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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  
    Laws of Minnesota 1993 

                        CHAPTER 222-S.F.No. 141 
           An act relating to uniform acts; enacting Minnesota 
          Common Interest Ownership Act; amending Minnesota 
          Statutes 1992, sections 308A.011, subdivision 1; 
          500.20, subdivision 2a; 508.71, by adding a 
          subdivision; and 541.023, subdivision 2; proposing 
          coding for new law as Minnesota Statutes, chapter 515B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

         APPLICABILITY, DEFINITIONS AND OTHER GENERAL PROVISIONS
    Section 1.  [515B.1-101] [SHORT TITLE.] 
    Sections 515B.1-101 through 515B.4-118 may be cited as the 
Minnesota Common Interest Ownership Act. 
    Sec. 2.  [515B.1-102] [APPLICABILITY.] 
    (a) Except as provided in this section, this chapter, and 
not chapters 515 and 515A, applies to all common interest 
communities created within this state on and after the effective 
date of this chapter. 
    (b) The applicability of this chapter to common interest 
communities created prior to the effective date of this chapter 
shall be as follows: 
    (1) This chapter shall apply to condominiums created under 
chapter 515A with respect to events and circumstances occurring 
on and after the effective date of this chapter; provided (i) 
that this chapter shall not invalidate the declarations, bylaws 
or condominium plats of those condominiums, and (ii) that 
chapter 515A, and not this chapter, shall govern all rights and 
obligations of a declarant of a condominium created under 
chapter 515A, and the rights and claims of unit owners against 
that declarant. 
    (2) The following sections shall apply to condominiums 
created under chapter 515: 515B.1-105 (Separate Titles and 
Taxation); 515B.1-106 (Applicability of Local Ordinances, 
Regulations, and Building Codes); 515B.1-107 (Eminent Domain); 
515B.1-116 (Recording); 515B.2-103 (Construction and Validity of 
Declaration and Bylaws); 515B.2-104 (Description of Units); 
515B.2-118 (Amendment of Declaration); 515B.3-102 (Powers of 
Unit Owners' Association); 515B.3-110 (Voting; Proxies); 
515B.3-111 (Tort and Contract Liability); 515B.3-113 
(Insurance); 515B.3-116 (Lien for Assessments); 515B.3-117 
(Other Liens); 515B.3-118 (Association Records); 515B.3-121 
(Accounting Controls); 515B.4-107 (Resale of Units); 515B.4-108 
(Purchaser's Right to Cancel Resale); 515B.4-116 (Rights of 
Action; Attorney's Fees); and 515B.1-103 (Definitions) to the 
extent necessary in construing any of those sections.  The 
foregoing sections shall apply only with respect to events and 
circumstances occurring on and after the effective date of this 
chapter and shall not invalidate the declarations, bylaws or 
condominium plats of those condominiums. 
    (3) This chapter shall not apply to cooperatives and 
planned communities created prior to the effective date of this 
chapter; except by election pursuant to subsection (d) and 
except that section 515B.2-118 (Amendment of Declaration) shall 
apply to all planned communities created in this state prior to 
the effective date of this chapter. 
    (c) This chapter shall not invalidate any amendment to the 
declaration, bylaws or condominium plat of any condominium 
created under chapter 515 or 515A if the amendment would be 
permitted by this chapter.  Any permitted amendment recorded on 
or after the effective date of this chapter shall be adopted in 
conformity with the procedures and requirements specified by 
those instruments and by this chapter.  If the amendment grants 
to any person any rights, powers or privileges permitted by this 
chapter, all correlative obligations, liabilities and 
restrictions contained in this chapter shall also apply to that 
person. 
    (d) Any condominium created under chapter 515, any planned 
community or cooperative which would be exempt from this chapter 
under subsection (e), or any planned community or cooperative 
created prior to the effective date of this chapter, may elect 
to be subject to this chapter, as follows: 
    (1) The election shall be accomplished by recording a 
declaration or amended declaration, and approving bylaws or 
amended bylaws, which conform to the requirements of this 
chapter, and which, in the case of amendments, are adopted in 
conformity with the procedures and requirements specified by the 
existing declaration and bylaws of the common interest 
community, and by any applicable statutes. 
    (2) An amended CIC plat shall not be required unless the 
amended declaration or bylaws contain provisions inconsistent 
with the existing CIC plat; provided, that the recording officer 
shall index or cross-reference the CIC number to any existing 
CIC plat. 
    (3) Except as otherwise expressly permitted under this 
chapter, no amendment may (i) create or increase special 
declarant rights; (ii) increase the number of units; (iii) 
convert common elements to limited common elements; or (iv) 
change the boundaries of a unit, a unit's allocated interests, 
or the residential or nonresidential use of a unit, in the 
absence of unanimous written agreement of all unit owners and 
mortgagees holding first liens on units. 
    (4) Except as permitted by paragraph (3), no declarant, 
affiliate of declarant, association, master association nor unit 
owner may acquire, increase, waive, reduce or revoke any 
previously existing warranty rights or causes of action that one 
of said persons has against any other of said persons by reason 
of exercising the right of election under this subsection. 
    (5) A common interest community which elects to be subject 
to this chapter may, as a part of the election process, change 
its form of ownership by complying with the requirements of 
section 515B.2-123. 
    (e) Except as otherwise provided in this subsection, this 
chapter shall not apply, except by election pursuant to 
subsection (d), to the following: 
    (1) a planned community or cooperative which consists of 12 
or fewer units subject to the same declaration, which is not 
subject to any rights to add additional real estate and which 
will not be subject to a master association; 
    (2) a common interest community where the units consist 
solely of separate parcels of real estate designed or utilized 
for detached single family dwellings or agricultural purposes, 
and where the association has no obligation to maintain any 
building containing a dwelling or any agricultural building; 
    (3) a planned community or cooperative where, at the time 
of creation of the planned community or cooperative, the unit 
owners' interests in the dwellings consist solely of leasehold 
interests having an unexpired term of fewer than twenty years, 
including renewal options; 
    (4) a common interest community containing only a 
combination of dwellings described in paragraphs (2) and (3); 
    (5) planned communities and cooperatives limited by the 
declaration to nonresidential use; or 
    (6) real estate subject only to an instrument or 
instruments filed primarily for the purpose of creating or 
modifying rights with respect to access, ditches, drainage or 
irrigation. 
    Section 515B.1-106 shall apply to all common interest 
communities. 
    Sec. 3.  [515B.1-103] [DEFINITIONS.] 
    In the declaration and bylaws, unless specifically provided 
otherwise or the context otherwise requires, and in this chapter:
    (1) "Additional real estate" means real estate that may be 
added to a flexible common interest community. 
    (2) "Affiliate of a declarant" means any person who 
controls, is controlled by, or is under common control with a 
declarant.  A person "controls" a declarant if the person (i) is 
a general partner, officer, director, or employer of the 
declarant, (ii) directly or indirectly or acting in concert with 
one or more other persons, or through one or more subsidiaries, 
owns, controls, holds with power to vote, or holds proxies 
representing, more than 20 percent of the voting interest in the 
declarant, (iii) controls in any manner the election of a 
majority of the directors of the declarant, or (iv) has 
contributed more than 20 percent of the capital of the 
declarant.  A person "is controlled by" a declarant if the 
declarant (i) is a general partner, officer, director, or 
employer of the person, (ii) directly or indirectly or acting in 
concert with one or more other persons, or through one or more 
subsidiaries, owns, controls, holds with power to vote, or holds 
proxies representing, more than 20 percent of the voting 
interest in the person, (iii) controls in any manner the 
election of a majority of the directors of the person, or (iv) 
has contributed more than 20 percent of the capital of the 
person.  Control does not exist if the powers described in this 
subsection are held solely as a security interest and have not 
been exercised. 
    (3) "Allocated interests" means the following interests 
allocated to each unit:  (i) in a condominium, the undivided 
interest in the common elements, the common expense liability, 
and votes in the association; (ii) in a cooperative, the common 
expense liability and the ownership interest and votes in the 
association; and (iii) in a planned community, the common 
expense liability and votes in the association. 
    (4) "Association" means the unit owners' association 
organized under section 515B.3-101. 
    (5) "Board" means the body, regardless of name, designated 
in the articles of incorporation, bylaws or declaration to act 
on behalf of the association, or on behalf of a master 
association when so identified. 
    (6) "CIC plat" means a common interest community plat 
described in section 515B.2-110. 
    (7) "Common elements" means all portions of the common 
interest community other than the units. 
    (8) "Common expenses" means expenditures made or 
liabilities incurred by or on behalf of the association, or 
master association when so identified, together with any 
allocations to reserves. 
    (9) "Common expense liability" means the liability for 
common expenses allocated to each unit pursuant to section 
515B.2-108. 
