declaration may authorize special allocations: (i) 22.35 of unit owner votes among certain units or classes of units on 22.36 particular matters specified in the declaration, or (ii) of 23.1 common expenses among certain units or classes of units on 23.2 particular matters specified in the declaration. Special 23.3 allocations may only be used to address operational, physical or 23.4 administrative differences within the common interest 23.5 community. A declarant may not utilize special allocations for 23.6 the purpose of evading any limitation or obligation imposed on 23.7 declarants by this chapter nor may units constitute a class 23.8 because they are owned by a declarant. 23.9 (e) The sum of each category of allocated interests 23.10 allocated at any time to all the units must equal one if stated 23.11 as a fraction or 100 percent if stated as a percentage. In the 23.12 event of a discrepancy between an allocated interest and the 23.13 result derived from application of the pertinent formula, the 23.14 allocated interest prevails. 23.15 (f) In a condominium or planned community, the common 23.16 elements are not subject to partition, and any purported 23.17 conveyance, encumbrance, judicial sale, or other voluntary or 23.18 involuntary transfer of an undivided interest in the common 23.19 elements made without the unit to which that interest is 23.20 allocated is void. The granting of easements, licenses or 23.21 leases pursuant to section 515B.3-102 shall not constitute a 23.22 partition. 23.23 (g) In a cooperative, any purported conveyance, 23.24 encumbrance, judicial sale, or other voluntary or involuntary 23.25 transfer of an ownership interest in the association made 23.26 without the possessory interest in the unit to which that 23.27 interest is related is void. 23.28 Sec. 11. Minnesota Statutes 2004, section 515B.2-110, is 23.29 amended to read: 23.30 515B.2-110 [COMMON INTEREST COMMUNITY PLAT (CIC PLAT).] 23.31 (a) A CIC plat is required for condominiums and planned 23.32 communities, and cooperatives in which the unit owners' 23.33 interests are characterized as real estate. The CIC plat is a 23.34 part of the declaration in condominiums, in planned communities 23.35 utilizing a CIC plat complying with subsection (c), and in 23.36 cooperatives in which the unit owners' interests are 24.1 characterized as real estate, but need not be physically 24.2 attached to the declaration. 24.3 (1) In a condominium, or a cooperative in which the unit 24.4 owners' interests are characterized as real estate, the CIC plat 24.5 shall comply with subsection (c). 24.6 (2) In a planned community, a CIC plat which does not 24.7 comply with subsection (c) shall consist of all or part of a 24.8 subdivision plat or plats complying with subsections (d)(1) and 24.9 (d)(2). The CIC plat need not contain the number of the common 24.10 interest community and may be recorded at any time at orbefore 24.11 the time ofrecording of the declaration .; provided, that if the 24.12 CIC plat for the planned communitycomplies with subsection (c), 24.13 the number of the common interest community shall be included 24.14 and the CIC plat shall be recorded at the time of recording of 24.15 the declaration. 24.16 (3) In a cooperative in which the unit owners' interests 24.17 are characterized as personal property, a CIC plat shall not be 24.18 required. In lieu of a CIC plat, the declaration or any 24.19 amendment to it creating, converting, or subdividing units in a 24.20 personal property cooperative shall include an exhibit 24.21 containing a scale drawing of each building, identifying the 24.22 building, and showing the perimeter walls of each unit created 24.23 or changed by the declaration or any amendment to it, including 24.24 the unit's unit identifier, and its location within the building 24.25 if the building contains more than one unit. 24.26 (b) The CIC plat, or supplemental or amended CIC plat, for 24.27 condominiums, for planned communities using a plat complying 24.28 with subsection (c), and for cooperatives in which the unit 24.29 owners' interests are characterized as real estate, shall 24.30 contain certifications by a registered professional land 24.31 surveyor and registered professional architect, as to the parts 24.32 of the CIC plat prepared by each, that (i) the CIC plat 24.33 accurately depicts all information required by this section, and 24.34 (ii) the work was undertaken by, or reviewed and approved by, 24.35 the certifying land surveyor or architect. The portions of the 24.36 CIC plat depicting the dimensions of the portions of the common 25.1 interest community described in subsections (c)(8), (9), (10), 25.2 and (12), may be prepared by either a land surveyor or an 25.3 architect. The other portions of the CIC plat shall be prepared 25.4 only by a land surveyor. A certification of the CIC plat or an 25.5 amendment to it under this subsection by an architect is not 25.6 required if all parts of the CIC plat or amendment are prepared 25.7 by a land surveyor. Certification by the land surveyor or 25.8 architect does not constitute a guaranty or warranty of the 25.9 nature, suitability, or quality of construction of any 25.10 improvements located or to be located in the common interest 25.11 community. 25.12 (c) A CIC plat for a condominium, or a cooperative in which 25.13 the unit owners' interests are characterized as real estate, 25.14 shall show: 25.15 (1) the number of the common interest community, and the 25.16 boundaries, dimensions and a legally sufficient description of 25.17 the land included therein; 25.18 (2) the dimensions and location of all existing, material 25.19 structural improvements and roadways; 25.20 (3) the intended location and dimensions of any 25.21 contemplated common element improvements to be constructed 25.22 within the common interest community after the filing of the CIC 25.23 plat, labeled either "MUST BE BUILT" or "NEED NOT BE BUILT"; 25.24 (4) the location and dimensions of any additional real 25.25 estate, labeled as such, and a legally sufficient description of 25.26 the additional real estate; 25.27 (5) the extent of any encroachments by or upon any portion 25.28 of the common interest community; 25.29 (6) the location and dimensions of all recorded easements 25.30 within the land included in the common interest community 25.31 serving orburdening any portion of the common interest25.32 communityland; 25.33 (7) the distance and direction between noncontiguous 25.34 parcels of real estate; 25.35 (8) the location and dimensions of limited common elements, 25.36 except that with respect to limited common elements described in 26.1 section 515B.2-102, subsections (d) and (f), only such material 26.2 limited common elements as porches, balconies, decks, patios, 26.3 and garages shall be shown; 26.4 (9) the location and dimensions of the front, rear, and 26.5 side boundaries of each unit and that unit's unit identifier; 26.6 (10) the location and dimensions of the upper and lower 26.7 boundaries of each unit with reference to an established or 26.8 assumed datum and that unit's unit identifier; 26.9 (11) a legally sufficient description of any real estate in 26.10 which the unit owners will own only an estate for years, labeled 26.11 as "leasehold real estate"; 26.12 (12) any units which may be converted by the declarant to 26.13 create additional units or common elements identified separately. 26.14 (d) A CIC plat for a planned community either shall comply 26.15 with subsection (c), or it shall: 26.16 (1) satisfy the requirements ofcomply with chapter 505 ,26.17 508, or 508A, as applicable; and 26.18 (2) satisfycomply with the platting requirements of any 26.19 governmental authority within whose jurisdiction the planned 26.20 community is located, subject to the limitations set forth in 26.21 section 515B.1-106. 26.22 (e) If a declarant adds additional real estate, the 26.23 declarant shall record a supplemental CIC plat or plats for the 26.24 real estate being added, conforming to the requirements of this 26.25 section which apply to the type of common interest community in 26.26 question. If less than all additional real estate is being 26.27 added, the supplemental CIC plat for a condominium, a planned 26.28 community whose CIC plat complies with subsection (c), or a 26.29 cooperative in which the unit owners' interests are 26.30 characterized as real estate, shall also show the location and 26.31 dimensions of the remaining portion. 26.32 (f) If, pursuant to section 515B.2-112, a declarant 26.33 subdivides or converts any unit into two or more units, common 26.34 elements or limited common elements, or combines two or more 26.35 units, the declarant shall record an amendment to the CIC plat 26.36 showing the location and dimensions of any new units, common 27.1 elements andor limited common elements thus created. 27.2 (g) A CIC plat which complies with subsection (c) is not 27.3 subject to chapter 505. 27.4 Sec. 12. Minnesota Statutes 2004, section 515B.2-111, is 27.5 amended to read: 27.6 515B.2-111 [EXPANSION OF FLEXIBLE COMMON INTEREST 27.7 COMMUNITY.] 27.8 (a) To add additional real estate pursuant to a right 27.9 reserved under section 515B.2-106(1)515B.2-106(a)(1), the 27.10 declarant and all persons whose interests in the additional real 27.11 estate will be conveyed to unit owners or the association, 27.12 except vendors under a contract for deed, shall execute and 27.13 record an amendment to thea supplemental declaration as 27.14 provided in this section. The amendment to thesupplemental 27.15 declaration shall be titled a "supplemental declaration," shall 27.16 be limited to matters authorized by this section, and shall 27.17 include: 27.18 (1) assign a unit identifier to each unit formed in the27.19 additionala legally sufficient description of the real estate 27.20 added by the supplemental declaration; 27.21 (2) reallocatea description of the boundaries of each unit 27.22 created by the supplemental declaration, consistent with the 27.23 declaration, and the unit's unit identifier; 27.24 (3) in a planned community containing common elements, a 27.25 legally sufficient description of the common elements; 27.26 (4) a reallocation of the common element interests, votes 27.27 in the association, and common expense liabilities as 27.28 applicable, in compliance with the declaration and section 27.29 515B.2-108; 27.30 (3) describe(5) a description of any limited common 27.31 elements formed out of the additional real estate, designating 27.32 the unit to which each is allocated to the extent required by 27.33 section 515B.2-109; 27.34 (6) a statement as to whether or not the period of 27.35 declarant control has terminated, regardless of the reason for 27.36 such termination; and 28.1 (4)(7) contain such other provisions as may be reasonably28.2 an attached affidavit attesting to the giving of the notice 28.3 required by the association; andsubsection (b), if such notice 28.4 is required. 28.5 (5) conform to the applicable requirements of the28.6 declaration and the act.28.7 (b) If the period of declarant control has terminated, a 28.8 declarant shall give notice of its intention to add additional 28.9 real estate as follows:to the association (Attention: 28.10 president of the association) by a notice given in the manner 28.11 provided in section 515B.1-115 not less than 15 days prior to 28.12 recording the supplemental declaration which adds the additional 28.13 real estate. A copy of the supplemental declaration shall be 28.14 attached to the notice. The supplemental declaration may be in 28.15 proposed form; however, following notice, the supplemental 28.16 declaration shall not be changed so as to materially and 28.17 adversely affect the rights of unit owners or the association 28.18 unless a new 15-day notice is given in accordance with this 28.19 section. 28.20 (1) If the period of declarant control has expired, to the28.21 association in the same manner as service of summons in a civil28.22 action in district court at least 15 days prior to recording the28.23 amendment. A copy of the amendment shall be attached to the28.24 notice.28.25 (2) If the period of declarant control has not expired, to28.26 the unit owners by notice (one notice per unit) given in the28.27 manner provided in section 515B.1-115, not less than 15 days28.28 prior to recording the amendment, addressed to "Unit Owner28.29 Entitled to Legal Notice" at each unit or to the unit owner at28.30 such other address as may be designated by notice from the unit28.31 owner. The declarant shall provide a copy of the amendment at28.32 no cost to any unit owner within five business days of the unit28.33 owner's request, and the notice shall include a statement to28.34 that effect.28.35 (3) Proof of notice to the association or the unit owners,28.36 as the case may be, shall be attached to the recorded29.1 amendment. Following service of notice, the amendment shall not29.2 be changed so as to materially and adversely affect the rights29.3 of unit owners or the association.29.4 (c) A lien upon the additional real estate that is not also 29.5 upon the existing common interest community is a lien only upon 29.6 the units, and their respective interest in the common elements 29.7 (if any), that are created from the additional real estate. 29.8 Units within the common interest community as it existed prior 29.9 to expansion are transferred free of liens that existed only 29.10 upon the additional real estate, notwithstanding the fact that 29.11 the interest in the common elements is a portion of the entire 29.12 common interest community, including the additional real estate. 29.13 (d) If a supplemental declaration in a planned community 29.14 creates common elements, then a conveyance of the common 29.15 elements to the association shall be recorded simultaneously 29.16 with the supplemental declaration. If a supplemental 29.17 declaration adds additional real estate to a cooperative, then a 29.18 conveyance of the additional real estate to the association 29.19 shall be recorded simultaneously with the supplemental 29.20 declaration. 29.21 Sec. 13. Minnesota Statutes 2004, section 515B.2-112, is 29.22 amended to read: 29.23 515B.2-112 [SUBDIVISION, COMBINATION, OR CONVERSION OF 29.24 UNITS.] 29.25 (a) If the declaration so provides, (i) a unit owned by a29.26 person other than a declarantone or more units may be 29.27 subdivided into two or more units or combined into a lesser 29.28 number of units, or (ii) a unit or units owned exclusively by a 29.29 declarant may be subdivided, combined, or converted into twoone 29.30 or more units, limited common elements, common elements, or a 29.31 combination of units, limited common elements or common 29.32 elements , subject to subsections (b) and (c). 29.33 (b) If athe unit isor units are not owned exclusively 29.34 by a unit owner other than adeclarant, the unit ownerowners of 29.35 the units to be combined or subdivided shall preparecause to be 29.36 prepared and submitsubmitted to the association for approval an 30.1 application for an amendment to the declaration and amended CIC 30.2 plat, for the purpose of subdividing or combining the unit or 30.3 units. The application shall contain, at a minimum, a general 30.4 description of the proposed subdivision or combination, and 30.5 shall specify in detail the matters required by paragraphs30.6 (2)subsection (c)(2) and (3). The basis for disapproval of the 30.7 application by the association shall be limited to (i) health or 30.8 safety considerations, (ii) liability considerations for the 30.9 association and other unit owners, (iii) aesthetic changes to 30.10 the common elements or another unit, (iv) any material and 30.11 adverse impact on the common elements or another unit, or (v) a 30.12 failure to comply with the declaration, this chapter, or 30.13 governmental laws, ordinances, or regulations. The association 30.14 shall give written notice of its decision and required changes 30.15 to the unit owner or owners who made the application. The 30.16 association shall establish fair and reasonable procedures and 30.17 time frames for the submission and prompt processing of the 30.18 applications. 30.19 (c) If thean application under subsection (b) is approved, 30.20 the unit owner shall cause an amendment and amended CIC plat to 30.21 be prepared based upon the approved application. The amendment 30.22 shall: 30.23 (1) be executed by the association and by each unit owner 30.24 and any secured party with respect to theeach unit to be 30.25 combined or subdivided; 30.26 (2) assign a unit identifier to each unit createdresulting 30.27 from the subdivision or combination; 30.28 (3) reallocate the common element interest, votes in the 30.29 association, and common expense liability as applicable, 30.30 formerly allocated to the unit or units to be combined or 30.31 subdivided among the unit or units createdresulting from the 30.32 subdivision or combination on the basis of the formula described 30.33 in the declaration; and 30.34 (4) contain such other provisions as may be reasonably30.35 required by the association; and30.36 (5)conform to the requirements of the declaration and this 31.1 chapter. The basis for disapproval shall be limited to (i)31.2 structural or safety considerations, (ii) liability31.3 considerations for the association and other unit owners, (iii)31.4 aesthetic considerations if the changes affect exterior portions31.5 of a structure, or (iv) a failure to comply with the31.6 declaration, this chapter, or governmental laws, ordinances or31.7 regulations. The association shall give written notice of its31.8 decision and/or required changes to the unit owner.31.9 (d) If the association determines that the amendment 31.10 conformsand amended CIC plat conform to the approved 31.11 application, the declaration, and this chapter, the association 31.12 shall be obligated toexecute the amendment and cooperate in its31.13 recordingcause the amendment and the amended CIC plat to be 31.14 recorded. The unit owner shall record the amendment and the31.15 amended CIC plat and deliver a copy of the recorded amendment31.16 and amended CIC plat to the association.The association may 31.17 require the unit owners executing the amendment to pay all fees 31.18 and costs for reviewing, preparing, and recording the amendment 31.19 and the amended CIC plat, and any other fees or costs incurred 31.20 by the association in connection therewith. 31.21 (c)(e) If athe unit isor units are owned 31.22 exclusively by a declarant, the declarant shall have the 31.23 authority to unilaterally prepare and record, at its expense, an 31.24 amendment and an amended CIC plat subdividing, combining, or 31.25 converting the unit or units. The amendment shall comply 31.26 with the requirements of subsection (b)(1)subsections (c)(1), 31.27 (2), (3), and (5)(4), and shall be limited to those provisions 31.28 necessary to accomplish the subdivision, combination, or 31.29 conversion unless the consent of unit owners required to amend 31.30 the declaration is obtained. 31.31 (d) If(f) A secured party joins in the amendment pursuant31.32 to this section, itsparty's interest and remedies shall be 31.33 deemed to apply to the unit or units and the common element31.34 intereststhat result from the subdivision or conversion31.35 combination of the unit or units in which the secured party held 31.36 a security interest. If the secured party enforces any remedy, 32.1 including foreclosure of its lien, against any of the resulting 32.2 units created, all instruments and notices relating to the 32.3 foreclosure shall describe the subject property in terms of 32.4 the amendment and the amended descriptionsCIC plat which 32.5 created the resulting units. 32.6 Sec. 14. Minnesota Statutes 2004, section 515B.2-113, is 32.7 amended to read: 32.8 515B.2-113 [ALTERATIONS OF UNITS.] 32.9 (a) Subject to the provisions of the declaration and 32.10 applicable law, a unit owner may, at the unit owner's expense, 32.11 make any improvements or alterations to the unit, provided: (i) 32.12 that they do not impair the structural integrity or mechanical 32.13 systems, affect the common elements, or impair the support of 32.14 any portion of the common interest community; (ii) that prior 32.15 arrangements are made with the association to ensure that other 32.16 unit owners are not disturbed; (iii) that the common elements 32.17 are not damaged; and (iv) that the common elements and other 32.18 units are protected against mechanics' liens. 32.19 (b) Subject to the provisions of applicable law, a unit 32.20 owner of a unit in residential use may, at the unit owner's 32.21 expense, make improvements or alterations to the unit as 32.22 necessary for the full enjoyment of the unit by any person 32.23 residing in the unit who has a handicap or disability, as 32.24 provided in the Fair Housing Amendments Act, United States Code, 32.25 title 42, section 3601, et seq., and the Minnesota Human Rights 32.26 Act, chapter 363A, and any amendments to those acts. 32.27 (c) The declaration, bylaws, rules, and regulations, or 32.28 agreements with the association may not prohibit the 32.29 improvements or alterations referred to in subsection (b), but 32.30 may reasonably regulate the type, style, and quality of the 32.31 improvements or alterations, as they relate to health, safety, 32.32 and architectural standards. In addition, improvements or 32.33 alterations made pursuant to subsection (b) must satisfy the32.34 requirements ofcomply with subsection (a)(i), (ii), (iii), and 32.35 (iv). 32.36 (d) Notwithstanding any contrary provision of section 33.1 515B.1-102, subsection (b) applies to all common interest 33.2 communities subject to this chapter, chapter 515, or 515A. The 33.3 unit owner's rights under this section may not be waived. 33.4 (e) Subsection (b) does not apply to restrictions on 33.5 improvements or alterations imposed by statute, rule, or 33.6 ordinance. 33.7 (f) Subject to the provisions of the declaration and 33.8 applicable law, a unit owner may, at the unit owner's expense, 33.9 after acquiring title to an adjoining unit or an adjoining part 33.10 of an adjoining unit, with the prior written approval of the 33.11 association and first mortgagees of the affected units, remove 33.12 or alter any intervening partition or create apertures therein, 33.13 even if the partition is part of the common elements, if those 33.14 acts do not impair the structural integrity or mechanical 33.15 systems or lessen the support of any portion of the common 33.16 interest community. The adjoining unit owners shall have the 33.17 exclusive license to use the space occupied by the removed 33.18 partition, but the use shall not create an easement or vested 33.19 right. Removal of partitions or creation of apertures under 33.20 this paragraph is not an alteration of boundaries. The 33.21 association may require that the owner or owners of units 33.22 affected replace or restore any removed partition, that the unit 33.23 owner comply with subsection (a)(i), (ii) and (iii), and that 33.24 the unit owner pay all fees and costs incurred by the 33.25 association in connection with the alteration. 33.26 Sec. 15. Minnesota Statutes 2004, section 515B.2-118, is 33.27 amended to read: 33.28 515B.2-118 [AMENDMENT OF DECLARATION.] 33.29 (a) The declaration, including any CIC plat, may be amended 33.30 only by vote or written agreement of unit owners of units to 33.31 which at least 67 percent of the votes in the association are 33.32 allocated, or any greater or other requirement the declaration 33.33 specifies, subject to the following qualifications: 33.34 (1) A declarant may execute supplemental declarations or 33.35 amendments under section 515B.2-111 or 515B.2-112. 33.36 (2) The association and certain unit owners, as applicable, 34.1 may execute amendments under section 515B.2-107, 515B.2-109, 34.2 515B.2-112, 515B.2-113, 515B.2-114, 515B.2-119, 515B.2-122, 34.3 515B.2-123, or 515B.2-124. 34.4 (3) The unanimous written consent of the unit owners is 34.5 required for any amendment which (i) creates or increases 34.6 special declarant rights, (ii) increases the number of units, 34.7 (iii) changes the boundaries of any unit, (iv) changes the 34.8 allocated interests of a unit, (v) changes common elements to 34.9 limited common elements or units, (vi) changes the authorized 34.10 use of a unit from residential to nonresidential, or conversely, 34.11 or (vii) changes the characterization of the unit owner's 34.12 interest in a cooperative from real estate to personal property, 34.13 or conversely; unless the amendment is expressly permitted or 34.14 required by other provisions of this chapter. Where the 34.15 amendment involves the conversion of common elements into a unit 34.16 or units, the title to the unit or units created shall, upon 34.17 recording of the amendment, vest in the association free and 34.18 clear of the interests of the unit owners. 34.19 (4) The declaration may specify less than 67 percent for 34.20 approval of an amendment, but only if all of the units are 34.21 restricted to nonresidential use. 34.22 (b) No action to challenge the validity of an amendment 34.23 adopted by the association pursuant to this section may be 34.24 brought more than two years after the amendment is recorded. 34.25 (c) Every amendment to the declaration shall be recorded in 34.26 every county in which any portion of the common interest 34.27 community is located and is effective only when recorded. If an 34.28 amendment (i) changes the number of units, (ii) changes the 34.29 boundary of a unit, (iii) changes common elements to limited 34.30 common elements, or conversely, or (iv) makes any other change 34.31 that affects the CIC plat, then an amendment to the CIC plat 34.32 reflecting the change shall be recorded. 34.33 Sec. 16. Minnesota Statutes 2004, section 515B.2-119, is 34.34 amended to read: 34.35 515B.2-119 [TERMINATION OF COMMON INTEREST COMMUNITY.] 34.36 (a) Except as otherwise provided in this chapter, a common 35.1 interest community may be terminated only by agreement of unit 35.2 owners of units to which at least 80 percent of the votes in the 35.3 association are allocated, and 80 percent of the first 35.4 mortgagees of units (each mortgagee having one vote per unit 35.5 financed), or any larger percentage the declaration specifies. 35.6 The declaration may specify a smaller percentage only if all of 35.7 the units are restricted to nonresidential use. 35.8 (b) An agreement to terminate shall be evidenced by a 35.9 written agreement, executed in the same manner as a deed by the 35.10 number of unit owners and first mortgagees of units required by 35.11 subsection (a). The agreement shall specify a date after which 35.12 the agreement shall be void unless recorded before that date. 35.13 The agreement shall also specify a date by which the termination 35.14 of the common interest community and the winding up of its 35.15 affairs must be accomplished. A certificate of termination 35.16 executed by the association evidencing the termination shall be 35.17 recorded on or before the termination date, or the agreement to 35.18 terminate shall be revoked. The agreement to terminate, or a 35.19 memorandum thereof, and the certificate of termination shall be 35.20 recorded in every county in which a portion of the common 35.21 interest community is situated and is effective only upon 35.22 recording. 35.23 (c) In the case of a condominium or planned community 35.24 containing only units having upper and lower boundaries, a 35.25 termination agreement may provide that all of the common 35.26 elements and units of the common interest community must be sold 35.27 following termination. If, pursuant to the agreement, any real 35.28 estate in the common interest community is to be sold following 35.29 termination, the termination agreement shall set forth the 35.30 minimum terms of sale acceptable to the association. 35.31 (d) In the case of a condominium or planned community 35.32 containing any units not having upper and lower boundaries, a 35.33 termination agreement may provide for sale of the common 35.34 elements, but it may not require that the units be sold 35.35 following termination, unless the original declaration provided 35.36 otherwise or all unit owners whose units are to be sold consent 36.1 to the sale. 36.2 (e) The association, on behalf of the unit owners, shall 36.3 have authority to contract for the sale of real estate in a 36.4 common interest community pursuant to this section, subject to 36.5 the required approval. The agreement to terminate shall be 36.6 deemed to grant to the association a power of attorney coupled 36.7 with an interest to effect the conveyance of the real estate on 36.8 behalf of the holders of all interests in the units, including 36.9 without limitation the power to execute all instruments of 36.10 conveyance and related instruments. Until the sale has been 36.11 completed, all instruments in connection with the sale have been 36.12 executed and the sale proceeds distributed, the association 36.13 shall continue in existence with all powers it had before 36.14 termination. 36.15 (1) The instrument conveying or creating the interest in 36.16 the common interest community shall include as exhibits (i) an 36.17 affidavit of the secretary of the association certifying that 36.18 the approval required by this section has been obtained and (ii) 36.19 a schedule of the names of all unit owners in the common 36.20 interest community as of the date of the approval. 36.21 (2) Proceeds of the sale shall be distributed to unit 36.22 owners and secured parties as their interests may appear, in 36.23 accordance with subsections (h), (i), (j), and (k). 36.24 (3) Unless otherwise specified in the agreement of 36.25 termination, until the association has conveyed title to the 36.26 real estate, each unit owner and the unit owner's successors in 36.27 interest have an exclusive right to occupancy of the portion of 36.28 the real estate that formerly constituted the unit. During the 36.29 period of that occupancy, each unit owner and the unit owner's 36.30 successors in interest remain liable for all assessments and 36.31 other obligations imposed on unit owners by this chapter, the 36.32 declaration or the bylaws. 36.33 (f) The legal description of the real estate constituting 36.34 the common interest community shall, upon the date of recording 36.35 of the certificate of termination referred to in subsection (b), 36.36 be as follows: 37.1 (1) In a planned community utilizing a CIC plat complying 37.2 with section 515B.2-110(d)(1) and (2), the lot and block 37.3 description contained in the CIC plat, and any amendments 37.4 thereto, subject to any subsequent conveyance or taking of a fee 37.5 interest in any part of the property. 37.6 (2) In a condominium or cooperative, or a planned community 37.7 utilizing a CIC plat complying with section 515B.2-110(c), the 37.8 underlying legal description of the real estate as set forth in 37.9 the declaration creating the common interest community, and any 37.10 amendments thereto, subject to any subsequent conveyance or 37.11 taking of a fee interest in any part of the property. 37.12 (3) The legal description referred to in this subsection 37.13 shall apply upon the recording of the certificate of 37.14 termination. The recording officer for each county in which the 37.15 common interest community is located shall index the property 37.16 located in that county in its records under the legal 37.17 description required by this subsection from and after the date 37.18 of recording of the certificate of termination. In the case of 37.19 registered property, the registrar of titles shall cancel the 37.20 existing certificates of title with respect to the property and 37.21 issue one or more certificates of title for the property 37.22 utilizing the legal description required by this subsection. 37.23 (g) In a condominium or planned community, if the agreement 37.24 to terminate provides that the real estate constituting the 37.25 common interest community is not to be sold following 37.26 termination, title to the common elements and, in a common 37.27 interest community containing only units having upper and lower 37.28 boundaries described in the declaration, title to all the real 37.29 estate in the common interest community, vests in the unit 37.30 owners upon termination as tenants in common in proportion to 37.31 their respective interest as provided in subsection (k), and 37.32 liens on the units shift accordingly. While the tenancy in 37.33 common exists, each unit owner and the unit owner's successors 37.34 in interest have an exclusive right to occupancy of the portion 37.35 of the real estate that formerly constituted the unit. 37.36 (h) The proceeds of any sale of real estate pursuant to 38.1 subsection (e), together with the assets of the association, 38.2 shall be held by the association as trustee for unit owners, 38.3 secured parties and other holders of liens on the units as their 38.4 interests may appear. Before distributing any proceeds, the 38.5 association shall have authority to deduct from the proceeds of 38.6 sale due with respect to the unit (i) unpaid assessments levied 38.7 by the association with respect to the unit, (ii) unpaid real 38.8 estate taxes or special assessments due with respect to the 38.9 unit, and (iii) the share of expenses of sale and winding up of 38.10 the association's affairs with respect to the unit. 38.11 (i) Following termination of a condominium or planned 38.12 community, creditors of the association holding liens on the 38.13 units perfected before termination may enforce those liens in 38.14 the same manner as any lien holder, in order of priority based 38.15 upon their times of perfection. All other creditors of the 38.16 association are to be treated as if they had perfected liens on 38.17 the units immediately before termination. 38.18 (j) In a cooperative, the declaration may provide that all 38.19 creditors of the association have priority over any interests of 38.20 unit owners and creditors of unit owners. In that event, 38.21 following termination, creditors of the association holding 38.22 liens on the cooperative which were perfected before termination 38.23 may enforce their liens in the same manner as any lien holder, 38.24 in order of priority based upon their times of perfection. All 38.25 other creditors of the association shall be treated as if they 38.26 had perfected a lien against the cooperative immediately before 38.27 termination. Unless the declaration provides that all creditors 38.28 of the association have that priority: 38.29 (1) the lien of each creditor of the association which was 38.30 perfected against the association before termination becomes, 38.31 upon termination, a lien against each unit owner's interest in 38.32 the unit as of the date the lien was perfected; 38.33 (2) any other creditor of the association is to be treated 38.34 upon termination as if the creditor had perfected a lien against 38.35 each unit owner's interest immediately before termination; 38.36 (3) the amount of the lien of an association's creditor 39.1 described in paragraphs (1) and (2) against each of the unit 39.2 owners' interest shall be proportionate to the ratio which each 39.3 unit's common expense liability bears to the common expense 39.4 liability of all of the units; 39.5 (4) the lien of each creditor of each unit owner which was 39.6 perfected before termination continues as a lien against that 39.7 unit owner's interest in the unit as of the date the lien was 39.8 perfected; and 39.9 (5) the assets of the association shall be distributed to 39.10 all unit owners and all lien holders as their interests may 39.11 appear in the order described in this section. Creditors of the 39.12 association are not entitled to payment from any unit owner in 39.13 excess of the amount of the creditor's lien against that unit 39.14 owner's interest. 39.15 (k) The respective interest of unit owners referred to in 39.16 subsections (e), (f), (g), (h) and (i) are as follows: 39.17 (1) Except as provided in paragraph (2), the respective 39.18 interests of unit owners are the fair market values of their 39.19 units, allocated interests, and any limited common elements 39.20 immediately before the termination, as determined by one or more 39.21 independent appraisers selected by the association. The 39.22 decision of the independent appraisers must be distributed to 39.23 the unit owners and becomes final unless disapproved within 30 39.24 days after distribution by unit owners of units to which 25 39.25 percent of the votes in the association are allocated. The 39.26 proportion of any unit's interest to that of all units is 39.27 determined by dividing the fair market value of that unit by the 39.28 total fair market values of all the units. 39.29 (2) If any unit or any limited common element is destroyed 39.30 to the extent that an appraisal of the fair market value thereof 39.31 before destruction cannot be made, the interests of all unit 39.32 owners areshall be measured by: (i) in a condominium, 39.33 their respectiveallocations of common element interests 39.34 immediately before the termination, (ii) in a cooperative, their 39.35 respective ownership interests immediately before the 39.36 termination, and (iii) in a planned community, their 40.1 respective allocations of common expense liabilitiesexpenses 40.2 immediately before the termination. 40.3 (1) In a condominium or planned community, except as 40.4 provided in subsection (m), foreclosure or enforcement of a lien 40.5 or encumbrance against the entire common interest community does 40.6 not terminate, of itself, the common interest community, and 40.7 foreclosure or enforcement of a lien or encumbrance against a 40.8 portion of the common interest community does not withdraw that 40.9 portion from the common interest community. 40.10 (m) In a condominium or planned community, if a lien or 40.11 encumbrance against a portion of the real estate comprising the 40.12 common interest community has priority over the declaration and 40.13 the lien or encumbrance has not been partially released, the 40.14 parties foreclosing the lien or encumbrance, upon foreclosure, 40.15 may record an instrument excluding the real estate subject to 40.16 that lien or encumbrance from the common interest community. 40.17 (n) Following the termination of a common interest 40.18 community in accordance with this section, the board of 40.19 directors of the association shall cause the association to be 40.20 dissolved in accordance with law. 40.21 Sec. 17. Minnesota Statutes 2004, section 515B.2-121, is 40.22 amended to read: 40.23 515B.2-121 [MASTER ASSOCIATIONS.] 40.24 (a) A master association formed after June 1, 1994, shall 40.25 be organized as a Minnesota profit, nonprofit or cooperative 40.26 corporation. A master association shall be incorporated prior 40.27 to the delegation to it of any powers under this chapter. 40.28 (b) The members of the master association shall be any 40.29 combination of (i) unit owners of one or more common interest 40.30 communities, (ii) one or more associations, (iii) one or more 40.31 master associations, or (iv) owners of real estate or property 40.32 ownersowner's associations not subject to this chapter in 40.33 combination with any other category of member. An association 40.34 or its members may be members of an entity created before June 40.35 1, 1994, which performs functions similar to those performed by 40.36 a master association regardless of whether the entity is subject 41.1 to this chapter. 41.2 (c) A master association shall be governed by a board of 41.3 directors. Except as expressly prohibited by the master 41.4 declaration, the master association's articles of incorporation 41.5 or bylaws, or other provisions of this chapter, the master 41.6 association board may act in all instances on behalf of the 41.7 master association. The directors of a master association shall 41.8 be elected or, if a nonprofit corporation, elected or appointed, 41.9 in a manner consistent with the requirements of the statute 41.10 under which the master association is formed and of the master 41.11 association's articles of incorporation and bylaws, and subject 41.12 to the following requirements: 41.13 (1) Except as set forth in subsections (2) and (3), the 41.14 members of the master association shall elect the board of 41.15 directors. A majority of the directors shall be members of the 41.16 master association or members of a member of the master 41.17 association, and shall be persons other than a declarant or 41.18 affiliate of a declarant. If the member is not a natural 41.19 person, it may designate a natural person to act on its behalf. 41.20 (2) The articles of incorporation or bylaws of the master 41.21 association may authorize aany person other than, whether or 41.22 not the person is a member of, or otherwise subject to, the 41.23 master association or a unit owner, including a declarant, to 41.24 appoint or elect one director. 41.25 (3) A master association's articles of incorporation may 41.26 suspend the members' right to elect or, in the case of a 41.27 nonprofit corporation, elect or appoint, the master 41.28 association's board of directors for a specified time period. 41.29 During this period, the person or persons who execute the master 41.30 declaration under subsection (f)(1), or their successors or 41.31 assigns, may appoint the directors. The period during which the 41.32 person or persons may appoint the directors begins when the 41.33 master declaration is recorded and terminates upon the earliest 41.34 of: 41.35 (i) the voluntary surrender of the right to appoint 41.36 directors; 42.1 (ii) the date ten years after the date the master 42.2 declaration is recorded; 42.3 (iii) the date, if any, in the articles of incorporation; 42.4 or 42.5 (iv) the date when at least 75 percent of the associations42.6 that are members of the master association or whose members are42.7 members of the master association are controlled by their42.8 members. An association's members control the association when42.9 they have the right to elect or appoint a majority of the42.10 association's voting directorsunits and other parcels of real 42.11 estate which are referred to in subsection (f)(1)(vii) have been 42.12 conveyed to such persons for occupancy by the persons or their 42.13 tenants. 42.14 (4) The term of any director appointed under subsection (3) 42.15 expires 60 days after the right to appoint directors 42.16 terminates. The master association's board of directors shall 42.17 call an annual or special meeting of the master association's 42.18 members to elect or appoint successor directors within the 42.19 60-day period. 