    (10) "Common interest community" means contiguous or 
noncontiguous real estate within Minnesota that is subject to an 
instrument which obligates persons owning a separately described 
parcel of the real estate, or occupying a part of the real 
estate pursuant to a proprietary lease, by reason of their 
ownership or occupancy, to pay for (i) real estate taxes levied 
against; (ii) insurance premiums payable with respect to; (iii) 
maintenance of; or (iv) construction, maintenance, repair or 
replacement of, improvements located on one or more parcels or 
parts of the real estate other than the parcel or part that the 
person owns or occupies. 
    (11) "Condominium" means a common interest community in 
which (i) portions of the real estate are designated as units, 
(ii) the remainder of the real estate is designated for common 
ownership solely by the owners of the units, and (iii) undivided 
interests in the common elements are vested in the unit owners. 
    (12) "Conversion property" means real estate on which is 
located a building that at any time within two years before 
creation of the common interest community was occupied as a 
residence wholly or partially by persons other than purchasers 
and persons who occupy with the consent of purchasers. 
    (13) "Cooperative" means a common interest community in 
which the real estate is owned by an association, each of whose 
members is entitled by virtue of the member's ownership interest 
in the association to a proprietary lease. 
    (14) "Dealer" means a person in the business of selling 
units for the person's own account. 
    (15) "Declarant" means: 
    (i) if the common interest community has been created, (A) 
any person who has executed a declaration, or an amendment to a 
declaration to add additional real estate, except secured 
parties, persons whose interests in the real estate will not be 
transferred to unit owners, or, in the case of a leasehold 
common interest community, a lessor who possesses no special 
declarant rights and who is not an affiliate of a declarant who 
possesses special declarant rights, or (B) any person who 
reserves, or succeeds under section 515B.3-104 to any special 
declarant rights; or 
    (ii) any person or persons acting in concert who have 
offered prior to creation of the common interest community to 
transfer their interest in a unit to be created and not 
previously transferred. 
    (16) "Declaration" means any instrument, however 
denominated, including any amendment to the instrument, that 
creates a common interest community. 
    (17) "Dispose" or "disposition" means a voluntary transfer 
to a purchaser of any legal or equitable interest in the common 
interest community, but the term does not include the transfer 
or release of a security interest. 
    (18) "Flexible common interest community" means a common 
interest community to which additional real estate may be added. 
    (19) "Leasehold common interest community" means a common 
interest community in which all or a portion of the real estate 
is subject to a lease the expiration or termination of which 
will terminate the common interest community or reduce its size. 
    (20) "Limited common element" means a portion of the common 
elements allocated by the declaration or by operation of section 
515B.2-102(d) or (f) for the exclusive use of one or more but 
fewer than all of the units. 
    (21) "Master association" means an entity that directly or 
indirectly exercises any of the powers set forth in section 
515B.3-102 on behalf of one or more members described in section 
515B.2-121(b), (i), (ii) or (iii), whether or not it also 
exercises those powers on behalf of one or more property owners 
associations described in section 515B.2-121(b)(iv).  An entity 
hired by an association to perform maintenance, repair, 
accounting, bookkeeping or management services is not, solely by 
virtue of that relationship, a master association. 
    (22) "Period of declarant control" means the time period 
provided for in section 515B.3-103(c) during which the declarant 
may appoint and remove officers and directors of the association.
    (23) "Person" means an individual, corporation, limited 
liability company, partnership, trustee under a trust, personal 
representative, guardian, conservator, government, governmental 
subdivision or agency, or other legal or commercial entity 
capable of holding title to real estate. 
    (24) "Planned community" means a common interest community 
that is not a condominium or a cooperative.  A condominium or 
cooperative may be a part of a planned community. 
    (25) "Proprietary lease" means an agreement with a 
cooperative association whereby a member of the association is 
entitled to exclusive possession of a unit in the cooperative. 
    (26) "Purchaser" means a person, other than a declarant, 
who by means of a voluntary transfer acquires a legal or 
equitable interest in a unit other than (i) a leasehold interest 
of less than 20 years, including renewal options, or (ii) a 
security interest. 
    (27) "Real estate" means any fee simple, leasehold or other 
estate or interest in, over, or under land, including 
structures, fixtures, and other improvements and interests that 
by custom, usage, or law pass with a conveyance of land though 
not described in the contract of sale or instrument of 
conveyance.  "Real estate" may include spaces with or without 
upper or lower boundaries, or spaces without physical boundaries.
    (28) "Residential use" means use as a dwelling, whether 
primary, secondary or seasonal, but not transient use such as 
hotels or motels. 
    (29) "Secured party" means the person owning a security 
interest as defined in paragraph (30). 
    (30) "Security interest" means a perfected interest in real 
estate or personal property, created by contract or conveyance, 
which secures payment or performance of an obligation.  The term 
includes a mortgagee's interest in a mortgage, a vendor's 
interest in a contract for deed, a lessor's interest in a lease 
intended as security, a holder's interest in a sheriff's 
certificate of sale during the period of redemption, an 
assignee's interest in an assignment of leases or rents intended 
as security, a lender's interest in a cooperative share loan, a 
pledgee's interest in the pledge of an ownership interest, or 
any other interest intended as security for an obligation under 
a written agreement. 
    (31) "Special declarant rights" means rights reserved in 
the declaration for the benefit of a declarant to (i) complete 
improvements indicated on the CIC plat; (ii) add additional real 
estate to a common interest community; (iii) create units, 
common elements, or limited common elements within a common 
interest community; (iv) subdivide units or convert units into 
common elements, limited common elements and/or units; (v) 
maintain sales offices, management offices, signs advertising 
the common interest community, and models; (vi) use easements 
through the common elements for the purpose of making 
improvements within the common interest community or any 
additional real estate; (vii) create a master association and 
provide for the exercise of authority by the master association 
over the common interest community or its unit owners; (viii) 
merge or consolidate a common interest community with another 
common interest community of the same form of ownership; or (ix) 
appoint or remove any officer or director of the association or 
any master association during any period of declarant control. 
    (32) "Time share" means a right to occupy a unit or any of 
several units during five or more separate time periods over a 
period of a least five years, including renewal options, whether 
or not coupled with an estate or interest in a common interest 
community or a specified portion thereof. 
    (33) "Unit" means a parcel of real estate within a common 
interest community the boundaries of which parcel are described 
in the common interest community's declaration and which is 
intended for separate ownership or separate occupancy pursuant 
to a proprietary lease. 
    (34) "Unit identifier" means English letters or Arabic 
numerals, or a combination thereof, which identify only one unit 
in a common interest community and which meet the requirements 
of section 515B.2-104. 
    (35) "Unit owner" means a declarant or other person who 
owns a unit, or a lessee of a unit in a leasehold common 
interest community whose lease expires simultaneously with any 
lease the expiration or termination of which will remove the 
unit from the common interest community, but does not include a 
secured party.  In a common interest community, the declarant is 
the unit owner of a unit until that unit has been conveyed to 
another person. 
    Sec. 4.  [515B.1-104] [VARIATION BY AGREEMENT.] 
    The provisions of this chapter may not be varied by 
agreement, and rights conferred by it may not be waived, except 
as expressly provided in this chapter.  A declarant may not act 
under a power of attorney, or use any other device, to evade the 
limitations or prohibitions of this chapter or the declaration. 
    Sec. 5.  [515B.1-105] [SEPARATE TITLES AND TAXATION.] 
    (a) In a cooperative: 
    (1) Each unit, and its allocated interests and right to 
possession under a proprietary lease, constitutes a separate 
interest in personal property, or a separate parcel of real 
estate if so designated by the declaration. 
    (2) The unit owners' interests in units and their allocated 
interests are wholly personal property, unless the declaration 
provides that the interests are wholly real estate.  The 
characterization of these interests as real or personal property 
shall not affect whether homestead exemptions or classifications 
apply. 
    (3) The ownership interest in a unit which may be sold, 
conveyed, voluntarily or involuntarily encumbered, or otherwise 
transferred by a unit owner, is the right to possession of that 
unit under a proprietary lease coupled with the allocated 
interests of that unit, and the association's interest in that 
unit is not affected by the transaction. 
    (b) In a condominium or planned community: 
    (1) Each unit, and its allocated interest in the common 
elements, constitutes a separate parcel of real estate. 
    (2) If there is any unit owner other than a declarant, each 
unit shall be separately taxed and assessed, and no separate tax 
or assessment may be rendered against any common elements. 
    (c) If a declaration is recorded prior to 30 days before 
any installment of real estate taxes becomes payable, the local 
taxing authority shall split the taxes so payable on the common 
interest community among the units.  Interest and penalties 
which would otherwise accrue shall not begin to accrue until at 
least 30 days after the split is accomplished. 
    (d) A unit used for residential purposes together with not 
more than three units used for vehicular parking, and their 
common element interests, shall be treated as one parcel of real 
estate in determining whether homestead exemptions or 
classifications apply. 
    Sec. 6.  [515B.1-106] [APPLICABILITY OF LOCAL ORDINANCES, 
REGULATIONS AND BUILDING CODES.] 