42.20 (5) The system for the election of directors shall be fair 42.21 and equitable and shall take into account the number of members 42.22 of each association any of whose powers are delegated to the 42.23 master association, the needs of the members of the master 42.24 association, the allocation of liability for master association 42.25 common expenses, and the types of common interest communities 42.26 and other real estate subject to the master association. 42.27 (d) The articles of incorporation or bylaws of the master 42.28 association may authorize special classes of directors and 42.29 allocations of director voting rights, as follows: (i) classes 42.30 of directors that are elected by different classes of members, 42.31 to address operational, physical, or administrative differences 42.32 within the master association, or (ii) class voting by the 42.33 classes of directors on specific issues affecting only a certain 42.34 class or classes of members or, units or other parcels of real 42.35 estate, or to otherwise protect the legitimate interests of such 42.36 class or classes. No person may utilize such special classes or 43.1 allocations for the purpose of evading any limitation imposed on 43.2 declarants by this chapter. 43.3 (e) The officers of a master association shall be elected, 43.4 appointed, or designated in a manner consistent with the statute 43.5 under which the master association is formed and consistent with 43.6 the master association articles of incorporation and bylaws. 43.7 (f) The creation and authority of a master association 43.8 shall be governed by the following requirements: 43.9 (1) A master declaration shall be recorded in connection 43.10 with the creation of a master association. The master 43.11 declaration shall be executed by the owners of the real estate 43.12 subjected to the master declaration. The master declaration 43.13 shall contain, at a minimum: 43.14 (i) the name of the master association; 43.15 (ii) a legally sufficient description of the real estate 43.16 which is subject to the master declaration and a legally 43.17 sufficient description of any other real estate which may be 43.18 subjected to the master declaration pursuant to subsection (g); 43.19 (iii) a statement as to whether the real estate subject to, 43.20 and which may be subjected to, the master declaration 43.21 collectively is or collectively will be a separate common 43.22 interest community; 43.23 (iv) a description of the members of the master 43.24 association; 43.25 (v) a description of the master association's powers. To 43.26 be exercised by the master association on behalf of its members43.27 and on behalf of the members of its members in the case of43.28 members that are common interest communities. The provisions of43.29 the master declaration with respect to the grant and exercise of43.30 powers for common interest communities subject to the master43.31 association shall be consistent with the declarations of the43.32 common interest communities that delegate powers to the master43.33 associationthe extent described in the master declaration, a 43.34 master association has the powers with respect to the master 43.35 association's members and the property subject to the master 43.36 declaration that section 515B.3-102 grants to an association 44.1 with respect to the association's members and the property 44.2 subject to the declaration. A master association also has the 44.3 powers delegated to it by an association pursuant to subsection 44.4 (f)(2) or by a property owner's association not subject to the 44.5 chapter; provided (i) that the master declaration identifies the 44.6 powers and authorizes the delegation either expressly or by a 44.7 grant of authority to the board of the association or property 44.8 owner's association and (ii) that the master association board 44.9 has not refused the delegation pursuant to subsection (f)(4). 44.10 The provisions of the declarations of the common interest 44.11 communities, or the provisions of recorded instruments governing 44.12 other property subject to the master declaration, that delegate 44.13 powers to the master association shall be consistent with the 44.14 provisions of the master declaration that govern the delegation 44.15 of the powers; 44.16 (vi) a description of the formulaformulas governing the 44.17 allocation of assessments and member voting rights, including 44.18 any special classes or allocations referred to in subsection 44.19 (d); and44.20 (vii) a statement of the total number of units and other 44.21 parcels of real estate intended for residential use by a person 44.22 or the person's tenants that are (i) subject to the master 44.23 declaration as initially recorded and (ii) intended to be 44.24 created by the addition of real estate or by the subdivision of 44.25 units or other parcels of real estate; and 44.26 (viii) the requirements for amendment of the master 44.27 declaration, other than an amendment under subsection (g). 44.28 (2) The declaration of a common interest community subject44.29 to the master association shall contain provisions delegating,44.30 or authorizing the delegation of, powers to the master44.31 association in accordance with subsection (f)(3). The44.32 provisions of the declarations relating to the delegation shall44.33 be consistent with the provisions of the master declaration44.34 granting or reserving those powers to the master association.44.35 (3)The declaration of a common interest community located 44.36 on property subject to a master declaration may: 45.1 (i) delegate any of the powers described in section 45.2 515B.3-102 to athe master association .; provided, that a 45.3 delegation of the powers described in section 515B.3-102(a)(2) 45.4 is effective only if expressly stated in the declaration; and 45.5 (ii) authorize the board to delegate any of the powers 45.6 described in section 515B.3-102, except for the powers described 45.7 in section 515B.3-102(a)(2), to athe master association. 45.8 (4)(3) With respect to any other property subject to a 45.9 master association, there need not be an instrument other than 45.10 the master declaration recorded against the property to empower 45.11 the master association to exercise powers with respect to the 45.12 property. 45.13 (5)(4) If a declaration or other recorded instrument 45.14 authorizes athe board or ownerthe board of a property owner's 45.15 association to delegate powers to a master association, the 45.16 master association board may refuse any delegation of powers 45.17 that does not comply with (i) this chapter, (ii) the declaration 45.18 or other recorded instrument, or (iii) the organizational 45.19 documents of the master association. 45.20 (6)(5) The failure of a declaration, a board or an owner 45.21 of property subject to a master association to properly delegate 45.22 some or all of the powers to the master association does not 45.23 affect the authority of the master association to exercise those 45.24 and other powers with respect to other common interest 45.25 communities or owners of properties that are subject to the 45.26 master association. 45.27 (g) The master declaration may authorize other real estate 45.28 to be subjected to the master declaration. The other real 45.29 estate shall be subjected to the master declaration by an 45.30 amendment executed by the owner of the other real estate and 45.31 approved in writing by the person who executedany other person 45.32 or persons required by the master declaration, if other than the45.33 owner of the other real estateand recorded. 45.34 (h) Sections 515B.3-103(a), (b), and (g), 515B.3-108, 45.35 515B.3-109, 515B.3-110, and 515B.3-112 shall apply in the 45.36 conduct of the affairs of a master association. But the rights 46.1 of voting, notice, and other rights enumerated in those sections 46.2 apply onlyto persons who elect or appoint the board of a master 46.3 association, whether or not those persons are otherwise unit 46.4 owners within the meaning of this chapter. 46.5 (i) If so provided in the master declaration, a master 46.6 association may levy assessments for common expenses of the 46.7 master association against the property subject to the master 46.8 declaration, and have and foreclose liens securing the 46.9 assessments. The liens shall have the same priority against 46.10 secured parties, shall include the same fees and charges, and 46.11 may be foreclosed in the same manner, as assessment liens under 46.12 section 515B.3-116. The master association's lien shall have 46.13 priority as against the lien of an association or property 46.14 owner's association subject to the master association, 46.15 regardless of when the lien arose or was perfected. 46.16 (1) Master association common expenses shall be allocated 46.17 among the members of the master association in a fair and 46.18 equitable manner. If the members areinclude associations or 46.19 property owners'owner's associations, then the master 46.20 assessments may be allocated among and levied against the 46.21 associations or property owner's associations, or allocated 46.22 among and levied directlyagainst the units or other parcels of 46.23 real estate owned by the members of the association or property 46.24 owner's association. If so provided in the master declaration, 46.25 master assessments levied against a member association or 46.26 property owner's association are allocated among and levied 46.27 against the units or other parcels of real estate owned by the 46.28 members of the association or property owner's association. If 46.29 applicable and appropriate, the formulas and principles 46.30 described in section 515B.2-108, subsections (b), (c), (d), and 46.31 (e), shall be used in making the allocations. The assessment 46.32 formulas and procedures described in the declarations of any 46.33 common interest communities or any instruments governing other 46.34 real estate subject to the master association shall not conflict 46.35 with the formulas and procedures described in the master 46.36 declaration. 47.1 (2) The master declaration may exempt from liability for 47.2 all or a portion of master association assessments any person 47.3 authorized by subsection (c)(3) to appoint the members of the 47.4 master association board for master association common expenses, 47.5 or any other person, and exempt any unit or other parcel of real 47.6 estate owned by the person from a lien for such common expenses47.7 assessments, until a dwellingbuilding constituting or located 47.8 within the unit or other parcel of real estate is substantially 47.9 completed. Substantial completion shall be evidenced by a 47.10 certificate of occupancy in a jurisdiction that issues that 47.11 certificate. 47.12 (j) A master association shall not be used, directly or 47.13 indirectly, to avoid or nullify any warranties or other 47.14 obligations for which a declarant of a common interest community 47.15 subject to the master association is responsible, or to 47.16 otherwise avoid the requirements of this chapter. 47.17 Sec. 18. Minnesota Statutes 2004, section 515B.2-123, is 47.18 amended to read: 47.19 515B.2-123 [CHANGE OF FORM OF COMMON INTEREST COMMUNITY.] 47.20 (a) The legal form of a condominium, planned community or 47.21 cooperative subject to this chapter may be changed to a 47.22 condominium or planned community, subject to any requirements 47.23 contained in the declaration or bylaws of the common interest 47.24 community, and the following requirements: 47.25 (1) Subject to paragraphs (2) and (3), the change of form 47.26 shall be approved in writing by the unit owners of units to 47.27 which at least 80 percent of the votes in the association are 47.28 allocated, and 80 percent of the first mortgagees of record of 47.29 the units (each mortgagee having one vote per unit financed). 47.30 The declaration or bylaws may specify a smaller percentage only 47.31 if all of the units are restricted to nonresidential use. The47.32 approval shall include the approval ofA declaration and bylaws 47.33 satisfying the requirements ofcomplying with this chapter shall 47.34 be approved, subject to the foregoing approval standards, with 47.35 respect to the new common interest community. 47.36 (2) If the period of declarant control has not expired, the 48.1 change of form shall also be approved in writing by the 48.2 declarant. 48.3 (3) If the existing common interest community is a 48.4 cooperative, the change of form shall also be approved in 48.5 writing by (i) each holder of a blanket mortgage of record and 48.6 (ii) 80 percent of the secured parties holding interests in 48.7 share loans encumbering the cooperative units or memberships 48.8 (each secured party having one vote per share loan owned). 48.9 (b) Upon approval as provided in subsection (a), the 48.10 association in the existing common interest community shall have 48.11 authority to execute the declaration of the new common interest 48.12 community on behalf of the unit owners of, and all other persons 48.13 holding an interest in, the units or other property which is a 48.14 part of the existing common interest community, and to do all 48.15 other acts necessary to create the new common interest community. 48.16 (c) Upon approval as provided in subsection (a), the 48.17 association in the existing common interest community shall have 48.18 a power of attorney coupled with an interest to effect the 48.19 conveyance of the units or any other real estate owned by the 48.20 unit owners or the association, which is a part of the existing 48.21 common interest community, on behalf of the unit owners and all 48.22 other holders of interests in the common interest community, 48.23 including without limitation the power to execute all 48.24 instruments of conveyance and related instruments. 48.25 (d) In a change of legal form under this section, the 48.26 offer, conveyance or exchange of a unit in the new common 48.27 interest community to or with the person owning the unit in the 48.28 existing common interest community shall not be subject to 48.29 article 4 of this chapter. 48.30 (e) A change of legal form under this section shall not 48.31 affect any preexisting obligations or liabilities of a declarant 48.32 under any statute, or under the disclosure statement, 48.33 declaration or bylaws of the existing common interest 48.34 community. The declarant of the existing common interest 48.35 community shall continue to have the rights and obligations of a 48.36 declarant with respect to the offer and sale of units owned by 49.1 it or its affiliates in the new common interest community. 49.2 Sec. 19. Minnesota Statutes 2004, section 515B.2-124, is 49.3 amended to read: 49.4 515B.2-124 [SEVERANCE OF COMMON INTEREST COMMUNITY.] 49.5 (a) Unless the declaration provides otherwise, a part of a 49.6 common interest community containing one or more units, with or 49.7 without common elements, may be severed from the common interest 49.8 community, subject to the requirements of this section. Subject 49.9 to any additional requirements contained in the declaration, the 49.10 severance shall be approved in a written severance 49.11 agreement satisfying the requirements ofcomplying with this 49.12 section, executed by: 49.13 (1) unit owners entitled to cast at least 67 percent of the 49.14 votes in the association, which approval shall include the 49.15 approval of unit owners entitled to cast a majority of the votes 49.16 allocated to units in the remaining common interest community 49.17 and the approval of unit owners entitled to cast a majority of 49.18 the votes allocated to units in the part of the common interest 49.19 community being severed; 49.20 (2) declarant until the earlier of five years after the 49.21 recording of the declaration or the time at which declarant no 49.22 longer owns an unsold unit; and 49.23 (3) in the case of a cooperative, all holders of mortgages 49.24 or contracts for deed on the entire real estate constituting the 49.25 cooperative. 49.26 (b) The declaration may specify a smaller percentage for 49.27 unit owner approval only if all of the units are restricted to 49.28 nonresidential use. 49.29 (c) The severance agreement shall specify a severance date 49.30 by which the severance of the common interest community shall be 49.31 accomplished, after which the severance agreement is void. The 49.32 severance agreement shall be deemed to grant to the association 49.33 a power of attorney coupled with an interest to effect the 49.34 severance of the common interest community on behalf of the unit 49.35 owners and the holders of all other interests in the units, 49.36 including without limit the power to execute the amendment to 50.1 the declaration, any instruments of conveyance, and all related 50.2 instruments. 50.3 (d) The severance agreement shall: 50.4 (1) Approve an amendment to the declaration complying with 50.5 this chapter, in substantially the same form to be recorded, 50.6 which, at a minimum (i) legally describes the real estate 50.7 constituting the remaining common interest community and the 50.8 real estate being severed, (ii) restates the number of units in 50.9 the remaining common interest community, (iii) reallocates the 50.10 interests of the unit owners in the remaining common interest 50.11 community among the remaining units in accordance with the 50.12 allocation formula set forth in the declaration, and (iv) 50.13 recites any easements to which the severed portion of the common 50.14 interest community remains subject. 50.15 (2) Approve an amendment to the articles of incorporation 50.16 and bylaws of the remaining common interest community, if 50.17 necessary. 50.18 (3) Authorize the association to execute and record the 50.19 amended declaration, articles of incorporation or bylaws on 50.20 behalf of the unit owners and all other persons holding an 50.21 interest in the remaining common interest community, and to take 50.22 other actions necessary to accomplish the severance of the 50.23 common interest community. 50.24 (4) Allocate the assets and liabilities of the association 50.25 between the association and (i) a new association formed 50.26 pursuant to subsection (g), or (ii) the owners of the units 50.27 being severed, subject to a lien against their interest in the 50.28 severed real estate or their share in the assets of the 50.29 association in favor of any person that held a security interest 50.30 in their unit. 50.31 (5) If the units that are being severed from the common 50.32 interest community will not be included in a new common interest 50.33 community that is (i) formed simultaneously with the severance 50.34 of the common interest community, and (ii) includes all of the 50.35 units and substantially all of the common elements being 50.36 severed, then the agreement shall contain the written consent of 51.1 holders of first mortgages on all units that are being severed, 51.2 and shall describe in detail the proposed disposition of all 51.3 real estate to be severed and all assets of the association 51.4 allocated to the severed units, and the distribution of the 51.5 proceeds of the disposition, if any. 51.6 (e) The severance agreement or a memorandum of it shall be 51.7 recorded in every county in which a part of the common interest 51.8 community is located. The recording of the severance agreement 51.9 or memorandum of it shall, from the date of recording, 51.10 constitute notice to all persons subsequently acquiring an 51.11 interest in the common interest community that the common 51.12 interest community is being severed, and that those persons 51.13 acquire their interests subject to the terms and conditions 51.14 contained in the severance agreement and the amendment to the 51.15 declaration. 51.16 (f) The amendment to the declaration of the remaining 51.17 common interest community shall be recorded on or before the 51.18 severance date or the severance agreement and the amendment to 51.19 the declaration is void as of the day after the severance date. 51.20 The recording of the amendment to the declaration shall complete 51.21 the severance of the common interest community and release the 51.22 severed part of the common interest community from the 51.23 declaration without further action by any person. 51.24 (g) If the unit owners whose units are being severed from 51.25 the common interest community intend to form a new common 51.26 interest community, then said unit owners shall unanimously, by 51.27 at least 80 percent of the votes allocated by the existing 51.28 declaration to said units, approve a new declaration, articles 51.29 of incorporation and bylaws to govern the new common interest 51.30 community no later than 60 days before the effective date of the 51.31 severance. The new declaration creating the new common interest51.32 communityshall be recorded simultaneously with the amendment to 51.33 the existing declaration. No later than 30 days beforeafter 51.34 the effectivedate of the severance agreement, the unit owners51.35 shall causearticles of incorporation creating the 51.36 association governingintended to govern the new common interest 52.1 community to be created by filing the articles of incorporation52.2 of the associationshall be filed with the secretary of state 52.3 and promptly thereafter the unit owners whose units are being 52.4 severed shall elect a board of directors to act on behalf of the 52.5 new association. The board of directors of the new association 52.6 shall coordinate the completion of the severancecooperate with 52.7 the board of directors of the existing association to complete 52.8 the severance. The existing association shall retain all 52.9 authority to act on behalf of the common interest community 52.10 until the amendment to the existing declaration isand the new 52.11 declaration are recorded. 