    (a) Except as provided in subsections (b) and (c), a 
zoning, subdivision, building code, or other real estate use 
law, ordinance, charter provision, or regulation may not 
directly or indirectly prohibit the common interest community 
form of ownership or impose any requirement upon a common 
interest community, upon the creation or disposition of a common 
interest community or upon any part of the common interest 
community conversion process which it would not impose upon a 
physically similar development under a different form of 
ownership.  Otherwise, no provision of this chapter invalidates 
or modifies any provision of any zoning, subdivision, building 
code, or other real estate use law, ordinance, charter 
provision, or regulation. 
    (b) Subsection (a) shall not apply to any ordinance, rule, 
regulation, charter provision or contract provision relating to 
the financing of housing construction, rehabilitation, or 
purchases provided by or through a housing finance program 
established and operated pursuant to state or federal law by a 
state or local agency or local unit of government. 
    (c) A statutory or home rule charter city, pursuant to an 
ordinance or charter provision establishing standards to be 
applied uniformly within its jurisdiction, may prohibit or 
impose reasonable conditions upon the conversion of buildings to 
the common interest community form of ownership only if there 
exists within the city a significant shortage of suitable rental 
dwellings available to low and moderate income individuals or 
families or to establish or maintain the city's eligibility for 
any federal or state program providing direct or indirect 
financial assistance for housing to the city.  Prior to the 
adoption of an ordinance pursuant to the authority granted in 
this subsection, the city shall conduct a public hearing.  Any 
ordinance or charter provision adopted pursuant to this 
subsection shall not apply to any existing or proposed 
conversion common interest community (i) for which a bona fide 
loan commitment for a consideration has been issued by a lender 
and is in effect on the date of adoption of the ordinance or 
charter provision, or (ii) for which a notice of conversion or 
intent to convert required by section 515B.4-111, containing a 
termination of tenancy, has been given to at least 75 percent of 
the tenants and subtenants in possession prior to the date of 
adoption of the ordinance or charter provision. 
    (d) For purposes of providing marketable title, a statement 
in the declaration that the common interest community is not 
subject to an ordinance or that any conditions required under an 
ordinance have been complied with shall be prima facie evidence 
that the common interest community was not created in violation 
of the ordinance. 
    (e) A violation of an ordinance or charter provision 
adopted pursuant to the provisions of subsection (b) or (c) 
shall not affect the validity of a common interest community.  
This subsection shall not be construed to in any way limit the 
power of a city to enforce the provisions of an ordinance or 
charter provision adopted pursuant to subsection (b) or (c). 
    (f) Any ordinance or charter provision enacted hereunder 
shall not be effective for a period exceeding 18 months. 
    Sec. 7.  [515B.1-107] [EMINENT DOMAIN.] 
    (a) If a unit is acquired by eminent domain, or if part of 
a unit is acquired by eminent domain leaving the unit owner with 
a remnant which may not practically or lawfully be used for any 
material purpose permitted by the declaration, the award shall 
compensate the unit owner and secured party in the unit as their 
interests may appear, whether or not any common element interest 
is acquired.  Upon acquisition, unless the order or final 
certificate otherwise provides, that unit's allocated interests 
are automatically reallocated among the remaining units in 
proportion to their respective allocated interests prior to the 
taking, and the association shall promptly prepare, execute, and 
record an amendment to the declaration reflecting the 
allocations.  Any remnant of a unit remaining after part of a 
unit is taken under this subsection is thereafter a common 
element. 
    (b) Except as provided in subsection (a), if part of a unit 
is acquired by eminent domain, the award shall compensate the 
unit owner and secured party for the reduction in value of the 
unit and its interest in the common elements, whether or not any 
common elements are acquired. Upon acquisition, unless the order 
or final certificate otherwise provides, (i) that unit's 
allocated interests are reduced in proportion to the reduction 
in the size of the unit, or on any other basis specified in the 
declaration and (ii) the portion of the allocated interests 
divested from the partially acquired unit are automatically 
reallocated to that unit and to the remaining units in 
proportion to the respective allocated interests of those units 
before the taking, with the partially acquired unit 
participating in the reallocation on the basis of its reduced 
allocated interests. 
    (c) If part of the common elements is acquired by eminent 
domain, the portion of the award attributable to the common 
elements taken shall be paid to the association.  Unless the 
declaration provides otherwise, any portion of the award 
attributable to the acquisition of a limited common element 
shall be equally divided among the owners of the units to which 
that limited common element was allocated at the time of 
acquisition and their secured parties, as their interests may 
appear or as provided by the declaration. 
    (d) In any eminent domain proceeding the units shall be 
treated as separate parcels of real estate for valuation 
purposes, regardless of the number of units subject to the 
proceeding. 
    (e) Any distribution to a unit owner from the proceeds of 
an eminent domain award shall be subject to any limitations 
imposed by the declaration or bylaws. 
    (f) The court order or final certificate containing the 
final awards shall be recorded in every county in which any 
portion of the common interest community is located. 
    Sec. 8.  [515B.1-108] [SUPPLEMENTAL GENERAL PRINCIPLES OF 
LAW APPLICABLE.] 
    The principles of law and equity, including the law of 
corporations, the law of real property, the law relative to 
capacity to contract, principal and agent, eminent domain, 
estoppel, fraud, misrepresentation, duress, coercion, mistake, 
receivership, substantial performance, or other validating or 
invalidating cause supplement the provisions of this chapter, 
except to the extent inconsistent with this chapter. 
    Sec. 9.  [515B.1-109] [CONSTRUCTION AGAINST IMPLICIT 
REPEAL.] 
    This chapter being a general act intended as a unified 
coverage of its subject matter, no part of it shall be construed 
to be impliedly repealed by subsequent legislation if that 
construction can reasonably be avoided. 
    Sec. 10.  [515B.1-110] [UNIFORMITY OF APPLICATION AND 
CONSTRUCTION.] 
    This chapter shall be applied and construed so as to 
effectuate its general purpose to make uniform the law with 
respect to the subject of this chapter among states enacting the 
Uniform Common Interest Ownership Act. 
    Sec. 11.  [515B.1-111] [SEVERABILITY.] 
    If any provision of this chapter or the application thereof 
to any person or circumstances is held invalid, the invalidity 
does not affect other provisions or applications of this chapter 
which can be given effect without the invalid provisions or 
applications, and to this end the provisions of this chapter are 
severable. 
    Sec. 12.  [515B.1-112] [UNCONSCIONABLE AGREEMENT OR TERM OF 
CONTRACT.] 
    (a) The court, upon finding as a matter of law that a 
contract or contract clause was unconscionable at the time the 
contract was made, may refuse to enforce the contract, enforce 
the remainder of the contract without the unconscionable clause, 
or limit the application of any unconscionable clause in order 
to avoid an unconscionable result. 
    (b) Whenever it is claimed, or appears to the court, that a 
contract or any contract clause is or may be unconscionable, the 
parties, in order to aid the court in making the determination, 
shall be afforded a reasonable opportunity to present evidence 
as to: 
    (1) the commercial setting of the negotiations; 
    (2) whether a party has knowingly taken advantage of the 
inability of the other party reasonably to protect the other 
party's interests by reason of physical or mental infirmity, 
illiteracy, inability to understand the language of the 
agreement, or similar factors; 
    (3) the effect and purpose of the contract or clause; and 
    (4) if a sale, any gross disparity, at the time of 
contracting, between the amount charged for the property and the 
value of that property measured by the price at which similar 
property was readily obtainable in similar transaction, 
provided, that this factor shall not, of itself, render the 
contract unconscionable. 
    Sec. 13.  [515B.1-113] [OBLIGATION OF GOOD FAITH.] 
    Every contract or duty governed by this chapter imposes an 
obligation of good faith in its performance or enforcement. 
    Sec. 14.  [515B.1-114] [REMEDIES TO BE LIBERALLY 
ADMINISTERED.] 
    (a) The remedies provided by this chapter shall be 
liberally administered to the end that the aggrieved party is 
put in as good a position as if the other party had fully 
performed.  However, consequential, special, or punitive damages 
may not be awarded except as specifically provided in this 
chapter or by other rule of law. 
    (b) Any right or obligation declared by this chapter is 
enforceable by judicial proceeding, unless the provision 
declaring it provides otherwise. 
    Sec. 15.  [515B.1-115] [NOTICE.] 
    Except as otherwise stated in this chapter all notices 
required by this chapter shall be in writing and shall be 
effective upon hand delivery, or upon mailing if properly 
addressed with postage prepaid and deposited in the United 
States mail. 
    Sec. 16.  [515B.1-116] [RECORDING.] 
    (a) A declaration, bylaws, any amendment to a declaration 
or bylaws, and any other instrument affecting a common interest 
community shall be entitled to be recorded. 
    (b) The recording officer shall upon request promptly 
assign a number (CIC number) to a common interest community to 
be formed or to a common interest community resulting from the 
merger of two or more common interest communities. 
    (c) Documents recorded pursuant to this chapter shall in 
the case of registered land be filed, and references to the 
recording of documents shall mean filed in the case of 
registered land. 
    (d) Subject to any specific requirements of this chapter, 
if any document to be recorded pursuant to this chapter requires 
approval by a certain vote or agreement of the unit owners or 
secured parties, an affidavit of the secretary of the 
association stating that the required vote or agreement has 
occurred shall be attached to the document and shall constitute 
prima facie evidence of the representations contained therein. 
    (e) If a common interest community is located on registered 
land, the recording fee for any document affecting two or more 
units shall be the then-current fee for registering the document 
on one certificate of title for the first affected certificate 
and one-third of the then-current fee for each additional 
affected certificate.  This provision shall not apply to 
recording fees for deeds of conveyance, with the exception of 
deeds given pursuant to sections 515B.2-119 and 515B.3-112. 
    (f) An amendment to or restatement of a declaration or 
bylaws, or an amended CIC plat, approved by the required vote of 
unit owners of an association may be recorded without the 
necessity of paying the current or delinquent taxes on any of 
the units in the common interest community. 

                                ARTICLE 2

                  CREATION, ALTERATION AND TERMINATION
    Section 1.  [515B.2-101] [CREATION OF COMMON INTEREST 
COMMUNITIES.] 
    (a) A common interest community may be created only as 
follows: 
    (1) A condominium may be created only by recording a 
declaration. 
    (2) A cooperative may be created only by recording a 
declaration and by recording a conveyance of the real estate 
subject to that declaration to the association. 
    (3) A planned community which includes common elements may 
be created only by recording a declaration and by recording a 
conveyance of the common elements subject to that declaration to 
the association. 
    (4) A planned community without common elements may be 
created only by recording a declaration. 
    (b) Except as otherwise expressly provided in this chapter, 
the declaration shall be executed by all persons whose interests 
in the real estate will be conveyed to unit owners, except 
vendors under contracts for deed, and by every lessor of a lease 
the expiration or termination of which will terminate the common 
interest community.  The declaration shall be recorded in every 
county in which any portion of the common interest community is 
located.  Failure of any party not required to execute a 
declaration, but having a recorded interest in the common 
interest community, to join in the declaration shall have no 
effect on the validity of the common interest community; 
provided that the party is not bound by the declaration until 
that party acknowledges the existence of the common interest 
community in a recorded instrument. 
    (c) In a condominium or real estate cooperative, a 
declaration, or an amendment to a declaration adding units, may 
not be recorded unless all structural components and mechanical 
systems of all buildings containing or comprising any units 
thereby created, but not necessarily the units, are 
substantially completed, as evidenced by a recorded certificate 
executed by a registered engineer or architect. 
    (d) A project which meets the definition of a "common 
interest community" in section 515B.1-103(10), and is not exempt 
under section 515B.1-102(e), is subject to this chapter even if 
this or other sections of the chapter have not been complied 
with, and the declarant and all unit owners are bound by all 
requirements and obligations of this chapter. 
    Sec. 2.  [515B.2-102] [UNIT BOUNDARIES.] 
    (a) The declaration shall describe the boundaries of the 
units as provided in section 515B.2-105(5).  The boundaries need 
not be delineated by a physical structure.  The unit may consist 
of noncontiguous portions of the common interest community. 
    (b) In a condominium or cooperative, except as the 
declaration otherwise provides, if the walls, floors, or 
ceilings of a unit are designated as its boundaries, then the 
boundaries shall be the interior, unfinished surfaces of the 
perimeter walls, floors and ceilings of the unit.  All paneling, 
tiles, wallpaper, paint, floor covering, and any other finishing 
materials applied to the interior surfaces of the perimeter 
walls, floors or ceilings, are a part of the unit, and all other 
portions of the walls, floors, or ceilings, including perimeter 
doors and windows, and their frames, are a part of the common 
elements. 
    (c) In a planned community, except as the declaration 
otherwise provides, the unit boundaries shall be the boundary 
lines as designated on a plat recorded pursuant to chapter 505 
or on a registered land survey filed pursuant to chapter 508 or 
508A. 
    (d) If any chute, flue, duct, wire, conduit, bearing wall, 
bearing column, or any other fixture lies partially within and 
partially outside of the designated boundaries of a unit, any 
portion thereof serving only that unit is a limited common 
element allocated solely to that unit, and any portion thereof 
serving more than one unit or any portion of the common elements 
is a part of the common elements. 
    (e) Subject to subsection (d), all spaces, interior 
partitions, and other fixtures and improvements within the 
boundaries of a unit are a part of the unit. 
    (f) Improvements such as shutters, awnings, window boxes, 
doorsteps, stoops, porches, balconies, decks, patios, perimeter 
doors and windows, constructed as part of the original 
construction to serve a single unit, and authorized replacements 
and modifications thereof, if located outside the unit's 
boundaries, are limited common elements allocated exclusively to 
that unit. 
    Sec. 3.  [515B.2-103] [CONSTRUCTION AND VALIDITY OF 
DECLARATION AND BYLAWS.] 
    (a) All provisions of the declaration and bylaws are 
severable. 
    (b) The rule against perpetuities may not be applied to 
defeat any provision of the declaration or this chapter, or any 
instrument executed pursuant to the declaration or this chapter. 
    (c) In the event of a conflict between the provisions of 
the declaration and the bylaws, the declaration prevails except 
to the extent that the declaration is inconsistent with this 
chapter. 
    Sec. 4.  [515B.2-104] [DESCRIPTION OF UNITS.] 
    (a) If the CIC plat in a common interest community complies 
with section 515B.2-110(c), a description of a unit is legally 
sufficient if it sets forth (i) the unit identifier of the unit, 
(ii) the number assigned to the common interest community by the 
recording officer, and (iii) the county in which the unit is 
located.  In a condominium or cooperative created under this 
chapter, a unit identifier shall contain no more than six 
characters, only one of which may be a letter. 
    (b) If the CIC plat for a planned community complies with 
chapter 505, 508, or 508A, then a description of a unit in the 
planned community is legally sufficient if it is stated in terms 
of a plat or registered land survey and contains the common 
interest community number. 
    (c) A description which conforms to the requirements of 
this section shall be deemed to include all rights, obligations, 
and interests appurtenant to the unit which were created by the 
declaration or bylaws, or by this chapter, whether or not those 
rights, obligations, or interests are expressly described. 
    Sec. 5.  [515B.2-105] [CONTENTS OF DECLARATION; ALL COMMON 
INTEREST COMMUNITIES.] 
    (a) The declaration shall contain: 
    (1) the number of the common interest community, and the 
names of the common interest community and the association; 
    (2) a statement that the common interest community is 
either a condominium, cooperative, or planned community, and 
whether it is or is not subject to a master association; 
    (3) a statement that the association has been incorporated 
and a reference to the statute under which it was incorporated; 
    (4) a legally sufficient description of the real estate 
included in the common interest community, including the name of 
the county, and any appurtenant easements; 
    (5) a description of the boundaries of each unit created by 
the declaration and the unit's unit identifier; 
    (6) in a cooperative, a statement as to whether the unit 
owners' interests in all units and their allocated interests are 
real estate or personal property; 
    (7) an allocation to each unit of the allocated interests 
in the manner described in section 515B.2-108; 
    (8) a statement of (i) the total number of units and (ii) 
which units will be restricted to residential use and which 
units will be restricted to nonresidential use; 
    (9) a statement of the maximum number of units which may be 
created by the subdivision or conversion of units owned by the 
declarant pursuant to section 515B.2-112; 
    (10) any material restrictions on use, occupancy, or 
alienation of the units, or on the sale price of a unit or on 
the amount that may be received by an owner on sale, 
condemnation or casualty loss to the unit or to the common 
interest community, or on termination of the common interest 
community; provided, that these requirements shall not affect 
the power of the association to adopt, amend or revoke rules and 
regulations pursuant to section 515B.3-102; 
    (11) a statement as to whether time shares are permitted; 
and 
    (12) all matters required by sections 515B.1-103(31), 
Special Declarant Rights; 515B.2-107, Leaseholds; 515B.2-109, 
Common Elements and Limited Common Elements; 515B.2-110, Common 
Interest Community Plat; 515B.3-115, Assessments for Common 
Expenses; and 515B.2-121, Master Associations.  
    (b) The declaration may contain any other matters the 
declarant considers appropriate. 
    Sec. 6.  [515B.2-106] [CONTENTS OF DECLARATION; FLEXIBLE 
COMMON INTEREST COMMUNITIES.] 