52.12 (h) The legal descriptions of the real estate constituting 52.13 (i) the remaining common interest community, and (ii) the 52.14 severed portion of the common interest community shall, at the 52.15 time of recording of the amendment to the declaration referred 52.16 to in subsection (e), be as follows: 52.17 (1) In a planned community using a CIC plat that complies 52.18 with section 515B.2-110, subsection (d), the lot and block 52.19 descriptions contained in the CIC plat, and any amendments to 52.20 it, with respect to (i) the remaining common interest community, 52.21 and (ii) the severed portion of the common interest community. 52.22 (2) In a condominium, or cooperative or planned community 52.23 using a CIC plat that complies with section 515B.2-110, 52.24 subsection (c), (i) the CIC plat description relating to the 52.25 remaining common interest community, and (ii) the part of the 52.26 underlying legal description of the real estate in the 52.27 declaration creating the common interest community, and any 52.28 amendments to it, relating to the severed part of the common 52.29 interest community. 52.30 (3) The recording officer for each county in which the 52.31 common interest community is located shall index the property 52.32 located in that county in its records under the legal 52.33 descriptions required by this subsection as of the date of 52.34 recording of the amendment to the declaration. In the case of 52.35 registered property, the registrar of titles shall cancel the 52.36 existing certificates of title for the severed part of the 53.1 common interest community and issue certificates of title for 53.2 the property using the legal descriptions required by this 53.3 subsection. 53.4 (i) In a condominium or planned community, if the severed 53.5 part of the common interest community is not to be reconstituted 53.6 as a new common interest community following severance, title to 53.7 the common elements and, in a common interest community in which 53.8 all units have upper and lower boundaries described in the 53.9 declaration title to all the real estate in the severed part of 53.10 the common interest community, vests in the unit owners of the 53.11 units being severed, upon severance, as tenants in common in 53.12 proportion to their respective allocated interests in the 53.13 declaration, and liens on the units shift accordingly. While 53.14 the tenancy in common exists, each unit owner and the unit 53.15 owner's successors in interest have an exclusive right to 53.16 occupancy of the portion of the real estate that formerly 53.17 constituted the unit, and a nonexclusive easement across, over 53.18 and under any common elements contained in the severed portion 53.19 of the common interest community for enjoyment, access, 53.20 utilities, communication services, and other essential services, 53.21 as applicable. 53.22 (j) No common interest community shall be severed in such a 53.23 manner as to materially impair access, utility services, 53.24 communication services, or other essential services with respect 53.25 to either the remaining common interest community or the severed 53.26 part of the common interest community. 53.27 Sec. 20. Minnesota Statutes 2004, section 515B.3-101, is 53.28 amended to read: 53.29 515B.3-101 [ORGANIZATION OF UNIT OWNERS' ASSOCIATION.] 53.30 A common interest community shall be administered by a unit53.31 owners'an association. The unit owners'association shall be 53.32 incorporated no later than the date the common interest 53.33 community is created. The membership of the association at all 53.34 times consists exclusively of all unit owners or, following 53.35 termination of the common interest community, of all former unit 53.36 owners entitled to distributions of proceeds under section 54.1 515B.2-119 or their heirs, successors, or assigns. The 54.2 association shall be organized as a Minnesota profit or 54.3 nonprofit corporation, or may, in the case of a cooperative, be 54.4 organized under chapter 308A. In the event of a conflict 54.5 between this chapter and any other chapter under which the 54.6 association is incorporated, this chapter shall control. 54.7 Sec. 21. Minnesota Statutes 2004, section 515B.3-102, is 54.8 amended to read: 54.9 515B.3-102 [POWERS OF UNIT OWNERS' ASSOCIATION.] 54.10 (a) Except as provided in subsection (b), and subject to 54.11 the provisions of the declaration or bylaws, the association 54.12 shall have the power to: 54.13 (1) adopt, amend and revoke rules and regulations not 54.14 inconsistent with the articles of incorporation, bylaws and 54.15 declaration, as follows: (i) regulating the use of the common 54.16 elements; (ii) regulating the use of the units, and conduct of 54.17 unit occupants, which may jeopardize the health, safety or 54.18 welfare of other occupants, which involves noise or other 54.19 disturbing activity, or which may damage the common elements or 54.20 other units; (iii) regulating or prohibiting animals; (iv) 54.21 regulating changes in the appearance of the common elements and 54.22 conduct which may damage the common interest community; (v) 54.23 regulating the exterior appearance of the common interest 54.24 community, including, for example, balconies and patios, window 54.25 treatments, and signs and other displays, regardless of whether 54.26 inside a unit; (vi) implementing the articles of incorporation, 54.27 declaration and bylaws, and exercising the powers granted by 54.28 this section; and (vii) otherwise facilitating the operation of 54.29 the common interest community; 54.30 (2) adopt and amend budgets for revenues, expenditures and 54.31 reserves, and levy and collect assessments for common expenses 54.32 from unit owners; 54.33 (3) hire and discharge managing agents and other employees, 54.34 agents, and independent contractors; 54.35 (4) institute, defend, or intervene in litigation or 54.36 administrative proceedings (i) in its own name on behalf of 55.1 itself or two or more unit owners on matters affecting the 55.2 common elements or other matters affecting the common interest 55.3 community or, (ii) with the consent of the owners of the 55.4 affected units on matters affecting only those units; 55.5 (5) make contracts and incur liabilities; 55.6 (6) regulate the use, maintenance, repair, replacement, and 55.7 modification of the common elements and the units; 55.8 (7) cause improvements to be made as a part of the common 55.9 elements, and, in the case of a cooperative, the units; 55.10 (8) acquire, hold, encumber, and convey in its own name any 55.11 right, title, or interest to real estate or personal property, 55.12 but (i) common elements in a condominium or planned community 55.13 may be conveyed or subjected to a security interest only 55.14 pursuant to section 515B.3-112, or (ii) part of a cooperative 55.15 may be conveyed, or all or part of a cooperative may be 55.16 subjected to a security interest, only pursuant to section 55.17 515B.3-112; 55.18 (9) grant easements for public utility easementsutilities, 55.19 public rights-of-way or other public purposes, and cable 55.20 television or other communications, through, over or under the 55.21 common elements ,; grant easements, leases, or licenses to unit 55.22 owners for purposes authorized by the declaration; and, subject 55.23 to approval by resolution of unit owners other than declarant or 55.24 its affiliates at a meeting duly called, grant other public or55.25 privateeasements, leases, and licenses through, over or under 55.26 the common elements; 55.27 (10) impose and receive any payments, fees, or charges for 55.28 the use, rental, or operation of the common elements, other than 55.29 limited common elements, and for services provided to unit 55.30 owners; 55.31 (11) impose charges for late payment of assessments and, 55.32 after notice and an opportunity to be heard, levy reasonable 55.33 fines for violations of the declaration, bylaws, and rules and 55.34 regulations of the association; 55.35 (12) impose reasonable charges for the review, preparation 55.36 and recordation of amendments to the declaration, resale 56.1 certificates required by section 515B.4-107, statements of 56.2 unpaid assessments, or furnishing copies of association records; 56.3 (13) provide for the indemnification of its officers and 56.4 directors, and maintain directors' and officers' liability 56.5 insurance; 56.6 (14) provide for reasonable procedures governing the 56.7 conduct of meetings and election of directors; 56.8 (15) exercise any other powers conferred by law, or by the 56.9 declaration, articles of incorporation or bylaws; and 56.10 (16) exercise any other powers necessary and proper for the 56.11 governance and operation of the association. 56.12 (b) Notwithstanding subsection (a) the declaration or 56.13 bylaws may not impose limitations on the power of the 56.14 association to deal with the declarant which are more 56.15 restrictive than the limitations imposed on the power of the 56.16 association to deal with other persons. 56.17 Sec. 22. Minnesota Statutes 2004, section 515B.3-103, is 56.18 amended to read: 56.19 515B.3-103 [ DUTY OFBOARD OF DIRECTORS, OFFICERS DURING,56.20 AFTERAND DECLARANT CONTROL.] 56.21 (a) An association shall be governed by a board of 56.22 directors. Except as expressly prohibited by the declaration, 56.23 the articles of incorporation, bylaws, subsection (b), or other 56.24 provisions of this chapter, the board may act in all instances 56.25 on behalf of the association. In the performance of their 56.26 duties, the officers and directors are required to exercise (i) 56.27 if appointed by the declarant, the care required of fiduciaries 56.28 of the unit owners and (ii) if elected by the unit owners, the 56.29 care required of a director by section 302A.251 or 317A.251, as 56.30 applicable. 56.31 (b) The board may not act unilaterally to amend the 56.32 declaration, to terminate the common interest community, to 56.33 elect directors to the board, or to determine the 56.34 qualifications, powers and duties, or terms of office of 56.35 directors, but the board may fill vacancies in its membership 56.36 created other than by removal by the vote of the association 57.1 members for the unexpired portion of any term. 57.2 (c) Subject to subsection (d),The declaration may provide 57.3 for a period of declarant control of the association, during 57.4 which a declarant, or persons designated by the declarant, may 57.5 appoint and remove the officers and directors of the 57.6 association. The maximumperiod of declarant control may extend57.7 frombegins on the date of the first conveyance of a unit to a57.8 unit owner other than a declarant for a period not57.9 exceedingcreation of the common interest community and 57.10 terminates upon the earliest of the following events: (i) five 57.11 years after the date of the first conveyance of a unit to a unit 57.12 owner other than a declarant in the case of a flexible common 57.13 interest community or three years in the case of any other 57.14 common interest community . Regardless of any longer period57.15 provided in the declaration or elsewhere, a period of declarant57.16 control shall terminate upon the earlier of (i) surrender of57.17 control by the declarant or (ii) 60 days after, (ii) the 57.18 declarant's voluntary surrender of control by giving written 57.19 notice to the unit owners pursuant to section 515B.1-115, or 57.20 (iii) the conveyance of 75 percent of the units to unit owners 57.21 other than a declarant. 57.22 (d) Not later than 60 days after conveyance ofThe board 57.23 shall cause a meeting of the unit owners to be called, as 57.24 follows: 57.25 (1) If the period of declarant control has terminated 57.26 pursuant to subsection (c), a meeting of the unit owners shall 57.27 be called and held within 60 days after said termination, at 57.28 which the board shall be elected by all unit owners, including 57.29 declarant, subject to the requirements of subsection (e). 57.30 (2) If 50 percent of the units that may be created to unit57.31 owners other than a declarant or an affiliate of a declarant, a57.32 meeting of the unit owners shall be helda declarant is 57.33 authorized by the declaration to create have been conveyed prior 57.34 to the termination of the declarant control period, a meeting of 57.35 the unit owners shall be called and held within 60 days 57.36 thereafter, at which not less than 33-1/3 percent of the members 58.1 of the board shall be elected by unit owners other than a 58.2 declarant or an affiliate of a declarant. 58.3 (e) Following the termination of any period of declarant 58.4 control, the unit owners shall elect the board. All unit 58.5 owners, including the declarant and its affiliates, may cast the 58.6 votes allocated to any units owned by them. The board shall 58.7 thereafter be subject to the following requirements. 58.8 (1) A majority of the directors shall be unit owners other 58.9 than a declarant or an affiliate of a declarant, or a natural 58.10 person designated by a unit owner that is not a natural person. 58.11 The remaining directors need not be unit owners unless required 58.12 by the articles of incorporation or bylaws. 58.13 (2) Subject to the requirements of subsection (1), the 58.14 articles of incorporation or bylaws may authorize (i) the 58.15 appointment or election of one director, who need not be a unit 58.16 owner, by a declarant or by a person or persons other than a 58.17 unit owner, (ii) classes of directors, and (iii) the election of 58.18 certain directors by unit owners of a certain class or classes 58.19 of units. The articles of incorporation or bylaws shall not be 58.20 amended to change or terminate the authorization described in 58.21 (i) without the written consent of the declarant or other person 58.22 possessing the power to appoint or elect. 58.23 (3) Subject to the requirements of subsection (1), if 58.24 separate classes of directors are authorized under subsection 58.25 (2), the articles of incorporation or bylaws may authorize class 58.26 voting by classes of directors on specified issues affecting 58.27 only a certain class of units, or to protect the legitimate 58.28 interests of the class. A person shall not use special class 58.29 voting to evade any limit imposed on declarants by this chapter. 58.30 (4) The board shall elect the officers. The directors and 58.31 officers shall take office upon election. 58.32 (f) In determining whether the period of declarant control 58.33 has terminated under subsection (c), or whether unit owners 58.34 other than a declarant are entitled to elect members of the 58.35 board of directors under subsection (d), the percentage of the 58.36 units which has beenconveyed shall be calculated based upon the59.1 assumption that all units which the declarant has built or59.2 reserved the right to build in the declaration are included in59.3 the common interest communityusing as a numerator the number of 59.4 units conveyed and as a denominator the number of units subject 59.5 to the declaration plus the number of units which the declarant 59.6 is authorized by the declaration to create on any additional 59.7 real estate. The percentages referred to in subsections (c) and 59.8 (d) shall be calculated without reference to units that are 59.9 auxiliary to other units, such as garage units or storage 59.10 units. A person shall not use a master association or other 59.11 device to evade the requirements of this section. 59.12 (g) Except as otherwise provided in this subsection, 59.13 meetings of the board of directors must be open to the unit 59.14 owners. To the extent practicable, the board shall give 59.15 reasonable notice to the unit owners of the date, time, and 59.16 place of a board meeting. If the date, time, and place of 59.17 meetings are provided for in the declaration, articles, or 59.18 bylaws, announced at a previous meeting of the board, posted in 59.19 a location accessible to the unit owners and designated by the 59.20 board from time to time, or if an emergency requires immediate 59.21 consideration of a matter by the board, notice is not required. 59.22 "Notice" has the meaning given in section 317A.011, subdivision 59.23 14. Meetings may be closed to discuss the following: 59.24 (1) personnel matters; 59.25 (2) pending or potential litigation, arbitration or other 59.26 potentially adversarial proceedings, between unit owners, 59.27 between the board or association and unit owners, or other 59.28 matters in which any unit owner may have an adversarial 59.29 interest, if the board determines that closing the meeting is 59.30 necessary to discuss strategy or to otherwise protect the 59.31 position of the board or association or the privacy of a unit 59.32 owner or occupant of a unit; or 59.33 (3) criminal activity arising within the common interest 59.34 community if the board determines that closing the meeting is 59.35 necessary to protect the privacy of the victim or that opening 59.36 the meeting would jeopardize investigation of the activity. 60.1 Nothing in this subsection imposes a duty on the board to 60.2 provide special facilities for meetings. The failure to give 60.3 notice as required by this subsection shall not invalidate the 60.4 board meeting or any action taken at the meeting. The minutes 60.5 of any part of a meeting that is closed under this subsection 60.6 may be kept confidential at the discretion of the board. 60.7 Sec. 23. Minnesota Statutes 2004, section 515B.3-105, is 60.8 amended to read: 60.9 515B.3-105 [TERMINATION OF DECLARANT'SCONTRACTS, LEASES.] 60.10 (a) If entered into prior to expirationtermination of the 60.11 period of declarant control pursuant to section 515B.3-103, (i) 60.12 any management contract, employment contract, or lease of 60.13 recreational facilities, units,or garages or other parking 60.14 facilities, (ii) any contract, lease, or license binding the 60.15 association, and to which a declarant or an affiliate of a 60.16 declarant is a party, or (iii) any contract, lease or license 60.17 binding the association or any unit owner other than the 60.18 declarant or an affiliate of the declarant which is not bona 60.19 fide or which was unconscionable to the unit owners at the time 60.20 entered into under the circumstances then prevailing, may be 60.21 terminated without penalty by the association at any time after60.22 the expiration of declarant control upon not less than 90 days'60.23 notice to the other partyunder the procedures described in this 60.24 section. 60.25 (b) If , duringprior to expiration of the suspension period 60.26 described in section 515B.2-121, subsection (c), paragraph (3), 60.27 a contract, lease, or license of a type described in this60.28 sectionsubsection (a) is entered into by a person having 60.29 authority to appoint the directors of the master association and 60.30 is binding upon athe master association, then the master 60.31 association, and not any association, may terminate the 60.32 contract, lease, or license under the procedures described in 60.33 this section. 60.34 (c) Termination shall be upon no less than 90 days' notice. 60.35 Notice of termination shall be given by the association or 60.36 master association, as applicable, in accordance with section 61.1 515B.1-115; provided, that notice shall be effective only if 61.2 given within two years following the termination of the period 61.3 of declarant control or the suspension period described in 61.4 section 515B.2-121, subsection (c), paragraph (3), as applicable. 61.5 (d) This section does not apply to (i): 61.6 (1) any lease the termination of which would terminate the 61.7 common interest community , (ii) a proprietary lease, or (iii); 61.8 (2) in the case of a cooperative, a mortgage or contract 61.9 for deed encumbering allreal estate constituting the common61.10 interest community.owned by the association, except that if the 61.11 mortgage or contract for deed contains a contractual obligation 61.12 involving a type of contract, lease, or license which may be 61.13 terminated pursuant to subsection (a) or (b), then that 61.14 contractual obligation may be terminated pursuant to subsection 61.15 (c); or 61.16 (3) an agreement between a declarant or an affiliate of a 61.17 declarant, or a person having authority pursuant to section 61.18 515B.2-121(c)(3) to appoint the directors of the master 61.19 association, and any governmental entity, if such agreement is 61.20 necessary to obtain governmental approvals, provide financing 61.21 under any type of government program, or provide for 61.22 governmentally required access, conservation, drainage, or 61.23 utilities. 61.24 Sec. 24. Minnesota Statutes 2004, section 515B.3-106, is 61.25 amended to read: 61.26 515B.3-106 [BYLAWS; ANNUAL REPORT.] 61.27 (a) A common interest community shall have bylaws which 61.28 comply with this chapter and the requirements ofthe statute 61.29 under which the association is incorporated. The bylaws and any 61.30 amendments may be recorded, but need not be recorded to be 61.31 effective unless so provided in the bylaws. 61.32 (b) The bylaws shall provide that, in addition to any 61.33 statutory requirements: 61.34 (1) A meeting of the members shall be held at least once 61.35 each year, and a specified officer of the association shall give 61.36 notice of the meeting as provided in section 515B.3-108. 62.1 (2) An annual report shall be prepared by the association 62.2 and a copy of the report shall be provided to each unit owner at 62.3 or prior to the annual meeting. 