    The declaration for a flexible common interest community 
shall include, in addition to the matters specified in section 
515B.2-105: 
    (1) a reservation of any rights to add additional real 
estate; 
    (2) a statement of any time limit, not exceeding ten years 
after the recording of the declaration, upon which any right 
reserved under paragraph (1) will lapse, together with a 
statement of any circumstances that will terminate the option 
before the expiration of the time limit.  If no time limit is 
set forth in the declaration, the time limit shall be ten years 
after the recording of the declaration; provided, that the time 
limit may be extended by an amendment to the declaration 
approved in writing by the declarant, and by the vote or written 
agreement of unit owners, other than the declarant or an 
affiliate of the declarant, to whose units are allocated at 
least 67 percent of the votes in the association; 
    (3) a statement of any limitations on any rights reserved 
under paragraph (1), other than limitations created by or 
imposed pursuant to law; 
    (4) a legally sufficient description of the additional real 
estate; 
    (5) a statement as to whether portions of any additional 
real estate may be added at different times; 
    (6) a statement of (i) the maximum number of units that may 
be created within any additional real estate, and (ii) how many 
of those units will be restricted to residential use; 
    (7) a statement that any buildings and units erected upon 
the additional real estate, when and if added, will be 
compatible with the other buildings and units in the common 
interest community in terms of architectural style, quality of 
construction, principal materials employed in construction, and 
size, or a statement of any differences with respect to the 
buildings or units, or a statement that no assurances are made 
in those regards; 
    (8) a statement that all restrictions in the declaration 
affecting use, occupancy, and alienation of units will apply to 
units created in the additional real estate, when and if added, 
or a statement of any differences with respect to the additional 
units; 
    (9) a statement as to whether any assurances made in the 
declaration regarding additional real estate pursuant to 
paragraphs (5) through (8) will apply if the real estate is not 
added to the common interest community. 
    Sec. 7.  [515B.2-107] [CONTENTS OF DECLARATION; LEASEHOLD 
COMMON INTEREST COMMUNITIES.] 
    (a) Any lease the expiration or termination of which may 
terminate the common interest community or reduce its size, or a 
memorandum thereof, shall be recorded.  The declaration of a 
leasehold common interest community shall include: 
    (1) the recording data for the lease, or the memorandum of 
lease, and a statement of where the complete lease may be 
inspected if only a memorandum is recorded; 
    (2) the date on which the lease expires; 
    (3) a legally sufficient description of the real estate 
subject to the lease; 
    (4) any right of the unit owners to purchase the lessor's 
interest in the lease and the procedure for exercise of those 
rights, or a statement that they do not have those rights; 
    (5) any right of the unit owners to remove any improvements 
within a reasonable time after the expiration or termination of 
the lease, or a statement that they do not have those rights; 
and 
    (6) any rights of the unit owners to renew the lease and 
the conditions of any renewal, or a statement that they do not 
have those rights. 
    (b) After the declaration of a leasehold condominium or 
leasehold planned community is recorded, neither the lessor who 
has joined in the declaration nor any successor in interest may 
terminate the leasehold interest of a unit owner who makes 
timely payment of the unit owner's share of the rent and 
otherwise complies with all covenants which, if violated, would 
entitle the lessor to terminate the lease.  A unit owner's 
leasehold interest in a condominium or planned community is not 
affected by failure of any other person to pay rent or fulfill 
any other covenant. 
    (c) Acquisition of the leasehold interest of any unit owner 
by the owner of the reversion or remainder does not merge the 
leasehold and fee simple interest unless the leasehold interest 
of all unit owners subject to that reversion or remainder are 
acquired. 
    (d) If the expiration or termination of a lease decreases 
the number of units in a common interest community, the 
allocated interests shall be reallocated in accordance with 
section 515B.1-107 as if those units had been taken by eminent 
domain.  Reallocations must be confirmed by an amendment to the 
declaration prepared, executed, and recorded by the association. 
    Sec. 8.  [515B.2-108] [ALLOCATION OF INTERESTS.] 
    (a) The declaration shall allocate to each unit: 
    (1) in a condominium, a fraction or percentage of undivided 
interests in the common elements and in the common expenses of 
the association and a portion of the votes in the association; 
    (2) in a cooperative, an ownership interest in the 
association, a fraction or percentage of the common expenses of 
the association and a portion of the votes in the association; 
and 
    (3) in a planned community, a fraction or percentage of the 
common expenses of the association and a portion of the votes in 
the association. 
    (b) The declaration shall state the formulas used to 
establish allocations of interests.  If the fractions or 
percentages are all equal the declaration may so state in lieu 
of stating the fractions or percentages.  The allocations may 
not discriminate in favor of units owned by the declarant or an 
affiliate of the declarant, except as provided in section 
515B.3-115. 
    (c) If units may be added to the common interest community, 
the declaration shall state the formulas to be used to 
reallocate the allocated interests among all units included in 
the common interest community after the addition. 
    (d) The declaration may authorize special allocations which 
provide:  (i) that different allocations of votes and/or common 
expenses shall be made among certain units or classes of units 
on particular matters specified in the declaration, or (ii) for 
class voting on specified issues affecting the class, with 
respect to allocations within the class or common expenses 
pertaining only to the class, or to otherwise protect valid 
interests of the class.  Special allocations shall be used to 
address operational, physical or administrative differences 
within the common interest community.  A declarant may not 
utilize special allocations for the purpose of evading any 
limitation imposed on declarants by this chapter nor may units 
constitute a class because they are owned by a declarant. 
    (e) The sum of each category of allocated interests 
allocated at any time to all the units must equal one if stated 
as a fraction or 100 percent if stated as a percentage.  In the 
event of a discrepancy between an allocated interest and the 
result derived from application of the pertinent formula, the 
allocated interest prevails. 
    (f) In a condominium or planned community, the common 
elements are not subject to partition, and any purported 
conveyance, encumbrance, judicial sale, or other voluntary or 
involuntary transfer of an undivided interest in the common 
elements made without the unit to which that interest is 
allocated is void.  The granting of easements, licenses or 
leases pursuant to section 515B.3-102 shall not constitute a 
partition. 
    (g) In a cooperative, any purported conveyance, 
encumbrance, judicial sale, or other voluntary or involuntary 
transfer of an ownership interest in the association made 
without the possessory interest in the unit to which that 
interest is related is void. 
    Sec. 9.  [515B.2-109] [COMMON ELEMENTS AND LIMITED COMMON 
ELEMENTS.] 
    (a) Common elements other than limited common elements may 
be used in common by all unit owners.  Limited common elements 
are designated for the exclusive use of the unit owners of the 
unit or units to which the limited common elements are 
allocated, subject to subsection (b) and the rights of the 
association as set forth in the declaration, the bylaws or this 
chapter. 
    (b) Except for the limited common elements described in 
section 515B.2-102, subsections (d) and (f), the declaration 
shall specify to which unit or units each limited common element 
is allocated. 
    (c) If the declaration so provides, an allocation of 
limited common elements may be changed.  The reallocation shall 
be accomplished by an amendment to the declaration executed by 
the unit owners between or among whose units the reallocation is 
made and the association.  The unit owners required to execute 
the amendment shall submit to the association an application, 
including a proposed amendment, for approval as to form and 
compliance with the declaration and this chapter.  The 
association shall establish fair and reasonable procedures and 
time frames for the submission and processing of the 
applications, and shall maintain records thereof.  If approved, 
the unit owners executing the amendment shall promptly record 
the amendment and deliver a copy of the recorded amendment to 
the association.  The association may require the unit owners 
executing the amendment to pay all fees and costs for reviewing, 
preparing and recording the amendment and any amended CIC plat. 
    Sec. 10.  [515B.2-110] [COMMON INTEREST COMMUNITY PLAT (CIC 
PLAT).] 
    (a) The CIC plat is a part of the declaration, but need not 
be physically attached to the declaration.  The CIC plat is 
required for condominiums and planned communities, and 
cooperatives in which the unit owners' interests are 
characterized as real estate.  In cooperatives in which the unit 
owners' interests are characterized as personal property, the 
declaration shall include, in lieu of a CIC plat, an exhibit 
containing a scale drawing of each building showing the 
perimeter walls of each unit created by the declaration, 
including the unit's unit identifier, and its location within a 
building if the building contains more than one unit. 
    (b) The CIC plat shall contain certifications by a 
registered professional land surveyor and registered 
professional architect, as to the parts of the CIC plat prepared 
by each, that (i) the CIC plat accurately depicts all 
information required by this section, and (ii) the work was 
undertaken by, or reviewed and approved by, the certifying land 
surveyor or architect.  The portions of the CIC plat depicting 
the dimensions of the portions of a condominium or cooperative 
described in subsections (c)(8), (9), (10), and (12), may be 
prepared by either a land surveyor or an architect.  The other 
portions of the CIC plat shall be prepared only by a land 
surveyor.  Certification by the land surveyor or architect does 
not constitute a guaranty or warranty of the nature, 
suitability, or quality of construction of any improvements 
located or to be located in the common interest community. 