62.4 (c) The annual report shall contain at a minimum: 62.5 (1) a statement of any capital expenditures in excess of 62.6 two percent of the current budget or $5,000, whichever is 62.7 greater, approved by the association for the current fiscal year 62.8 or succeeding two fiscal years; 62.9 (2) a statement of the balance in any reserve or 62.10 replacement fund; 62.11 (3) a copy of the statement of revenues and expenses for 62.12 the association's last fiscal year, and a balance sheet as of 62.13 the end of said fiscal year; 62.14 (4) a statement of the status of any pending litigation or 62.15 judgments to which the association is a party; 62.16 (5) a detailed description of the insurance coverage 62.17 provided by the association including a statement as to which, 62.18 if any, of the items referred to in section 515B.3-113, 62.19 subsection (b), are insured by the association; and 62.20 (6) a statement of the total past due assessments on all 62.21 units, current as of not more than 60 days prior to the date of 62.22 the meeting. 62.23 Sec. 25. Minnesota Statutes 2004, section 515B.3-110, is 62.24 amended to read: 62.25 515B.3-110 [VOTING; PROXIES.] 62.26 (a) At any meeting of the association an owner or the 62.27 holder of the owner's proxy shall be entitled to cast the vote 62.28 which is allocated to the unit. If there is more than one owner 62.29 of a unit, only one of the owners may cast the vote. If the 62.30 owners of a unit fail to agree and notify the association as to 62.31 who shall cast the vote, the vote shall not be cast. Any 62.32 provision in the articles of incorporation, bylaws, declaration, 62.33 or other document restricting a unit owner's right to vote, or 62.34 affecting quorum requirements, by reason of nonpayment of 62.35 assessments, or a purported violation of any provision of the 62.36 documents governing the common interest community, shall be void. 63.1 (b) If permitted by the articles or bylaws, votes allocated 63.2 to a unit may be cast pursuant to a proxy executed by the unit 63.3 owner entitled to cast the vote for that unit. The board may 63.4 specify the form of proxy and proxy rules, consistent with law. 63.5 (c) The entire vote on any single issue (except the 63.6 election of directors), may be by mailed ballots, subject to (i) 63.7 any prohibition or requirement contained in the articles of 63.8 incorporation, bylaws, or declaration and (ii) any requirements 63.9 of the statute under which the association is created. Such a 63.10 vote shall have the force and effect of a vote taken at a 63.11 meeting; provided, that the total votes cast are at least equal 63.12 to the votes required for a quorum. The board shall set a 63.13 voting period within which the ballots must be returned, which 63.14 period shall be not less than ten nor more than 30 days after 63.15 the date of mailing or hand delivery of the ballots to the 63.16 owners. The board of directors shall provide written notice of 63.17 the results of the vote to the members within 30 days after the 63.18 expiration of the voting period. All requirements in this 63.19 chapter, the declaration or the bylaws for a meeting of the 63.20 members, or being present in person, shall be deemed satisfied 63.21 by a vote taken by mail in compliance with the requirements of 63.22 this section. 63.23 (d) The articles of incorporation or bylaws may authorize 63.24 class voting by unit owners for directors or on specified issues 63.25 affecting the class. Class voting may only be used to address 63.26 operational, physical, or administrative differences within the 63.27 common interest community. A declarant shall not use class 63.28 voting to evade any limit imposed on declarants by this chapter 63.29 and units shall not constitute a class because they are owned by 63.30 a declarant. 63.31 (e) The declaration or bylaws may provide that votes on 63.32 specified matters affecting the common interest community be 63.33 cast by lessees or secured parties rather than unit owners; 63.34 provided that (i) the provisions of subsections (a), (b), and (c) 63.35 apply to those persons as if they were unit owners; (ii) unit 63.36 owners who have so delegated their votes to other persons may 64.1 not cast votes on those specified matters; (iii) lessees or 64.2 secured parties are entitled to notice of meetings, access to 64.3 records, and other rights respecting those matters as if they 64.4 were unit owners, and (iv) the lessee or secured party has filed 64.5 satisfactory evidence of its interest with the secretary of the 64.6 association prior to the meeting. Unit owners must also be 64.7 given notice, in the manner provided in section 515B.3-108(b), 64.8 of meetings at which lessees or secured parties are entitled to 64.9 vote. 64.10 (f) No votes allocated to a unit owned by the association 64.11 may be cast nor counted toward a quorum. 64.12 Sec. 26. Minnesota Statutes 2004, section 515B.3-112, is 64.13 amended to read: 64.14 515B.3-112 [CONVEYANCE OR ENCUMBRANCEOF, OR CREATION OF 64.15 SECURITY INTERESTS IN, COMMON ELEMENTS.] 64.16 (a) In a condominium or planned community, unless the 64.17 declaration provides otherwise, portions of the common elements 64.18 may be conveyed or subjected to a security interest by the 64.19 association if persons entitled to cast at least 67 percent of 64.20 the votes in the association, including 67 percent of the votes 64.21 allocated to units not owned by a declarant, or any larger 64.22 percentage the declaration specifies, approve that action in 64.23 writing or at a meeting; but all unit owners of units to which 64.24 any limited common element is allocated must agree in order to 64.25 convey that limited common element or subject it to a security 64.26 interest. The declaration may specify a smaller percentage only 64.27 if all of the units are restricted to nonresidential use. 64.28 (b) In a cooperative, unless the declaration provides 64.29 otherwise, part of a cooperative may be conveyed, or all or a 64.30 part subjected to a security interest, by the association if 64.31 persons entitled to cast at least 67 percent of the votes in the 64.32 association, including 67 percent of the votes allocated to 64.33 units in which the declarant has no interest, or any larger 64.34 percentage the declaration specifies, approves that action in 64.35 writing or at a meeting. If fewer than all of the units or 64.36 limited common elements are to be conveyed or subjected to a 65.1 security interest, then all unit owners of those units, or the 65.2 units to which those limited common elements are allocated, must 65.3 agree in order to convey those units or limited common elements 65.4 or subject them to a security interest. The declaration may 65.5 specify a smaller percentage only if all of the units are 65.6 restricted to nonresidential use. Any purported conveyance or 65.7 other voluntary transfer of an entire cooperative is void, 65.8 unless made pursuant to section 515B.2-119. 65.9 (c) The association, on behalf of the unit owners, may 65.10 contract to convey or encumber an interest in the common 65.11 elements of a common interest community pursuant to this 65.12 subsection, subject to the required approval. After the 65.13 approval has been obtained, the association shall have a power 65.14 of attorney coupled with an interest to effect the conveyance or 65.15 encumbrance on behalf of all unit owners in the common interest 65.16 community, including the power to execute deeds, mortgages, or 65.17 other instruments of conveyance or security. The instrument 65.18 conveying or creating the interest in the common interest 65.19 community shall be recorded and shall include as exhibits (i) an 65.20 affidavit of the secretary of the association certifying that 65.21 the approval required by this section has been obtained and (ii) 65.22 a schedule of the names of all unit owners and units in the 65.23 common interest community as of the date of the approval. 65.24 (d) Except as provided in section 515B.3-102(a)(9),Unless 65.25 made pursuant to this section, any purported conveyance, 65.26 encumbrance,creation of a security interest in or other 65.27 voluntary transfer of any interest in the common elements, or of 65.28 any part of a cooperative, is void. The grant of an easement, 65.29 lease, or license pursuant to section 515B.3-102(a)(9) is not 65.30 subject to this section. 65.31 (e) In the case of a conveyance involving a condominium, a 65.32 planned community utilizing a CIC plat complying with section 65.33 515B.2-110(c), or a cooperative in which the unit owners' 65.34 interests are characterized as real estate, the association 65.35 shall record, simultaneously with the recording of the 65.36 instrument of conveyance, an amended CIC plat showing the real 66.1 estate constituting the common interest community exclusive of 66.2 the real estate conveyed. In all common interest communities, 66.3 upon recording of the instrument of conveyance, the declaration, 66.4 and all rights and obligations arising therefrom, shall be 66.5 deemed released and terminated as to the real estate conveyed. 66.6 (f) A conveyance or encumbrance of common elements, or of a 66.7 cooperative, pursuant to this section shall not deprive any unit 66.8 of its rights of support, reasonable access or utility services. 66.9 (g) Except as provided in subsection (a), or unless the 66.10 declaration otherwise provides, a conveyance or encumbrance of 66.11 common elements pursuant to this section does not affect the 66.12 priority or validity of preexisting encumbrances. 66.13 (h) Any proceeds of the conveyance or creation of a 66.14 security interest under this section are an asset of the 66.15 association. 66.16 (i) This section shall not apply to any conveyance or 66.17 encumbrance of any interest in a proprietary lease. 66.18 Sec. 27. Minnesota Statutes 2004, section 515B.3-113, is 66.19 amended to read: 66.20 515B.3-113 [INSURANCE.] 66.21 (a) Commencing not later than the time of the first 66.22 conveyance of a unit to a unit owner other than a declarant, the 66.23 association shall maintain, to the extent reasonably available: 66.24 (1) subject to subsection (b), property insurance (i) on 66.25 the common elements and, in a planned community, also on 66.26 property that must become common elements, (ii) for broad form 66.27 covered causes of loss, and (iii) in a total amount of not less 66.28 than the full insurable replacement cost of the insured 66.29 property, less deductibles, at the time the insurance is 66.30 purchased and at each renewal date, exclusive of items normally 66.31 excluded from property policies; and 66.32 (2) commercial general liability insurance against claims 66.33 and liabilities arising in connection with the ownership, 66.34 existence, use or management of the property in an amount, if 66.35 any, specified by the common interest community instruments or 66.36 otherwise deemed sufficient in the judgment of the board, 67.1 insuring the board, the association, the management agent, and 67.2 their respective employees, agents and all persons acting as 67.3 agents. The declarant shall be included as an additional 67.4 insured in its capacity as a unit owner or board member. The 67.5 unit owners shall be included as additional insureds but only 67.6 for claims and liabilities arising in connection with the 67.7 ownership, existence, use or management of the common elements. 67.8 The insurance shall cover claims of one or more insured parties 67.9 against other insured parties. 67.10 (b) In the case of a common interest community that 67.11 contains units, or structures within units, sharing or having 67.12 contiguous walls, siding or roofs, the insurance maintained 67.13 under subsection (a)(1) shall include those units, or structures 67.14 within those units, and the common elements. The insurance need 67.15 not cover the following items within the units: (i) ceiling or 67.16 wall finishing materials, (ii) floor coverings, (iii) cabinetry, 67.17 (iv) finished millwork, (v) electrical or plumbing fixtures 67.18 serving a single unit, (vi) built-in appliances, or (vii) other 67.19 improvements and betterments, regardless of when installed. If 67.20 any improvements and betterments are covered, any increased cost 67.21 may be assessed by the association against the units affected. 67.22 The association may, in the case of a claim for damage to a unit 67.23 or units, (i) pay the deductible amount as a common expense, 67.24 (ii) assess the deductible amount against the units affected in 67.25 any reasonable manner, or (iii) require the unit owners of the 67.26 units affected to pay the deductible amount directly. 67.27 (c) If the insurance described in subsections (a) and (b) 67.28 is not reasonably available, the association shall promptly 67.29 cause notice of that fact to be hand delivered or sent prepaid 67.30 by United States mail to all unit owners. The declaration may 67.31 require the association to carry any other insurance, and the 67.32 association in any event may carry any other insurance it 67.33 considers appropriate to protect the association, the unit 67.34 owners or officers, directors or agents of the association. 67.35 (d) Insurance policies carried pursuant to subsections (a) 67.36 and (b) shall provide that: 68.1 (1) each unit owner and secured party is an insured person 68.2 under the policy with respect to liability arising out of the 68.3 unit owner's interest in the common elements or membership in 68.4 the association; 68.5 (2) the insurer waives its right to subrogation under the 68.6 policy against any unit owner of the condominium or members of 68.7 the unit owner's household and against the association and 68.8 members of the board of directors; 68.9 (3) no act or omission by any unit owner or secured party, 68.10 unless acting within the scope of authority on behalf of the 68.11 association, shall void the policy or be a condition to recovery 68.12 under the policy; and 68.13 (4) if at the time of a loss under the policy there is 68.14 other insurance in the name of a unit owner covering the same 68.15 property covered by the policy, the association's policy is 68.16 primary insurance. 68.17 (e) Any loss covered by the property policy under 68.18 subsection (a)(1) shall be adjusted by and with the 68.19 association. The insurance proceeds for that loss shall be 68.20 payable to the association, or to an insurance trustee 68.21 designated by the association for that purpose. The insurance 68.22 trustee or the association shall hold any insurance proceeds in 68.23 trust for unit owners and secured parties as their interests may 68.24 appear. The proceeds shall be disbursed first for the repair or 68.25 restoration of the damaged common elements and units. Unit68.26 owners and secured parties are not entitled to receive any68.27 portion of the proceeds unlessIf there is a surplus of proceeds 68.28 after the common elements and units have been completely 68.29 repaired or restored or the common interest community is 68.30 terminated, the board of directors may retain the surplus for 68.31 use by the association or distribute the surplus among the 68.32 owners on an equitable basis as determined by the board. 68.33 (f) Unit owners may obtain insurance for personal benefit 68.34 in addition to insurance carried by the association. 68.35 (g) An insurer that has issued an insurance policy under 68.36 this section shall issue certificates or memoranda of insurance, 69.1 upon request, to any unit owner or secured party. The insurance 69.2 may not be canceled until 60 days after notice of the proposed 69.3 cancellation has been mailed to the association, each unit owner 69.4 and each secured party for an obligation to whom certificates of 69.5 insurance have been issued. 69.6 (h) Any portion of the common interest community which is 69.7 damaged or destroyed as the result of a loss covered by the 69.8 association's insurance shall be promptly repaired or replaced 69.9 by the association unless (i) the common interest community is 69.10 terminated and the association votes not to repair or replace 69.11 all or part thereof, (ii) repair or replacement would be illegal 69.12 under any state or local health or safety statute or ordinance, 69.13 or (iii) 80 percent of the unit owners, including every unit 69.14 owner and holder of a first mortgage on a unit or assigned 69.15 limited common element which will not be rebuilt, vote not to 69.16 rebuild. Subject to subsection (b), the cost of repair or 69.17 replacement of the common elements in excess of insurance 69.18 proceeds and reserves shall be paid as a common expense, and the 69.19 cost of repair of a unit in excess of insurance proceeds shall 69.20 be paid by the respective unit owner. 69.21 (i) If less than the entire common interest community is 69.22 repaired or replaced, (i) the insurance proceeds attributable to 69.23 the damaged common elements shall be used to restore the damaged 69.24 area to a condition compatible with the remainder of the common 69.25 interest community, (ii) the insurance proceeds attributable to 69.26 units and limited common elements which are not rebuilt shall be 69.27 distributed to the owners of those units, including units to 69.28 which the limited common elements were assigned, and the secured 69.29 parties of those units, as their interests may appear, and (iii) 69.30 the remainder of the proceeds shall be distributed to all the 69.31 unit owners and secured parties as their interests may appear in 69.32 proportion to their common element interest in the case of a 69.33 condominium or in proportion to their common expense liability 69.34 in the case of a planned community or cooperative. 69.35 (j) If the unit owners and holders of first mortgages vote 69.36 not to rebuild a unit, that unit's entire common element 70.1 interest, votes in the association, and common expense liability 70.2 are automatically reallocated upon the vote as if the unit had 70.3 been condemned under section 515B.1-107, and the association 70.4 shall promptly prepare, execute and record an amendment to the 70.5 declaration reflecting the reallocations. Notwithstanding the 70.6 provisions of this subsection, if the common interest community 70.7 is terminated, insurance proceeds not used for repair or 70.8 replacement shall be distributed in the same manner as sales 70.9 proceeds pursuant to section 515B.2-119. 70.10 (k) The provisions of this section may be varied or waived 70.11 in the case of a common interest community in which all units 70.12 are restricted to nonresidential use. 70.13 Sec. 28. Minnesota Statutes 2004, section 515B.3-114, is 70.14 amended to read: 70.15 515B.3-114 [RESERVES; SURPLUS FUNDS.] 70.16 (a) The annual budgets of the association shall provide 70.17 from year to year, on a cumulative basis, for adequate reserve 70.18 funds to cover the replacement of those parts of the 70.19 common elements and limited common elementsinterest community 70.20 which the association is obligated to maintain, repair, or70.21 replace. These reserve requirements shall not apply to a common 70.22 interest community which is restricted to nonresidential use. 70.23 (b) Unless the declaration provides otherwise, any surplus 70.24 funds that the association has remaining after payment of or 70.25 provision for common expenses and reserves shall be (i) credited 70.26 to the unit owners to reduce their future common expense 70.27 assessments or (ii) credited to reserves, or any combination 70.28 thereof, as determined by the board of directors. 70.29 Sec. 29. Minnesota Statutes 2004, section 515B.3-115, is 70.30 amended to read: 70.31 515B.3-115 [ASSESSMENTS FOR COMMON EXPENSES.] 70.32 (a) The obligation of a unit owner to pay common expense 70.33 assessments shall be as follows: 70.34 (1) If a common expense assessment has not been levied, the 70.35 declarant shall pay all accruedoperating expenses of the common 70.36 interest community, and shall fund the replacement reserve 71.1 component of the common expenses as required by subsection (b). 71.2 (2) If a common expense assessment has been levied, all 71.3 unit owners including the declarant shall pay the assessments 71.4 allocated to their units, subject to subsection (b).the 71.5 following: 71.6 (i) If the declaration so provides, a declarant's 71.7 liability, and the assessment lien, for the common expense 71.8 assessments, exclusive of replacement reserves, on any unit 71.9 owned by the declarant may be limited to 25 percent or more of 71.10 any assessment, exclusive of replacement reserves, until the 71.11 unit or any building located in the unit is substantially 71.12 completed. Substantial completion shall be evidenced by a 71.13 certificate of occupancy in any jurisdiction that issues the 71.14 certificate. 71.15 (ii) If the declaration provides for a reduced assessment 71.16 pursuant to paragraph (2)(i), the declarant shall be obligated, 71.17 within 60 days following the termination of the period of the 71.18 declarant control, to make up any operating deficit incurred by 71.19 the association during the period of declarant control. 71.20 (3) Notwithstanding subsections (a)(1), (a)(2), and (b), if71.21 the association maintains the exteriors of the buildings71.22 constituting or contained within the units, that part of any71.23 assessment that is allocated to replacement reserves referred to71.24 in section 515B.3-114 shall be fully levied against a unit,71.25 including any unit owned by a declarant, on the earlier of71.26 substantial completion of the exterior of (i) the building71.27 containing the unit or (ii) any building located within the unit.71.28 (b) Subject to subsection (a)(3), if the declaration so71.29 provides, a declarant's liability, and the assessment lien, for71.30 assessments, other than replacement reserves, on any unit owned71.31 by the declarant may be limited to 25 percent or any greater71.32 percentage of any assessment levied, until the unit or any71.33 building located in itThe replacement reserve component of the 71.34 common expenses shall be funded for each unit in accordance with 71.35 the projected annual budget required by section 515B.4-102(23); 71.36 provided, that the funding of replacement reserves with respect 72.1 to a unit shall commence no later than the date that the unit or 72.2 any building located within the unit boundaries is substantially 72.3 completed. Substantial completion shall be evidenced by a 72.4 certificate of occupancy in any jurisdiction that issues the 72.5 certificate. 72.6 (c) After an assessment has been levied by the association, 72.7 assessments shall be levied at least annually, based upon a 72.8 budget approved at least annually by the association. 72.9 (d) Except as modified by subsections (a)(1) and (2), (e), 72.10 (f), and (g), all common expenses shall be assessed against all 72.11 the units in accordance with the allocations established by the 72.12 declaration pursuant to section 515B.2-108. 72.13 (e) Unless otherwise required by the declaration: 72.14 (1) any common expense associated with the maintenance, 72.15 repair, or replacement of a limited common element shall be 72.16 assessed against the units to which that limited common element 72.17 is assigned, equally, or in any other proportion the declaration 72.18 provides; 72.19 (2) any common expense or portion thereof benefiting fewer 72.20 than all of the units may be assessed exclusively against the 72.21 units benefited, equally, or in any other proportion the 72.22 declaration provides; 72.23 (3) the costs of insurance may be assessed in proportion to 72.24 risk or coverage, and the costs of utilities may be assessed in 72.25 proportion to usage; 72.26 (4) reasonable attorneys fees and costs incurred by the 72.27 association in connection with (i) the collection of assessments 72.28 and, (ii) the enforcement of this chapter, the articles, bylaws, 72.29 declaration, or rules and regulations, against a unit owner, may 72.30 be assessed against the unit owner's unit; and 72.31 (5) fees, charges, late charges, fines and interest may be 72.32 assessed as provided in section 515B.3-116(a). 72.33 (f) Assessments levied under section 515B.3-116 to pay a 72.34 judgment against the association may be levied only against the 72.35 units in the common interest community at the time the judgment 72.36 was entered, in proportion to their common expense liabilities. 73.1 (g) If any damage to the common elements or another unit is 73.2 caused by the act or omission of any unit owner, or occupant of 73.3 a unit, or their invitees, the association may assess the costs 73.4 of repairing the damage exclusively against the unit owner's 73.5 unit to the extent not covered by insurance. 73.6 (h) Subject to any shorter period specified by the 73.7 declaration or bylaws, if any installment of an assessment 73.8 becomes more than 60 days past due, then the association may, 73.9 upon ten days' written notice to the unit owner, declare the 73.10 entire amount of the assessment immediately due and payable in 73.11 full. 73.12 (i) If common expense liabilities are reallocated for any 73.13 purpose authorized by this chapter, common expense assessments 73.14 and any installment thereof not yet due shall be recalculated in 73.15 accordance with the reallocated common expense liabilities. 73.16 (j) An assessment against fewer than all of the units must 73.17 be levied within three years after the event or circumstances 73.18 forming the basis for the assessment, or shall be barred. 73.19 Sec. 30. Minnesota Statutes 2004, section 515B.3-116, is 73.20 amended to read: 73.21 515B.3-116 [LIEN FOR ASSESSMENTS.] 73.22 (a) The association has a lien on a unit for any assessment 73.23 levied against that unit from the time the assessment becomes 73.24 due. If an assessment is payable in installments, the full 73.25 amount of the assessment is a lien from the time the first 73.26 installment thereof becomes due. Unless the declaration 73.27 otherwise provides, fees, charges, late charges, fines and 73.28 interest charges pursuant to section 515B.3-102(a)(10), (11) and 73.29 (12) are liens, and are enforceable as assessments, under this 73.30 section. 73.31 (b) A lien under this section is prior to all other liens 73.32 and encumbrances on a unit except (i) liens and encumbrances 73.33 recorded before the declaration and, in a cooperative, liens and 73.34 encumbrances which the association creates, assumes, or takes 73.35 subject to, (ii) any first mortgage encumbering the fee simple 73.36 interest in the unit, or, in a cooperative, any first security 74.1 interest encumbering only the unit owner's interest in the unit, 74.2 and(iii) liens for real estate taxes and other governmental 74.3 assessments or charges against the unit, and (iv) a master 74.4 association lien under clause (h). If a first mortgage on a 74.5 unit is foreclosed, the first mortgage was recorded after June 74.6 1, 1994, and no owner redeems during the owner's period of 74.7 redemption provided by chapter 580, 581, or 582, the holder of 74.8 the sheriff's certificate of sale from the foreclosure of the 74.9 first mortgage shall take title to the unit subject to a lien in 74.10 favor of the association for unpaid assessments for common 74.11 expenses levied pursuant to section 515B.3-115(a), (e)(1) to 74.12 (3), (f), and (i) which became due, without acceleration, during 74.13 the six months immediately preceding the first day following the 74.14 end of the owner's period of redemption. If a first security 74.15 interest encumbering a unit owner's interest in a cooperative 74.16 unit which is personal property is foreclosed, the secured party 74.17 or the purchaser at the sale shall take title to the unit 74.18 subject to unpaid assessments for common expenses levied 74.19 pursuant to section 515B.3-115(a), (e)(1) to (3), (f), and (i) 74.20 which became due, without acceleration, during the six months 74.21 immediately preceding the first day following either the 74.22 disposition date pursuant to section 336.9-610 or the date on 74.23 which the obligation of the unit owner is discharged pursuant to 74.24 section 336.9-622. This subsection shall not affect the 74.25 priority of mechanics' liens. 74.26 (c) Recording of the declaration constitutes record notice 74.27 and perfection of any lien under this section, and no further 74.28 recordation of any notice of or claim for the lien is required. 74.29 (d) Proceedings to enforce an assessment lien shall be 74.30 instituted within three years after the last installment of the 74.31 assessment becomes payable, or shall be barred. 74.32 (e) The unit owner of a unit at the time an assessment is 74.33 due shall be personally liable to the association for payment of 74.34 the assessment levied against the unit. If there are multiple 74.35 owners of the unit, they shall be jointly and severally liable. 74.36 (f) This section does not prohibit actions to recover sums 75.1 for which subsection (a) creates a lien nor prohibit an 75.2 association from taking a deed in lieu of foreclosure. The75.3 commencement of an action to recover the sums is not an election75.4 of remedies if it is dismissed before commencement of75.5 foreclosure of the lien provided for by this section.75.6 (g) The association shall furnish to a unit owner or the 75.7 owner's authorized agent upon written request of the unit owner 75.8 or the authorized agent a statement setting forth the amount of 75.9 unpaid assessments currently levied against the owner's unit. 75.10 If the unit owner's interest is real estate, the statement shall 75.11 be in recordable form. The statement shall be furnished within 75.12 ten business days after receipt of the request and is binding on 75.13 the association and every unit owner. 75.14 (h) The association's lien may be foreclosed as provided in 75.15 this subsection. 75.16 (1) In a condominium or planned community, the 75.17 association's lien may be foreclosed in a like manner as a 75.18 mortgage containing a power of sale pursuant to chapter 580, or 75.19 by action pursuant to chapter 581. The association shall have a 75.20 power of sale to foreclose the lien pursuant to chapter 580. 75.21 (2) In a cooperative whose unit owners' interests are real 75.22 estate, the association's lien shall be foreclosed in a like 75.23 manner as a mortgage on real estate as provided in paragraph (1). 75.24 (3) In a cooperative whose unit owners' interests in the 75.25 units are personal property, the association's lien shall be 75.26 foreclosed in a like manner as a security interest under article 75.27 9 of chapter 336. In any disposition pursuant to section 75.28 336.9-610 or retention pursuant to sections 336.9-620 to 75.29 336.9-622, the rights of the parties shall be the same as those 75.30 provided by law, except (i) notice of sale, disposition, or 75.31 retention shall be served on the unit owner 90 days prior to 75.32 sale, disposition, or retention, (ii) the association shall be 75.33 entitled to its reasonable costs and attorney fees not exceeding 75.34 the amount provided by section 582.01, subdivision 1a, (iii) the 75.35 amount of the association's lien shall be deemed to be adequate 75.36 consideration for the unit subject to disposition or retention, 76.1 notwithstanding the value of the unit, and (iv) the notice of 76.2 sale, disposition, or retention shall contain the following 76.3 statement in capital letters with the name of the association or 76.4 secured party filled in: 76.5 "THIS IS TO INFORM YOU THAT BY THIS NOTICE (fill in name of 76.6 association or secured party) HAS BEGUN PROCEEDINGS UNDER 76.7 MINNESOTA STATUTES, CHAPTER 515B, TO FORECLOSE ON YOUR INTEREST 76.8 IN YOUR UNIT FOR THE REASON SPECIFIED IN THIS NOTICE. YOUR 76.9 INTEREST IN YOUR UNIT WILL TERMINATE 90 DAYS AFTER SERVICE OF 76.10 THIS NOTICE ON YOU UNLESS BEFORE THEN: 76.11 (a) THE PERSON AUTHORIZED BY (fill in the name of 76.12 association or secured party) AND DESCRIBED IN THIS NOTICE TO 76.13 RECEIVE PAYMENTS RECEIVES FROM YOU: 76.14 (1) THE AMOUNT THIS NOTICE SAYS YOU OWE; PLUS 76.15 (2) THE COSTS INCURRED TO SERVE THIS NOTICE ON YOU; PLUS 76.16 (3) $500 TO APPLY TO ATTORNEYS FEES ACTUALLY EXPENDED OR 76.17 INCURRED; PLUS 76.18 (4) ANY ADDITIONAL AMOUNTS FOR YOUR UNIT BECOMING DUE TO 76.19 (fill in name of association or secured party) AFTER THE DATE OF 76.20 THIS NOTICE; OR 76.21 (b) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE 76.22 FORECLOSURE OF YOUR RIGHTS TO YOUR UNIT BE SUSPENDED UNTIL YOUR 76.23 CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING, OR 76.24 SETTLEMENT. YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND 76.25 GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES. 76.26 IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS 76.27 WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR OWNERSHIP 76.28 RIGHTS IN YOUR UNIT WILL TERMINATE AT THE END OF THE PERIOD, YOU 76.29 WILL LOSE ALL THE MONEY YOU HAVE PAID FOR YOUR UNIT, YOU WILL 76.30 LOSE YOUR RIGHT TO POSSESSION OF YOUR UNIT, YOU MAY LOSE YOUR 76.31 RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE, AND 76.32 YOU WILL BE EVICTED. IF YOU HAVE ANY QUESTIONS ABOUT THIS 76.33 NOTICE, CONTACT AN ATTORNEY IMMEDIATELY." 76.34 (4) In any foreclosure pursuant to chapter 580, 581, or 76.35 582, the rights of the parties shall be the same as those 76.36 provided by law, except (i) the period of redemption for unit 77.1 owners shall be six months from the date of sale or a lesser 77.2 period authorized by law, (ii) in a foreclosure by advertisement 77.3 under chapter 580, the foreclosing party shall be entitled to 77.4 costs and disbursements of foreclosure and attorneys fees 77.5 authorized by the declaration or bylaws, notwithstanding the 77.6 provisions of section 582.01, subdivisions 1 and 1a, (iii) in a 77.7 foreclosure by action under chapter 581, the foreclosing party 77.8 shall be entitled to costs and disbursements of foreclosure and 77.9 attorneys fees as the court shall determine, and (iv) the amount 77.10 of the association's lien shall be deemed to be adequate 77.11 consideration for the unit subject to foreclosure, 77.12 notwithstanding the value of the unit. 77.13 (i) If a holder of a sheriff's certificate of sale, prior 77.14 to the expiration of the period of redemption, pays any past due 77.15 or current assessments, or any other charges lienable as 77.16 assessments, with respect to the unit described in the sheriff's 77.17 certificate, then the amount paid shall be a part of the sum 77.18 required to be paid to redeem under section 582.03. 77.19 (j) In a cooperative, following foreclosureif the unit 77.20 owner fails to redeem before the expiration of the redemption 77.21 period in a foreclosure of the association's assessment lien, 77.22 the association may bring an action for eviction against the 77.23 unit owner and any persons in possession of the unit, and in 77.24 that case section 504B.291 shall not apply. 77.25 (k) An association may assign its lien rights in the same 77.26 manner as any other secured party. 77.27 Sec. 31. Minnesota Statutes 2004, section 515B.3-117, is 77.28 amended to read: 77.29 515B.3-117 [OTHER LIENS.] 77.30 (a) Except in a cooperative and except as otherwise 77.31 provided in this chapter or in a security instrument, an 77.32 individual unit owner may have the unit owner's unit released 77.33 from a lien if the unit owner pays the lienholder the portion of 77.34 the amount which the lien secures that is attributable to the 77.35 unit. Upon the receipt of payment, the lienholder shall 77.36 promptly deliver to the unit owner a recordable partial 78.1 satisfaction and release of lien releasing the unit from the 78.2 lien. The release shall be deemed to include a release of any 78.3 rights in the common elements appurtenant to the unit. The 78.4 portion of the amount which a lien secures that is attributable 78.5 to the unit shall be equal to the total amount which the lien 78.6 secures multiplied by a percentage calculated by dividing the 78.7 common expense liability attributable to the unit by the common 78.8 expense liability attributable to all units against which the 78.9 lien has been recorded, or in the case of a lien under 78.10 subsection (b), the units against which the lien is permitted or 78.11 required to be recorded. At the request of a lien claimant or 78.12 unit owners, the association shall provide a written statement 78.13 of the percentage of common expense liability attributable to 78.14 all units. After a unit owner's payment pursuant to this 78.15 section, the association may not assess the unit for any common 78.16 expense incurred thereafter in connection with the satisfaction 78.17 or defense against the lien. 78.18 (b) Labor performed or materials furnished for the 78.19 improvement of a unit shall be the basis for the recording of a 78.20 lien against that unit pursuant to the provisions of chapter 514 78.21 but shall not be the basis for the recording of a lien against 78.22 the common elements. Labor performed or materials furnished for 78.23 the improvement of common elements, for which a lien may be 78.24 recorded under chapter 514, if duly authorized by the 78.25 association, shall be deemed to be performed or furnished with 78.26 the express consent of each unit owner, and shall be perfected 78.27 by recording a lien against all the units in the common interest 78.28 community pursuant to the provisions of chapter 514, but shall 78.29 not be the basis for the recording of a lien against the common 78.30 elements except in the case of a condominium on registered land, 78.31 in which case a lien must be filed pursuant to section 508.351, 78.32 subdivision 3, or 508A.351, subdivision 3. Where a lien is 78.33 recorded against the units for labor performed or material 78.34 furnished for the improvement of common elements, the 78.35 association shall be deemed to be the authorized agent of the 78.36 unit owners for purposes of receiving the notices required under 79.1 sections 514.011 and 514.08, subdivision 1, clause (2). 79.2 (c) A security interest in a cooperative whose unit owners' 79.3 interests in the units are personal property shall be perfected 79.4 by recording a financing statement in the UCC filing section of 79.5 the office of the recording officer for the county in which the 79.6 unit is located. In any disposition by a secured party pursuant 79.7 to section 336.9-610 or retention pursuant to sections 336.9-620 79.8 to 336.9-622, the rights of the parties shall be the same as 79.9 those provided by law, subject to the exceptions and 79.10 requirements set forth in section 515B.3-116(h)(3), and except 79.11 that the unit owner has the right to reinstate the debt owing to 79.12 the secured party by paying to the secured party, prior to the 79.13 effective date of the disposition or retention, the amount which 79.14 would be required to reinstate the debt under section 580.30 if 79.15 the unit were wholly real estate. 79.16 Sec. 32. Minnesota Statutes 2004, section 515B.3-120, is 79.17 amended to read: 79.18 515B.3-120 [DECLARANT DUTIES; TURNOVER OF RECORDS.] 79.19 (a) During any period of declarant control pursuant to 79.20 section 515B.3-103(c), declarant and any of its representatives 79.21 who are acting as officers or directors of the association shall: 79.22 (1) cause the association to be operated and administered 79.23 in accordance with its articles of incorporation and bylaws, the 79.24 declaration and applicable law; 79.25 (2) be subject to all fiduciary obligations and obligations 79.26 of good faith applicable to any persons serving a corporation in 79.27 that capacity; 79.28 (3) cause the association's funds to be maintained in a 79.29 separate bank account or accounts solely in the association's 79.30 name, from and after the date of creation of the association; 79.31 and 79.32 (4) cause the association to maintain complete and accurate 79.33 records in compliance with section 515B.3-118. 79.34 (b) At such time as any period of declarant control 79.35 terminates, declarant shall cause to be delivered to the board 79.36 elected by the unit owners exclusive control of all funds of the 80.1 association, all contracts and agreements towhich are binding 80.2 on the association was or is a party, all corporate records of 80.3 the association including financial records, copies of all CIC 80.4 plats and supplementary CIC plats, personal property owned or 80.5 represented to be owned by the association, assignments of all 80.6 declarant's rights and interests under the warranties if not in 80.7 the name of the association, and, to the extent they are in the 80.8 control or possession of the declarant, copies of all plans and 80.9 specifications in its control or possession relating to the80.10 common interest communitybuildings and related 80.11 improvements which are part of the common elements, and 80.12 operating manuals and warranty materials relating to any 80.13 equipment or personal property utilized in the operation of the 80.14 common interest community. The declarant's obligation to turn 80.15 over the foregoing items shall continue to include additional 80.16 new or changed items in its possession or control. 80.17 (c) A declarant in controlperson entitled to appoint the 80.18 directors of a master association, and the master association's 80.19 officers and directors, shall be subject to the same duties and 80.20 obligations with respect to the master association as are 80.21 described in subsections (a) ,and (b) and (c), to the extent 80.22 applicable. The period of declarant control of the master80.23 association shall terminate as provided in section80.24 515B.2-121(f).A master association may not be used to 80.25 circumvent or avoid any obligation or restriction imposed on a 80.26 declarant or its affiliates by this chapter. 80.27 Sec. 33. Minnesota Statutes 2004, section 515B.4-101, is 80.28 amended to read: 80.29 515B.4-101 [APPLICABILITY; DELIVERY OF DISCLOSURE 80.30 STATEMENT.] 80.31 (a) Sections 515B.4-101 through 515B.4-118 apply to all 80.32 units subject to this chapter, except as provided in subsection 80.33 (c) or as modified or waived by written agreement of purchasers 80.34 of a unit which is restricted to nonresidential use. 80.35 (b) Subject to subsections (a) and (c), a declarant who 80.36 offers a unit to a purchaser shall deliver to the purchaser a 81.1 current disclosure statement which complies with the 81.2 requirements of section 515B.4-102. The disclosure statement 81.3 shall include any material amendments to the disclosure 81.4 statement made prior to the conveyance of the unit to the 81.5 purchaser. The declarant shall be liable to the purchaser to 81.6 whom it delivered the disclosure statement for any false or 81.7 misleading statement set forth therein or for any omission of a 81.8 material fact therefrom. 