    (c) A CIC plat for a condominium or cooperative shall show: 
    (1) the number of the common interest community, and the 
boundaries, dimensions and a legally sufficient description of 
the land included therein; 
    (2) the dimensions and location of all existing, material 
structural improvements and roadways; 
    (3) the intended location and dimensions of any 
contemplated common element improvements to be constructed 
within the common interest community after the filing of the CIC 
plat, labeled either "MUST BE BUILT" or "NEED NOT BE BUILT"; 
    (4) the location and dimensions of any additional real 
estate, labeled as such, and a legally sufficient description of 
the additional real estate; 
    (5) the extent of any encroachments by or upon any portion 
of the common interest community; 
    (6) the location and dimensions of all recorded easements 
within the common interest community serving or burdening any 
portion of the common interest community; 
    (7) the distance and direction between noncontiguous 
parcels of real estate; 
    (8) the location and dimensions of limited common elements, 
for example, storage lockers, porches, balconies, decks and 
patios, other than limited common elements described in section 
515B.2-102, subsections (b) and (d); 
    (9) the location and dimensions of the front, rear, and 
side boundaries of each unit and that unit's unit identifier; 
    (10) the location and dimensions of the upper and lower 
boundaries of each unit with reference to an established or 
assumed datum and that unit's unit identifier; 
    (11) a legally sufficient description of any real estate in 
which the unit owners will own only an estate for years, labeled 
as "leasehold real estate"; 
    (12) any units which may be converted by the declarant to 
create additional units or common elements identified separately.
    (d) A CIC plat for a planned community shall comply with 
either subsection (c) or it shall: 
    (1) show the number of the common interest community; 
    (2) satisfy the requirements of chapter 505, 508, or 508A, 
as applicable; and 
    (3) satisfy the platting requirements of any governmental 
authority within whose jurisdiction the planned community is 
located, subject to the limitations set forth in section 
515B.1-106. 
    (e) If a declarant adds additional real estate, the 
declarant shall record a supplemental CIC plat or plats for the 
real estate being added, conforming to the requirements of 
subsections (b) and (c) in the case of a condominium or 
cooperative, and subsections (b) and (d) in the case of a 
planned community.  If less than all additional real estate is 
being added, the supplemental CIC plat for a condominium or 
cooperative shall also show the location and dimensions of the 
remaining portion. 
    (f) If a declarant subdivides or converts any unit into two 
or more units, common elements or limited common elements, the 
declarant shall record an amendment to the CIC plat showing the 
location and dimensions of any new units, common elements and 
limited common elements thus created. 
    Sec. 11.  [515B.2-111] [EXPANSION OF FLEXIBLE COMMON 
INTEREST COMMUNITY.] 
    (a) To add additional real estate pursuant to a right 
reserved under section 515B.2-106(1), all persons whose 
interests in the additional real estate will be conveyed to unit 
owners, except vendors under a contract for deed, shall execute 
and record an amendment to the declaration as provided in this 
section.  The amendment to the declaration shall: 
    (1) assign a unit identifier to each unit formed in the 
additional real estate; 
    (2) reallocate common element interests, votes in the 
association, and common expense liabilities in compliance with 
the declaration and section 515B.2-108; 
    (3) describe any limited common elements formed out of the 
additional real estate, designating the unit to which each is 
allocated to the extent required by section 515B.2-109; 
    (4) contain such other provisions as may be reasonably 
required by the association; and 
    (5) conform to the applicable requirements of the 
declaration and the act. 
    (b) A declarant shall give notice of its intention to add 
additional real estate as follows: 
    (1) If the period of declarant control has expired, to the 
association in the same manner as service of summons in a civil 
action in district court at least 15 days prior to recording the 
amendment.  A copy of the amendment shall be attached to the 
notice. 
    (2) If the period of declarant control has not expired, to 
the unit owners by notice (one notice per unit) given in the 
manner provided in section 515B.1-115, not less than 15 days 
prior to recording the amendment, addressed to "Unit Owner 
Entitled to Legal Notice" at each unit or to the unit owner at 
such other address as may be designated by notice from the unit 
owner.  The declarant shall provide a copy of the amendment at 
no cost to any unit owner within five business days of the unit 
owner's request, and the notice shall include a statement to 
that effect. 
    (3) Proof of notice to the association or the unit owners, 
as the case may be, shall be attached to the recorded 
amendment.  Following service of notice, the amendment shall not 
be changed so as to materially and adversely affect the rights 
of unit owners or the association. 
    (c) A lien upon the additional real estate that is not also 
upon the existing common interest community is a lien only upon 
the units, and their respective interest in the common elements 
(if any), that are created from the additional real estate.  
Units within the common interest community as it existed prior 
to expansion are transferred free of liens that existed only 
upon the additional real estate, notwithstanding the fact that 
the interest in the common elements is a portion of the entire 
common interest community, including the additional real estate. 
    Sec. 12.  [515B.2-112] [SUBDIVISION OR CONVERSION OF 
UNITS.] 
    (a) If the declaration so provides, (i) a unit owned by a 
person other than a declarant may be subdivided into two or more 
units, or (ii) a unit owned by a declarant may be subdivided or 
converted into two or more units, limited common elements, 
common elements, or a combination of units, limited common 
elements or common elements, subject to subsections (b) and (c). 
    (b) If a unit is owned by a unit owner other than a 
declarant, the unit owner shall prepare and submit to the 
association for approval an application for an amendment to the 
declaration and amended CIC plat, for the purpose of subdividing 
the unit.  The application shall contain, at a minimum, a 
general description of the proposed subdivision, and shall 
specify in detail the matters required by paragraphs (2) and 
(3).  The association shall establish fair and reasonable 
procedures and time frames for the submission and prompt 
processing of the applications.  If the application is approved, 
the unit owner shall cause an amendment and amended CIC plat to 
be prepared based upon the approved application.  The amendment 
shall: 
    (1) be executed by the unit owner and any secured party 
with respect to the unit; 
    (2) assign a unit identifier to each unit created; 
    (3) reallocate the common element interest, votes in the 
association, and common expense liability formerly allocated to 
the unit among the units created on the basis described in the 
declaration; 
    (4) contain such other provisions as may be reasonably 
required by the association; and 
    (5) conform to the requirements of the declaration and this 
chapter.  The basis for disapproval shall be limited to (i) 
structural or safety considerations, (ii) liability 
considerations for the association and other unit owners, (iii) 
aesthetic considerations if the changes affect exterior portions 
of a structure, or (iv) a failure to comply with the 
declaration, this chapter, or governmental laws, ordinances or 
regulations.  The association shall give written notice of its 
decision and/or required changes to the unit owner.  If the 
amendment conforms to the application, the declaration and this 
chapter, the association shall be obligated to execute the 
amendment and cooperate in its recording.  The unit owner shall 
record the amendment and the amended CIC plat and deliver a copy 
of the recorded amendment and amended CIC plat to the 
association.  The association may require the unit owners 
executing the amendment to pay all fees and costs for reviewing, 
preparing and recording the amendment and the amended CIC plat, 
and any other fees or costs incurred by the association in 
connection therewith. 
    (c) If a unit is owned by a declarant, the declarant shall 
prepare and record at its expense an amendment and amended CIC 
plat subdividing or converting the unit.  The amendment shall 
comply with the requirements of subsection (b)(1), (2), (3) and 
(5), and shall be limited to those provisions necessary to 
accomplish the subdivision or conversion unless the consent of 
unit owners required to amend the declaration is obtained. 
    (d) If a secured party joins in the amendment pursuant to 
this section, its interest and remedies shall be deemed to apply 
to the units and the common element interests that result from 
the subdivision or conversion of the unit.  If the secured party 
enforces any remedy, including foreclosure of its lien, against 
any of the units created, all instruments and notices shall 
describe the subject property in terms of the amended 
descriptions. 
    Sec. 13.  [515B.2-113] [ALTERATIONS OF UNITS.] 
    Subject to the provisions of the declaration and applicable 
law: 
    (a) A unit owner may make any improvements or alterations 
to the unit that do not impair the structural integrity or 
mechanical systems, affect the common elements, or impair the 
support of any portion of the common interest community 
provided, (i) that prior arrangements are made with the 
association to ensure that other unit owners are not disturbed, 
(ii) that the common elements are not damaged, and (iii) that 
the common elements and other units are protected against 
mechanics' liens. 
    (b) A unit owner may, after acquiring title to an adjoining 
unit or an adjoining part of an adjoining unit, with the prior 
written approval of the association and first mortgagees of the 
affected units, remove or alter any intervening partition or 
create apertures therein, even if the partition is part of the 
common elements, if those acts do not impair the structural 
integrity or mechanical systems or lessen the support of any 
portion of the common interest community.  The adjoining unit 
owners shall have the exclusive license to use the space 
occupied by the removed partition, but the use shall not create 
an easement or vested right.  Removal of partitions or creation 
of apertures under this paragraph is not an alteration of 
boundaries.  The association may require that the owner or 
owners of units affected replace or restore any removed 
partition, that the unit owner comply with subsection (a)(i), 
(ii) and (iii), and that the unit owner pay all fees and costs 
incurred by the association in connection with the alteration. 
    Sec. 14.  [515B.2-114] [RELOCATION OF BOUNDARIES BETWEEN 
ADJOINING UNITS.] 
    (a) Subject to the provisions of the declaration and 
applicable law, the boundaries between adjoining units may be 
relocated by an amendment to the declaration upon the submission 
of an application to the association by the owners of those 
units and approval by the association.  The application shall 
contain, at a minimum, a general description of the proposed 
relocation, and shall specify in detail the matters required by 
subsection (b)(2) and (3). 
    (b) The association shall establish fair and reasonable 
procedures and time frames for the submission and prompt 
processing of the applications.  The basis for disapproval shall 
be limited to structural or safety considerations, or a failure 
to comply with the declaration, this chapter, or governmental 
laws, ordinances or regulations.  If the application is 
approved, the unit owners making the application shall cause an 
amendment and amended CIC plat to be prepared based upon the 
approved application, and submit them to the association for 
approval.  The amendment shall: 
    (1) be executed by the unit owners and by any secured party 
with respect to the units; 
    (2) identify the units involved; 
    (3) reallocate the common element interest, votes in the 
association and common expense liability formerly allocated to 
the units among the newly defined units on the basis described 
in the declaration; 
    (4) contain words of conveyance between them; 
    (5) contain such other provisions as may be reasonably 
required by the association; and 
    (6) conform to the requirements of the declaration and this 
chapter. 
    (c) The interest and remedies of a secured party which 
joins in the amendment pursuant to this section shall be deemed 
to be modified as provided in the amendment. 
    (d) The association may require the unit owners making the 
application to build a boundary wall and other common elements 
between the units, and to pay all fees and costs for reviewing, 
preparing and recording the amendment and the amended CIC plat, 
and any other fees or costs incurred by the association in 
connection therewith. 
    (e) The applicant shall deliver a copy of the recorded 
amendment and amended CIC plat to the association. 
    Sec. 15.  [515B.2-115] [MINOR VARIATIONS IN BOUNDARIES.] 
    The existing physical boundaries of a unit, or of a unit 
reconstructed in substantial accordance with the description 
contained in the original declaration, are its legal boundaries, 
regardless of vertical or lateral movement of the building or 
minor variances due to shifting or settling.  This section does 
not relieve a declarant or any other person of liability for 
failure to adhere to the CIC plat or for any representation in a 
disclosure statement. 
    Sec. 16.  [515B.2-116] [USE FOR SALES PURPOSES.] 
    A declarant may maintain sales offices, management offices, 
and models in units or on common elements in the common interest 
community only if the declaration so provides and specifies the 
rights of a declarant with regard to the number and location 
thereof.  If the declaration so provides, a declarant may 
maintain signs on the common elements and in model units 
advertising the common interest community.  Rights granted 
pursuant to this section are subject to the provisions of other 
state laws and to local ordinances. 
    Sec. 17.  [515B.2-117] [DECLARANT'S EASEMENT RIGHTS.] 
    Subject to the provisions of the declaration, a declarant 
has an easement through the common elements as may be reasonably 
necessary for the purpose of discharging the declarant's 
obligations or exercising special declarant rights, whether 
arising under this chapter or reserved in the declaration. 
    Sec. 18.  [515B.2-118] [AMENDMENT OF DECLARATION.] 
    (a) Except in cases of amendments that may be executed by a 
declarant under section 515B.2-111 or 515B.2-112, or by the 
association and/or certain unit owners under section 515B.2-107, 
515B.2-109, 515B.2-112, 515B.2-113, 515B.2-114, or 515B.2-119, 
and except as limited by subsection (d), the declaration, 
including any CIC plat, may be amended only by vote or written 
agreement of unit owners of units to which at least 67 percent 
of the votes in the association are allocated, or any greater or 
other requirement the declaration specifies.  The declaration 
may specify a smaller percentage only if all of the units are 
restricted to nonresidential use. 
    (b) No action to challenge the validity of an amendment 
adopted by the association pursuant to this section may be 
brought more than two years after the amendment is recorded. 
    (c) Every amendment to the declaration shall be recorded in 
every county in which any portion of the common interest 
community is located and is effective only when recorded. 
    (d) Except as expressly permitted or required by other 
provisions of this chapter, no amendment may create or increase 
special declarant rights, increase the number of units, change 
the boundaries of any unit, change the allocated interests of a 
unit, change common elements to limited common elements, change 
the authorized use of a unit from residential to nonresidential, 
or conversely, or change the characterization of the unit 
owners' interests in a cooperative from real estate to personal 
property, or conversely, in the absence of unanimous written 
consent of the unit owners. 
    Sec. 19.  [515B.2-119] [TERMINATION OF COMMON INTEREST 
COMMUNITY.] 
    (a) A common interest community may be terminated only by 
agreement of unit owners of units to which at least 80 percent 
of the votes in the association are allocated, and 80 percent of 
the first mortgagees of units (each mortgagee having one vote 
per unit financed), or any larger percentage the declaration 
specifies.  The declaration may specify a smaller percentage 
only if all of the units are restricted to nonresidential use. 
    (b) An agreement to terminate shall be evidenced by a 
written agreement, executed in the same manner as a deed by the 
number of unit owners and first mortgagees of units required by 
subsection (a).  The agreement shall specify a date after which 
the agreement shall be void unless recorded before that date.  
The agreement shall also specify a date by which the termination 
of the common interest community and the winding up of its 
affairs must be accomplished.  A certificate of termination 
executed by the association evidencing the termination shall be 
recorded on or before the termination date, or the agreement to 
terminate shall be revoked.  The agreement to terminate, or a 
memorandum thereof, and the certificate of termination shall be 
recorded in every county in which a portion of the common 
interest community is situated and is effective only upon 
recording. 
    (c) In the case of a condominium or planned community 
containing only units having upper and lower boundaries, a 
termination agreement may provide that all of the common 
elements and units of the common interest community must be sold 
following termination.  If, pursuant to the agreement, any real 
estate in the common interest community is to be sold following 
termination, the termination agreement shall set forth the 
minimum terms of sale acceptable to the association. 
    (d) In the case of a condominium or planned community 
containing any units not having upper and lower boundaries 
described in the declaration, a termination agreement may 
provide for sale of the common elements, but it may not require 
that the units be sold following termination, unless the 
original declaration provided otherwise or all unit owners whose 
units are to be sold consent to the sale. 
    (e) The association, on behalf of the unit owners, shall 
have authority to contract for the sale of real estate in a 
common interest community pursuant to this section, subject to 
the required approval.  The agreement to terminate shall be 
deemed to grant to the association a power of attorney coupled 
with an interest to effect the conveyance of the real estate on 
behalf of the holders of all interests in the units, including 
without limitation the power to execute all instruments of 
conveyance and related instruments.  Until the sale has been 
completed, all instruments in connection with the sale have been 
executed and the sale proceeds distributed, the association 
shall continue in existence with all powers it had before 
termination. 
    (1) The instrument conveying or creating the interest in 
the common interest community shall include as exhibits (i) an 
affidavit of the secretary of the association certifying that 
the approval required by this section has been obtained and (ii) 
a schedule of the names of all unit owners in the common 
interest community as of the date of the approval. 
    (2) Proceeds of the sale shall be distributed to unit 
owners and secured parties as their interests may appear, in 
accordance with subsections (h), (i), (j), and (k). 
    (3) Unless otherwise specified in the agreement of 
termination, until the association has conveyed title to the 
real estate, each unit owner and the unit owner's successors in 
interest have an exclusive right to occupancy of the portion of 
the real estate that formerly constituted the unit.  During the 
period of that occupancy, each unit owner and the unit owner's 
successors in interest remain liable for all assessments and 
other obligations imposed on unit owners by this chapter, the 
declaration or the bylaws. 
    (f) The legal description of the real estate constituting 
the common interest community shall, upon the date of recording 
of the certificate of termination referred to in subsection (b), 
be as follows: 
    (1) In a planned community, the lot and block description 
contained in the CIC plat, and any amendments thereto, subject 
to any subsequent conveyance or taking of a fee interest in any 
part of the property. 
    (2) In a condominium or cooperative, the underlying legal 
description of the real estate as set forth in the declaration 
creating the common interest community, and any amendments 
thereto, subject to any subsequent conveyance or taking of a fee 
interest in any part of the property. 
    (3) The legal description referred to in this subsection 
shall apply upon the recording of the certificate of 
termination.  The recording officer for each county in which the 
common interest community is located shall index the property 
located in that county in its records under the legal 
description required by this subsection from and after the date 
of recording of the certificate of termination.  In the case of 
registered property, the registrar of titles shall cancel the 
existing certificates of title with respect to the property and 
issue one or more certificates of title for the property 
utilizing the legal description required by this subsection. 
    (g) In a condominium or planned community, if the agreement 
to terminate provides that the real estate constituting the 
common interest community is not to be sold following 
termination, title to the common elements and, in a common 
interest community containing only units having upper and lower 
boundaries described in the declaration, title to all the real 
estate in the common interest community, vests in the unit 
owners upon termination as tenants in common in proportion to 
their respective interest as provided in subsection (k), and 
liens on the units shift accordingly.  While the tenancy in 
common exists, each unit owner and the unit owner's successors 
in interest have an exclusive right to occupancy of the portion 
of the real estate that formerly constituted the unit. 