81.9 (c) Neither a disclosure statement nor a resale disclosure 81.10 certificate need be prepared or delivered in the case of: 81.11 (1) a gratuitous transfer; 81.12 (2) a transfer pursuant to a court order; 81.13 (3) a transfer to a government or governmental agency; 81.14 (4) a transfer to a secured party by foreclosure or deed in 81.15 lieu of foreclosure; 81.16 (5) an option to purchase a unit, until exercised; 81.17 (6) a transfer to a person who "controls" or is "controlled 81.18 by," the grantor as those terms are defined with respect to a 81.19 declarant under section 515B.1-103(2); 81.20 (7) a transfer by inheritance; 81.21 (8) a transfer of special declarant rights under section 81.22 515B.3-104; or 81.23 (9) a transfer in connection with a change of form of 81.24 common interest community under section 515B.2-123. 81.25 (d) A purchase agreement for a unit shall contain the 81.26 following notice: "The following notice is required by 81.27 Minnesota Statutes. The purchaser is entitled to receive a 81.28 disclosure statement or resale disclosure certificate, as 81.29 applicable. The disclosure statement or resale disclosure 81.30 certificate contains important information regarding the common 81.31 interest community and the purchaser's cancellation rights." 81.32 (e) A purchase agreement for the sale, to the initial 81.33 occupant, of a platted lot or other parcel of real estate (i) 81.34 which is subject to a master declaration, (ii) which is intended 81.35 for residential occupancy, and (iii) which does not and is not 81.36 intended to constitute a unit, shall contain the following 82.1 notice: "The following notice is required by Minnesota 82.2 Statutes: The real estate to be conveyed under this agreement 82.3 is or will be subject to a master association as defined in 82.4 Minnesota Statutes, chapter 515B. The master association is 82.5 obligated to provide to the purchaser, pursuant to Minnesota 82.6 Statutes, section 515B.4-102(c), upon the purchaser's request, a 82.7 statement containing the information required by Minnesota 82.8 Statutes, section 515B.4-102(a)(20), with respect to the master 82.9 association, prior to the time that the purchaser signs a 82.10 purchase agreement for the real estate. The statement contains 82.11 important information regarding the master association and the 82.12 purchaser's obligations thereunder." A claim by a purchaser 82.13 based upon a failure to include the foregoing notice in a 82.14 purchase agreement: 82.15 (1) shall be limited to legal, and not equitable, remedies; 82.16 (2) shall be barred unless it is commenced within the time 82.17 period specified in section 515B.4-115(a); or 82.18 (3) may be waived by a separate written document signed by 82.19 the seller and purchaser. 82.20 Sec. 34. Minnesota Statutes 2004, section 515B.4-102, is 82.21 amended to read: 82.22 515B.4-102 [DISCLOSURE STATEMENT; GENERAL PROVISIONS.] 82.23 (a) A disclosure statement shall fully and accurately 82.24 disclose: 82.25 (1) the name and, if available, the number of the common 82.26 interest community; 82.27 (2) the name and principal address of the declarant; 82.28 (3) the number of units which the declarant has the right 82.29 to include in the common interest community and a statement that 82.30 the common interest community is either a condominium, 82.31 cooperative, or planned community; 82.32 (4) a general description of the common interest community, 82.33 including, at a minimum, (i) the number of buildings, (ii) the 82.34 number of dwellings per building, (iii) the type of 82.35 construction, (iv) whether the common interest community 82.36 involves new construction or rehabilitation, (v) whether any 83.1 building was wholly or partially occupied, for any purpose, 83.2 before it was added to the common interest community and the 83.3 nature of the occupancy, and (vi) a general description of any 83.4 roads, trails, or utilities that are located on the common 83.5 elements and that the association or a master association will 83.6 be required to maintain; 83.7 (5) declarant's schedule of commencement and completion of 83.8 construction of any buildings and other improvements that the 83.9 declarant is obligated to build pursuant to section 515B.4-117; 83.10 (6) any expenses or services, not reflected in the budget, 83.11 that the declarant pays or provides, which may become a common 83.12 expense; the projected common expense attributable to each of 83.13 those expenses or services; and an explanation of declarant's 83.14 limited assessment liability under section 515B.3-115, 83.15 subsection (b); 83.16 (7) any initial or special fee due from the purchaser to 83.17 the declarant or the association at closing, together with a 83.18 description of the purpose and method of calculating the fee; 83.19 (8) identification of any liens, defects, or encumbrances 83.20 which will continue to affect the title to a unit or to any real 83.21 property owned by the association after the contemplated 83.22 conveyance; 83.23 (9) a description of any financing offered or arranged by 83.24 the declarant; 83.25 (10) a statement as to whether application has been made 83.26 for any project approvals for the common interest community from 83.27 the Federal National Mortgage Association (FNMA), Federal Home 83.28 Loan Mortgage Corporation (FHLMC), Department of Housing and 83.29 Urban Development (HUD) or Department of Veterans Affairs (VA), 83.30 and which, if any, such final approvals have been received; 83.31 (11) the terms of any warranties provided by the declarant, 83.32 including copies of chapter 327A, andsections 515B.4-112 83.33 through 515B.4-115, and any other applicable statutory 83.34 warranties, and a statement of any limitations on the 83.35 enforcement of the applicable warranties or on damages; 83.36 (12) a statement that: (i) within ten days after the 84.1 receipt of a disclosure statement, a purchaser may cancel any 84.2 contract for the purchase of a unit from a declarant; provided, 84.3 that the right to cancel terminates upon the purchaser's 84.4 voluntary acceptance of a conveyance of the unit from the 84.5 declarant or by the purchaser agreeing to modify or waive the 84.6 right to cancel in the manner provided by section 515B.4-106, 84.7 paragraph (a); (ii) if a purchaser receives a disclosure 84.8 statement more than ten days before signing a purchase 84.9 agreement, the purchaser cannot cancel the purchase agreement; 84.10 and (iii) if a declarant obligated to deliver a disclosure 84.11 statement fails to deliver a disclosure statement which 84.12 substantially complies with this chapter to a purchaser to whom 84.13 a unit is conveyed, the declarant shall be liable to the 84.14 purchaser as provided in section 515B.4-106(d); 84.15 (13) a statement disclosing to the extent of the 84.16 declarant's or an affiliate of a declarant's actual knowledge, 84.17 after reasonable inquiry, any unsatisfied judgments or lawsuits 84.18 to which the association is a party, and the status of those 84.19 lawsuits which are material to the common interest community or 84.20 the unit being purchased; 84.21 (14) a statement (i) describing the conditions under which 84.22 earnest money will be held in and disbursed from the escrow 84.23 account, as set forth in section 515B.4-109, (ii) that the 84.24 earnest money will be returned to the purchaser if the purchaser 84.25 cancels the contract pursuant to section 515B.4-106, and (iii) 84.26 setting forth the name and address of the escrow agent; 84.27 (15) a detailed description of the insurance coverage 84.28 provided by the association for the benefit of unit owners, 84.29 including a statement as to which, if any, of the items referred 84.30 to in section 515B.3-113, subsection (b), are insured by the 84.31 association; 84.32 (16) any current or expected fees or charges, other than 84.33 assessments for common expenses, to be paid by unit owners for 84.34 the use of the common elements or any other improvements or 84.35 facilities; 84.36 (17) the financial arrangements, including any 85.1 contingencies, which have been made to provide for completion of 85.2 all improvements that the declarant is obligated to build 85.3 pursuant to section 515B.4-118, or a statement that no such 85.4 arrangements have been made; 85.5 (18) in a cooperative: (i) whether the unit owners will be 85.6 entitled for federal and state tax purposes, to deduct payments 85.7 made by the association for real estate taxes and interest paid 85.8 to the holder of a security interest encumbering the 85.9 cooperative; and(ii) a statement as to the effect on the unit 85.10 owners if the association fails to pay real estate taxes or 85.11 payments due the holder of a security interest encumbering the 85.12 cooperative; and (iii) the principal amount and a general 85.13 description of the terms of any blanket mortgage, contract for 85.14 deed, or other blanket security instrument encumbering the 85.15 cooperative property; 85.16 (19) a statement: (i) that real estate taxes for the unit 85.17 or any real property owned by the association are not delinquent 85.18 or, if there are delinquent real estate taxes, describing the 85.19 property for which the taxes are delinquent, stating the amount 85.20 of the delinquent taxes, interest and penalties, and stating the 85.21 years for which taxes are delinquent, and (ii) setting forth the 85.22 amount of real estate taxes, including the amount of any special 85.23 assessment certified for payment with the real estate taxes, due 85.24 and payable with respect to the unit in the year in which the 85.25 disclosure statement is given, if real estate taxes have been 85.26 separately assessed against the unit; 85.27 (20) if the association or the purchaser of the unit will 85.28 be a member of a master association, a statement to that effect, 85.29 and all of the following information with respect to the master 85.30 association: (i) a copy of the master declaration, if any85.31 (other than any CIC plat),the articles of incorporation, 85.32 bylaws, and rules and regulations for the master association, 85.33 together with any amendments thereto; (ii) the name, address and 85.34 general description of the master association, including a 85.35 general description of any other association, unit owners, or 85.36 other persons which are or may become members; (iii) a 86.1 description of any nonresidential use permitted on any property 86.2 subject to the master association; (iv) a statement as to the 86.3 estimated maximum number of associations, unit owners or other 86.4 persons which may become members of the master association, and 86.5 the degree and period of control of the master association by a 86.6 declarant or other person; (v) a description of any facilities 86.7 intended for the benefit of the members of the master 86.8 association and not located on property owned or controlled by a 86.9 member or the master association; (vi) the financial 86.10 arrangements, including any contingencies, which have been made 86.11 to provide for completion of the facilities referred to in 86.12 subsection (v), or a statement that no arrangements have been 86.13 made; (vii) any current balance sheet of the master association 86.14 and a projected or current annual budget, as applicable, which 86.15 budget shall include with respect to the master association 86.16 those items in paragraph (23), clauses (i) through (iv)(iii), 86.17 and the projected monthly common expense assessment for each 86.18 type of unit, lot, or other parcel of real estate which is or is 86.19 planned to be subject to assessment; (viii) a description of any 86.20 expenses or services not reflected in the budget, paid for or 86.21 provided by a declarant or a person executing the master 86.22 declaration, which may become an expense of the master 86.23 association in the future; (ix) a description of any powers 86.24 delegated to and accepted by the master association pursuant to 86.25 section 515B.2-121(f)(2); (x) identification of any liens, 86.26 defects or encumbrances that will continue to affect title to 86.27 property owned or operated by the master association for the 86.28 benefit of its members; (xi) the terms of any warranties 86.29 provided by any person for construction of facilities in which 86.30 the members of the master association have or may have an 86.31 interest, and any known defects in the facilities which would 86.32 violate the standards described in section 515B.4-112(b); (xii) 86.33 a statement disclosing, to the extent of the declarant's86.34 knowledge,after inquiry of the master association, any 86.35 unsatisfied judgments or lawsuits to which the master 86.36 association is a party, and the status of those lawsuits which 87.1 are material to the master association; (xiii) a description of 87.2 any insurance coverage provided for the benefit of its members 87.3 by the master association; and (xiv) any current or expected 87.4 fees or charges, other than assessments by the master 87.5 association, to be paid by members of the master association for 87.6 the use of any facilities intended for the benefit of the 87.7 members; 87.8 (21) a statement as to whether the unit will be 87.9 substantially completed at the time of conveyance to a 87.10 purchaser, and if not substantially completed, who is 87.11 responsible to complete and pay for the construction of the 87.12 unit; 87.13 (22) a copy of the declaration and any amendments thereto, 87.14 (exclusive of the CIC plat), any other recorded covenants, 87.15 conditions restrictions, and reservations affecting the common 87.16 interest community; the articles of incorporation, bylaws and 87.17 any rules or regulations of the association; any agreement 87.18 excluding or modifying any implied warranties; any agreement 87.19 reducing the statute of limitations for the enforcement of 87.20 warranties; any contracts or leases to be signed by purchaser at 87.21 closing; and a brief narrative description of any (i) contracts 87.22 or leases that are or may be subject to cancellation by the 87.23 association under section 515B.3-105 and (ii) any material 87.24 agreements entered into between the declarant and a governmental 87.25 entity that affect the common interest community; and 87.26 (23) any currenta balance sheet for the association, 87.27 current within 90 days; a projected annual budget for the 87.28 association for the year in which the first unit is conveyed to87.29 a purchaser, and thereafter the current annual budget of the87.30 association;and a statement identifying the party responsible 87.31 for the preparation of the budget. The budget shall assume that 87.32 all units intended to be included in the common interest 87.33 community, based upon the declarant's good faith estimate, have 87.34 been subjected to the declaration; provided, that additional 87.35 budget portrayals based upon a lesser number of units are 87.36 permitted. The budget shall include, without limitation: (i) a 88.1 statement of the amount included in the budget as a reserve for 88.2 maintenance, repair andreplacement; (ii) a statement of any 88.3 other reserves; (iii) the projected common expense for each 88.4 category of expenditures for the association; and(iv) the 88.5 projected monthly common expense assessment for each type of 88.6 unit; and (v) a footnote or other reference to those components 88.7 of the common interest community the maintenance, repair, or 88.8 replacement of which the budget assumes will be funded by 88.9 assessments under section 515B.3-115(e) rather than by 88.10 assessments included in the association's annual budget, and a 88.11 statement referencing section 515B.3-115(e)(1) or (2) as the 88.12 source of funding. If, based upon the association's then 88.13 current budget, the monthly common expense assessment for the 88.14 unit at the time of conveyance to the purchaser is anticipated 88.15 to exceed the monthly assessment stated in the budget, a 88.16 statement to such effect shall be included. 88.17 (b) A declarant shall promptly amend the disclosure 88.18 statement to reflect any material change in the information 88.19 required by this chapter. 88.20 (c) The master association, within ten days after a request 88.21 by a declarant, or anya holder of declarant rights, or a 88.22 purchaser referred to in section 515B.4-101(e), or the 88.23 authorized representative of any of them, shall furnish the 88.24 information required to be provided by subsection (a)(20). A 88.25 declarant or other person who provides information pursuant to 88.26 subsection (a)(20) is not liable to the purchaser for any 88.27 erroneous information if the declarant or other person: (i) is 88.28 not an affiliate of or related in any way to a person authorized 88.29 to appoint the master association board pursuant to section 88.30 515B.2-121(c)(3), and (ii) has no actual knowledge that the 88.31 information is incorrect. 88.32 Sec. 35. Minnesota Statutes 2004, section 515B.4-105, is 88.33 amended to read: 88.34 515B.4-105 [COMMON INTEREST COMMUNITY WITH BUILDING ONCE 88.35 OCCUPIED.] 88.36 The disclosure statement of a common interest community 89.1 containing any building that was at any time before the creation 89.2 of the common interest community wholly or partially occupied, 89.3 for any purpose, by persons other than purchasers or persons who 89.4 occupied with the consent of purchasers, shall contain, in 89.5 addition to the information required by sections 515B.4-102, 89.6 515B.4-103 and 515B.4-104: 89.7 (1) a professional opinion prepared by a registered 89.8 professional architect or engineer, licensed in this state, 89.9 describing the presentcurrent condition of all structural 89.10 components ,and mechanical and electrical installations ,89.11 material to the use and enjoyment of the building, to the extent 89.12 reasonably ascertainable without disturbing the improvements or 89.13 dismantling the equipment, which will be in place or be 89.14 operational at the time of conveyance of the first unit to a 89.15 person other than a declarant; 89.16 (2) a statement by the declarant of the expected useful 89.17 life of each item reported on in paragraph (1) or a statement 89.18 that no representations are made in that regard; and 89.19 (3) a list of any outstanding notices of uncured violations 89.20 of building code or other municipal regulations, together with 89.21 the estimated cost of curing those violations. 89.22 Sec. 36. Minnesota Statutes 2004, section 515B.4-106, is 89.23 amended to read: 89.24 515B.4-106 [PURCHASER'S RIGHT TO CANCEL.] 89.25 (a) A person required to deliver a disclosure statement 89.26 pursuant to section 515B.4-101(b) shall provide at least one of 89.27 the purchasers of the unit with a copy of the disclosure 89.28 statement and all amendments thereto before conveyance of the 89.29 unit. If a purchaser is not given a disclosure statement more 89.30 than fiveten days before execution of the purchase agreement, 89.31 the purchaser may, before conveyance, cancel the purchase 89.32 agreement within fiveten days after first receiving the 89.33 disclosure statement. If a purchaser is given the disclosure 89.34 statement more than fiveten days before execution of the 89.35 purchase agreement, the purchaser may not cancel the purchase 89.36 agreement pursuant to this section. Except as expressly90.1 provided in this chapter,The five-dayten-day rescission period 90.2 cannot be waivedmay be modified or waived, in writing, by 90.3 agreement of the purchaser of a unit only after the purchaser 90.4 has received and had an opportunity to review the disclosure 90.5 statement. The person required to deliver a disclosure 90.6 statement may not condition the sale of the unit on the 90.7 purchaser agreeing to modify or waive the purchaser's ten-day 90.8 right of rescission, may not contractually obligate the 90.9 purchaser to modify or waive the purchaser's ten-day right of 90.10 rescission, and may not include a modification or waiver of the 90.11 ten-day right of rescission in any purchase agreement for the 90.12 unit. To be effective, a modification or waiver of a 90.13 purchaser's ten-day right of rescission must be evidenced by an 90.14 instrument separate from the purchase agreement signed by the 90.15 purchaser more than three days after the purchaser signs the 90.16 purchase agreement. 90.17 (b) If an amendment to the disclosure statement materially 90.18 and adversely affects a purchaser, then the purchaser shall have 90.19 fiveten days after delivery of the amendment to cancel the 90.20 purchase agreement in accordance with this section. The ten-day 90.21 rescission period may be modified or waived, in writing, by 90.22 agreement of the purchaser of a unit only after the purchaser 90.23 has received and had an opportunity to review the disclosure 90.24 statement. To be effective, a modification or waiver of a 90.25 purchaser's ten-day right of rescission under this section must 90.26 be evidenced by a written instrument separate from the purchase 90.27 agreement signed by the purchaser more than three days after the 90.28 purchaser receives the amendment. 90.29 (c) If a purchaser elects to cancel a purchase agreement 90.30 pursuant to this section, the purchaser may do so by giving 90.31 notice thereof pursuant to section 515B.1-115. Cancellation is 90.32 without penalty, and all payments made by the purchaser before 90.33 cancellation shall be refunded promptly. Notwithstanding 90.34 anything in this section to the contrary, the purchaser's 90.35 cancellation rights under this section terminate upon the 90.36 purchaser's acceptance of a conveyance of the unit. 91.1 (d) If a declarant obligated to deliver a disclosure 91.2 statement fails to deliver to the purchaser a disclosure 91.3 statement which substantially complies with this chapter, the 91.4 declarant shall be liable to the purchaser in the amount of 91.5 $1,000, in addition to any damages or other amounts recoverable 91.6 under this chapter or otherwise. Any action brought under this 91.7 subsection shall be commenced within the time period specified 91.8 in section 515B.4-115, subsection (a). 91.9 Sec. 37. Minnesota Statutes 2004, section 515B.4-107, is 91.10 amended to read: 91.11 515B.4-107 [RESALE OF UNITS.] 91.12 (a) In the event of a resale of a unit by a unit owner 91.13 other than a declarant, unless exempt under section 91.14 515B.4-101(c), the unit owner shall furnish to a purchaser, 91.15 before execution of any purchase agreement for a unit or 91.16 otherwise before conveyance, the following documents relating to 91.17 the association or to the master association, if applicable: 91.18 (1) copies of the declaration (other than any CIC plat), 91.19 the articles of incorporation and bylaws, any rules and 91.20 regulations, and any amendments theretoor supplemental 91.21 declarations; 91.22 (2) the organizational and operating documents relating to 91.23 the master association, if any; and 91.24 (3) a resale disclosure certificate from the association 91.25 dated not more than 90 days prior to the date of the purchase 91.26 agreement or the date of conveyance, whichever is earlier, 91.27 containing the information set forth in subsection (b). 91.28 (b) The resale disclosure certificate must be in 91.29 substantially the following form: 91.30 COMMON INTEREST COMMUNITY 91.31 RESALE DISCLOSURE CERTIFICATE 91.32 Name of Common Interest Community:.............................. 91.33 Name of Association:............................................ 91.34 Address of Association:......................................... 91.35 Unit Number(s) (include principal unit and any garage, storage, 91.36 or other auxiliary unit(s)):..................................... 92.1 The following information is furnished by the association 92.2 named above according to Minnesota Statutes, section 515B.4-107. 92.3 1. There is no right of first refusal or other restraint 92.4 on the free alienability of the above unit(s) contained in the 92.5 declaration, bylaws, rules and regulations, or any amendment to 92.6 them, except as follows:........................................ 92.7 ................................................................ 92.8 ................................................................ 92.9 ................................................................ 92.10 2. The following periodic installments of common expense 92.11 assessments and special assessments are payable with respect to 92.12 the above unit(s): 92.13 a. Annual assessment 92.14 installments: $....... Due: ............. 92.15 b. Special assessment 92.16 installments: $....... Due: ............. 92.17 c. Unpaid assessments, fines, or other charges: 92.18 (1) Annual $....... 92.19 (2) Special $....... 92.20 (3) Fines $....... 92.21 (4) Other Charges $....... 92.22 d. The association has/has not (strike one) approved 92.23 a plan for levying certain common expense 92.24 assessments against fewer than all the units 92.25 according to Minnesota Statutes, section 515B.3-115, 92.26 subsection (e). If a plan is approved, a description 92.27 of the plan is attached to this certificate. 92.28 3. In addition to the amounts due under paragraph 2, the 92.29 following additional fees or charges other than assessments are 92.30 payable by unit owners (include late payment charges, user fees, 92.31 etc.):.......................................................... 92.32 ................................................................ 92.33 ................................................................ 92.34 4. There are no extraordinary expenditures approved by the 92.35 association, and not yet assessed, for the current and two 92.36 succeeding fiscal years, except as follows:..................... 93.1 ................................................................ 93.2 ................................................................ 93.3 5. The association has reserved the following amounts for 93.4 maintenance, repair, or replacement:............................ 93.5 ................................................................ 93.6 ................................................................ 93.7 The following portions of these reserves are designated for the 93.8 following specified projects or uses:........................... 93.9 ................................................................ 93.10 6. The following documents are furnished with this 93.11 certificate according to statute: 93.12 a. The most recent regularly prepared balance sheet and 93.13 income and expense statement of the association. 93.14 b. The current budget of the association. 93.15 7. There are no unsatisfied judgments against the 93.16 association, except as follows (identify creditor and amount):.. 93.17 ................................................................ 93.18 ................................................................ 93.19 8. There are no pending lawsuits to which the association 93.20 is a party, except as follows (identify and summarize status):.. 93.21 ................................................................ 93.22 ................................................................ 93.23 ................................................................ 93.24 9. Description of insurance coverages: 93.25 a. The association provides the following insurance 93.26 coverage for the benefit of unit owners: (Reference may be made 93.27 to applicable sections of the declaration or bylaws; however, 93.28 any additional coverages should be described in this space) 93.29 ................................................................ 93.30 ................................................................ 93.31 ................................................................ 93.32 b. The following described fixtures, decorating items, or 93.33 construction items within the unit referred to in Minnesota 93.34 Statutes, section 515B.3-113, subsection (b), are insured by the 93.35 association (check as applicable): 93.36 ..._____Ceiling or wall finishing materials 94.1 ..._____Floor coverings 94.2 ..._____Cabinetry 94.3 ..._____Finished millwork 94.4 ..._____Electrical or plumbing fixtures serving a single unit 94.5 ..._____Built-in appliances 94.6 ..._____Improvements and betterments as originally constructed 94.7 ..._____Additional improvements and betterments installed by 94.8 unit owners 94.9 10. The board of directors of the association has not 94.10 notified the unit owner (i) that any alterations or improvements 94.11 to the unit or to the limited common elements assigned to it 94.12 violate any provision of the declaration; or (ii) that the unit 94.13 is in violation of any governmental statute, ordinance, code, or 94.14 regulation, except as follows:................................... 94.15 ................................................................. 94.16 11. The remaining term of any leasehold estate affecting 94.17 the common interest community and the premises governing any 94.18 extension or renewal of it are as follows:...................... 94.19 ................................................................ 94.20 ................................................................ 94.21 12. In addition to the above, the following matters 94.22 affecting the unit or the unit owner's obligations with respect 94.23 to the unit are deemed material. .............................. 94.24 ................................................................ 94.25 I hereby certify that the foregoing information and 94.26 statements are true and correct as of ............. 94.27 (Date) 94.28 By: ....................... 94.29 Title: ..................... 94.30 (Association representative) 94.31 Address:.................... 94.32 Phone Number:............... 94.33 RECEIPT 94.34 In addition to the foregoing information furnished by the 94.35 association, the unit owner is obligated to furnish to the 94.36 purchaser before execution of any purchase agreement for a unit 95.1 or otherwise before conveyance, copies of the following 95.2 documents relating to the association or to the master 95.3 association (as applicable): the declaration (other than any 95.4 common interest community plat), articles of incorporation, 95.5 bylaws, rules and regulations (if any), and any amendments to 95.6 these documents. Receipt of the foregoing documents, and the 95.7 resale disclosure certificate, is acknowledged by the 95.8 undersigned buyer(s). 95.9 Dated: ............ ......................... 95.10 (Buyer) 95.11 ......................... 95.12 (Buyer) 95.13 (c) If the association is subject to a master association 95.14 to which has been delegated the association's powers under 95.15 section 515B.3-102(a)(2), then the financial information 95.16 required to be disclosed under subsection (b) may be disclosed 95.17 on a consolidated basis. 95.18 (d) The association, within ten days after a request by a 95.19 unit owner, or the unit owner's authorized representative, shall 95.20 furnish the certificate required in subsection (a). The 95.21 association may charge a reasonable fee for furnishing the 95.22 certificate and any association documents related thereto. A 95.23 unit owner providing a certificate pursuant to subsection (a) is 95.24 not liable to the purchaser for any erroneous information 95.25 provided by the association and included in the certificate. 95.26 (e) A purchaser is not liable for any unpaid common expense 95.27 assessments, including special assessments, if any, not set 95.28 forth in the certificate required in subsection (a). A 95.29 purchaser is not liable for the amount by which the annual or 95.30 special assessments exceed the amount of annual or special 95.31 assessments stated in the certificate for assessments payable in 95.32 the year in which the certificate was given, except to the 95.33 extent of any increases subsequently approved in accordance with 95.34 the declaration or bylaws. A unit owner is not liable to a 95.35 purchaser for the failure of the association to provide the 95.36 certificate, or a delay by the association in providing the 96.1 certificate in a timely manner. 96.2 Sec. 38. Minnesota Statutes 2004, section 515B.4-108, is 96.3 amended to read: 96.4 515B.4-108 [PURCHASER'S RIGHT TO CANCEL RESALE.] 96.5 (a) Unless a purchaser is given the information required to 96.6 be delivered by section 515B.4-107, by a delivery method 96.7 described in that section, more than fiveten days prior to the 96.8 execution of the purchase agreement for the unit the purchaser 96.9 may, prior to the conveyance, cancel the purchase agreement 96.10 within fiveten days after receiving the information. Except as96.11 expressly provided in this chapter, the five-day rescission96.12 period cannot be waived.The ten-day rescission period may be 96.13 modified or waived, in writing, by agreement of the purchaser of 96.14 a unit only after the purchaser has received and had an 96.15 opportunity to review the information required to be delivered 96.16 by section 515B.4-107. The person required to deliver the 96.17 information required to be delivered by section 515B.4-107 may 96.18 not condition the sale of the unit on the purchaser agreeing to 96.19 modify or waive the purchaser's ten-day right of rescission, may 96.20 not contractually obligate the purchaser to modify or waive the 96.21 purchaser's ten-day right of rescission, and may not include a 96.22 modification or waiver of the ten-day right of rescission in any 96.23 purchase agreement for the unit. To be effective, a 96.24 modification or waiver of a purchaser's ten-day right of 96.25 rescission must be evidenced by an instrument separate from the 96.26 purchase agreement signed by the purchaser more than three days 96.27 after the purchaser signs the purchase agreement. 96.28 (b) A purchaser who elects to cancel a purchase agreement 96.29 pursuant to subsection (a), may do so by hand delivering notice 96.30 thereof or mailing notice by postage prepaid United States mail 96.31 to the seller or the agent. Cancellation is without penalty and 96.32 all payments made by the purchaser shall be refunded promptly. 96.33 Sec. 39. Minnesota Statutes 2004, section 515B.4-109, is 96.34 amended to read: 96.35 515B.4-109 [ESCROW DEPOSITS.] 96.36 All earnest money paid or deposits made in connection with 97.1 the purchase or reservation of units from or with a declarant 97.2 shall be deposited in an escrow account controlled jointly by 97.3 the declarant and the purchaser, or controlled by a licensed 97.4 title insurance company or agent thereof, an attorney 97.5 representing either the declarant or the purchaser, a licensed 97.6 real estate broker or, an independent bonded escrow company, or 97.7 a governmental agency or instrumentality. The escrow account 97.8 shall be in an institution whose deposits are insured by a 97.9 governmental agency or instrumentality. The money or deposits 97.10 shall be held in the escrow account until (i) delivered to the 97.11 declarant at closing; (ii) delivered to the declarant because of 97.12 the purchaser's default under a reservation agreement or a 97.13 contract to purchase the unit; (iii) delivered to the purchaser 97.14 pursuant to the provisions of section 515B.4-106 or the 97.15 provisions of a reservation agreement or a contract to purchase; 97.16 or (iv) delivered for payment of construction costs pursuant to 97.17 a written agreement between the declarant and the purchaser. 97.18 Sec. 40. Minnesota Statutes 2004, section 515B.4-111, is 97.19 amended to read: 97.20 515B.4-111 [CONVERSION PROPERTY.] 97.21 (a) A unit owner of a unit occupied for residential use in 97.22 a common interest community containing conversion property shall 97.23 not, for a period of one year following the recording of the 97.24 declaration creating the common interest community, require any 97.25 occupant of the unit to vacate the unit unless the unit owner 97.26 gives notice to the occupant in the manner described in this 97.27 section. The notice shall be given no later than 120 days 97.28 before the occupant is required to vacate the unit. The notice 97.29 shall be sufficient as to all occupants of a unit if it is hand 97.30 delivered or mailed to the unit to be vacated, addressed to the 97.31 occupants thereof. If the holder of the lessee's interest in 97.32 the unit has given the unit owner an address different than that 97.33 of the unit, then the notice shall also be given to the holder 97.34 of the lessee's interest at the designated address. The notice 97.35 shall satisfycomply with the following requirements: 97.36 (1) The notice shall set forth generally the rights 98.1 conferred by this section. 98.2 (2) The notice shall have attached to the notice intended 98.3 for the holder of the lessee's interest a form of purchase 98.4 agreement setting forth the terms of sale contemplated by 98.5 subsection (d) and a statement of any significant restrictions 98.6 on the use and occupancy of the unit to be imposed by the 98.7 declarant. 98.8 (3) The notice shall state that the occupants of the 98.9 residential unit may demand to be given 60 additional days 98.10 before being required to vacate, if any of them, or any person 98.11 residing with them, is (i) 62 years of age or older, (ii) a 98.12 person with a disability as defined in section 268A.01, or (iii) 98.13 a minor child on the date the notice is given. This demand must 98.14 be in writing, contain reasonable proof of qualification, and be 98.15 given to the declarant within 30 days after the notice of 98.16 conversion is delivered or mailed. 98.17 (4) The notice shall be contained in an envelope upon which 98.18 the following shall be boldly printed: "Notice of Conversion." 98.19 (b) Notwithstanding subsection (a), an occupant may be 98.20 required to vacate a unit upon less than 120 days' notice by 98.21 reason of nonpayment of rent, utilities or other monetary 98.22 obligations, violations of law, waste, or conduct that disturbs 98.23 other occupants' peaceful enjoyment of the premises. The terms 98.24 of the tenancy may not be altered during the notice period, 98.25 except that the holder of the lessee's interest or other party 98.26 in possession may vacate and terminate the tenancy upon one 98.27 month's written notice to the declarant. Nothing in this 98.28 section prevents the unit owner and any occupant from agreeing 98.29 to a right of occupancy on a month-to-month basis beyond the 98.30 120-day notice period, or to an earlier termination of the right 98.31 of occupancy. 98.32 (c) No repair work or remodeling may be commenced or 98.33 undertaken in the occupied units or common areas of the building 98.34 during the notice period, unless reasonable precautions are 98.35 taken to ensure the safety and security of the occupants. 98.36 (d) For 60 days after delivery or mailing of the notice 99.1 described in subsection (a), the holder of the lessee's interest 99.2 in the unit on the date the notice is mailed or delivered shall 99.3 have an option to purchase that unit on the terms set forth in 99.4 the purchase agreement attached to the notice. The purchase 99.5 agreement shall contain no terms or provisions which violate any 99.6 state or federal law relating to discrimination in housing. If 99.7 the holder of the lessee's interest fails to purchase the unit 99.8 during that 60-day period, the unit owner may not offer to 99.9 dispose of an interest in that unit during the following 180 99.10 days at a price or on terms more favorable to the offeree than 99.11 the price or terms offered to the holder. This subsection does 99.12 not apply to any unit in a conversion building if that unit will 99.13 be restricted exclusively to nonresidential use or if the 99.14 boundaries of the converted unit do not substantially conform to 99.15 the boundaries of the residential unit before conversion. 99.16 (e) If a unit owner, in violation of subsection (b), 99.17 conveys a unit to a purchaser for value who has no knowledge of 99.18 the violation, the recording of the deed conveying the unit or, 99.19 in a cooperative, the conveyance of the right to possession of 99.20 the unit, extinguishes any right a holder of a lessee's interest 99.21 who is not in possession of the unit may have under subsection 99.22 (d) to purchase that unit, but the conveyance does not affect 99.23 the right of the holder to recover damages from the unit owner 99.24 for a violation of subsection (d). 99.25 (f) If a notice of conversion specifies a date by which a 99.26 unit or proposed unit must be vacated or otherwise complies with 99.27 the provisions of chapter 504B, the notice also constitutes a 99.28 notice to vacate specified by that statute. 99.29 (g) Nothing in this section permits a unit owner to 99.30 terminate a lease in violation of its terms. 99.31 (h) Failure to give notice as required by this section is a 99.32 defense to an action for possession until a notice complying 99.33 with this section is given and the applicable notice period 99.34 terminates. 99.35 Sec. 41. Minnesota Statutes 2004, section 515B.4-115, is 99.36 amended to read: 100.1 515B.4-115 [STATUTE OF LIMITATIONS FOR WARRANTIES.] 100.2 (a) A judicial proceeding for breach of an obligation 100.3 arising under section 515B.4-101(e) or 515B.4-106(d), shall be 100.4 commenced within six months after the conveyance of the unit or 100.5 other parcel of real estate. 100.6 (b) A judicial proceeding for breach of an obligation 100.7 arising under section 515B.4-112 or 515B.4-113 shall be 100.8 commenced within six years after the cause of action accrues, 100.9 but the parties may agree to reduce the period of limitation to 100.10 not less than two years. An agreement reducing the period of 100.11 limitation shall be binding on the purchaser's successor assigns. 100.12 With respect to a unit that may be occupied for residential use, 100.13 an agreement to reduce the period of limitation must be 100.14 evidenced by an instrument separate from the purchase agreement 100.15 signed by the purchaser. 100.16 (c) Subject to subsection (d), a cause of action under 100.17 section 515B.4-112 or 515B.4-113, regardless of the purchasers 100.18 lack of knowledge of the breach, accrues: 100.19 (1) as to a unit, at the earlier of the time of conveyance 100.20 of the unit by the declarant to a bona fide purchaser of the 100.21 unit other than an affiliate of a declarant, or the time the 100.22 purchaser enters into possession of the unit; and 100.23 (2) as to each common element, the latest of (i) the time 100.24 the common element is completed, (ii) the time the first unit in 100.25 the common interest community is conveyed to a bona fide 100.26 purchaser, or if the common element is located on property that 100.27 is additional real estate at the time the first unit therein is 100.28 conveyed to a bona fide purchaser, or (iii) the termination of 100.29 the period of declarant control. 100.30 (d) If a warranty explicitly extends to future performance 100.31 or duration of any improvement or component of the common 100.32 interest community, the cause of action accrues at the time the 100.33 breach is discovered or at the end of the period for which the 100.34 warranty explicitly extends, whichever is earlier.