    (h) The proceeds of any sale of real estate pursuant to 
subsection (e), together with the assets of the association, 
shall be held by the association as trustee for unit owners, 
secured parties and other holders of liens on the units as their 
interests may appear.  Before distributing any proceeds, the 
association shall have authority to deduct from the proceeds of 
sale due with respect to the unit (i) unpaid assessments levied 
by the association with respect to the unit, (ii) unpaid real 
estate taxes or special assessments due with respect to the 
unit, and (iii) the share of expenses of sale and winding up of 
the association's affairs with respect to the unit. 
    (i) Following termination of a condominium or planned 
community, creditors of the association holding liens on the 
units perfected before termination may enforce those liens in 
the same manner as any lien holder, in order of priority based 
upon their times of perfection.  All other creditors of the 
association are to be treated as if they had perfected liens on 
the units immediately before termination. 
    (j) In a cooperative, the declaration may provide that all 
creditors of the association have priority over any interests of 
unit owners and creditors of unit owners.  In that event, 
following termination, creditors of the association holding 
liens on the cooperative which were perfected before termination 
may enforce their liens in the same manner as any lien holder, 
in order of priority based upon their times of perfection.  All 
other creditors of the association shall be treated as if they 
had perfected a lien against the cooperative immediately before 
termination.  Unless the declaration provides that all creditors 
of the association have that priority: 
    (1) the lien of each creditor of the association which was 
perfected against the association before termination becomes, 
upon termination, a lien against each unit owner's interest in 
the unit as of the date the lien was perfected; 
    (2) any other creditor of the association is to be treated 
upon termination as if the creditor had perfected a lien against 
each unit owner's interest immediately before termination; 
    (3) the amount of the lien of an association's creditor 
described in paragraphs (1) and (2) against each of the unit 
owners' interest shall be proportionate to the ratio which each 
unit's common expense liability bears to the common expense 
liability of all of the units; 
    (4) the lien of each creditor of each unit owner which was 
perfected before termination continues as a lien against that 
unit owner's interest in the unit as of the date the lien was 
perfected; and 
    (5) the assets of the association shall be distributed to 
all unit owners and all lien holders as their interests may 
appear in the order described in this section.  Creditors of the 
association are not entitled to payment from any unit owner in 
excess of the amount of the creditor's lien against that unit 
owner's interest. 
    (k) The respective interest of unit owners referred to in 
subsections (e), (f), (g), (h) and (i) are as follows: 
    (1) Except as provided in paragraph (2), the respective 
interests of unit owners are the fair market values of their 
units, allocated interests, and any limited common elements 
immediately before the termination, as determined by one or more 
independent appraisers selected by the association.  The 
decision of the independent appraisers must be distributed to 
the unit owners and becomes final unless disapproved within 30 
days after distribution by unit owners of units to which 25 
percent of the votes in the association are allocated.  The 
proportion of any unit's interest to that of all units is 
determined by dividing the fair market value of that unit by the 
total fair market values of all the units. 
    (2) If any unit or any limited common element is destroyed 
to the extent that an appraisal of the fair market value thereof 
before destruction cannot be made, the interests of all unit 
owners are:  (i) in a condominium, their respective common 
element interests immediately before the termination, (ii) in a 
cooperative, their respective ownership interests immediately 
before the termination, and (iii) in a planned community, their 
respective common expense liabilities immediately before the 
termination. 
    (1) In a condominium or planned community, except as 
provided in subsection (m), foreclosure or enforcement of a lien 
or encumbrance against the entire common interest community does 
not terminate, of itself, the common interest community, and 
foreclosure or enforcement of a lien or encumbrance against a 
portion of the common interest community does not withdraw that 
portion from the common interest community. 
    (m) In a condominium or planned community, if a lien or 
encumbrance against a portion of the real estate comprising the 
common interest community has priority over the declaration and 
the lien or encumbrance has not been partially released, the 
parties foreclosing the lien or encumbrance, upon foreclosure, 
may record an instrument excluding the real estate subject to 
that lien or encumbrance from the common interest community. 
    (n) Following the termination of a common interest 
community in accordance with this section, the board of 
directors of the association shall cause the association to be 
dissolved in accordance with law. 
    Sec. 20.  [515B.2-120] [RIGHTS OF SECURED PARTIES.] 
    Notwithstanding any requirement in the declaration, the 
articles of incorporation or the bylaws that a percentage of 
secured parties approve specified actions of the unit owners or 
the association as a condition to the effectiveness of those 
actions, no requirement for approval may operate to (i) deny or 
delegate control over the general administrative affairs of the 
association by the unit owners or the board of directors, or 
(ii) prevent the association or the board of directors from 
commencing, intervening in, or settling any litigation or 
proceeding, or (iii) prevent the association or its appointed 
insurance trustee from receiving and distributing any insurance 
proceeds except pursuant to section 515B.3-113. 
    Sec. 21.  [515B.2-121] [MASTER ASSOCIATIONS.] 
    (a) A master association formed after the effective date of 
this chapter shall be organized as a Minnesota profit, 
nonprofit, cooperative or municipal corporation.  A master 
association shall be incorporated prior to the delegation to it 
of any powers under this chapter. 
    (b) The members of the master association shall be any 
combination of (i) unit owners of one or more common interest 
communities, (ii) one or more associations, (iii) one or more 
master associations, or (iv) owners or property owners 
associations not subject to this chapter in combination with any 
other category of member.  An association or its members may be 
members of an entity created before the effective date of this 
chapter which performs functions similar to those performed by a 
master association regardless of whether the entity is subject 
to this chapter. 
    (c) If so provided in the declaration, any of the powers 
described in section 515B.3-102 may be delegated to and 
exercised by a master association, and the master association 
shall have all powers referred to elsewhere in this chapter 
which may be necessary or incidental to the exercise of the 
delegated powers.  However, a master association may exercise 
the powers set forth in section 515B.3-102(a)(2) only to the 
extent expressly permitted in the declarations of the common 
interest communities, and the declarations or bylaws of other 
master associations, which are intended to be subject to those 
powers and which are members of the master association, or whose 
members or associations are members of the master association. 
    (d) The powers may be delegated to a master association by 
the declaration, or by the board pursuant to authority granted 
in the declaration.  If any delegation of powers may be made at 
the discretion of the board, the board of the master association 
shall have authority to determine whether the delegation of 
powers is authorized by, and consistent with the intent of, the 
declaration of the common interest community whose association's 
powers are being delegated and the organizational documents of 
the master association, and shall have authority to refuse any 
improper delegation of powers. 
    (e) If a board properly delegates powers to a master 
association, the members of the board have no liability for the 
acts or omissions of the master association with respect to the 
delegated powers following delegation, except those arising out 
of their actions as officers or directors of the master 
association. 
    (f) Sections 515B.3-103, 515B.3-108, 515B.3-109, 
515B.3-110, and 515B.3-112 shall apply in the conduct of the 
affairs of a master association; provided, that the rights of 
voting, notice and other rights enumerated in those sections 
apply only to persons who elect the board of a master 
association, whether or not those persons are otherwise unit 
owners within the meaning of this chapter. 
    (g) The bylaws of the master association may provide for a 
control period during which the members of the master 
association board may be appointed by a person, identified in 
the master association's bylaws, other than the members of the 
master association.  The control period may extend from the date 
of filing of the articles of incorporation of the master 
association, and shall terminate upon the earlier of (i) 
surrender of control by the person authorized to appoint the 
members of the master association board or (ii) 60 days after 
conveyance of 75 percent of the units contained in all common 
interest communities subject to the master association to unit 
owners other than a declarant or an affiliate of a declarant of 
those common interest communities, subject to the following: 
    (1) not later than 60 days after conveyance of 50 percent 
of the units that may be created to unit owners other than a 
declarant or an affiliate of a declarant, a meeting of the 
members of the master association shall be held at which not 
less than 33-1/3 percent of the members of the master 
association board shall be elected by persons entitled to elect 
said board other than a declarant or an affiliate of a declarant.
    (2) not later than the termination of the control period, 
those members of the master association entitled to elect the 
master association board shall elect a master association board 
of at least three members.  Thereafter, a majority of the 
directors of the master association board shall be members of 
the master association other than a declarant or an affiliate of 
a declarant.  The remaining directors need not be members of the 
master association, unless required by the articles of 
incorporation or bylaws of the master association.  The master 
association board shall elect the officers of the master 
association.  The directors and officers shall take office upon 
election. 
    (3) In determining whether the control period has 
terminated under subsection (h), or whether members other than a 
declarant or an affiliate of a declarant are entitled to elect 
members of the master board, the percentage of units which has 
been conveyed shall be calculated based upon the assumption that 
all units which a declarant or declarants have built or reserved 
the right to build in all common interest communities which may 
be subject to the master association are subjected to the master 
association. 
    (h) The declaration or bylaws of the master association, 
and the declaration of each common interest community whose 
association's powers are delegated to the association, shall 
provide that after the expiration of the control period referred 
to in subsection (g) the board of the master association shall 
be elected by the members of the master association.  The system 
of election shall be fair and equitable, and shall take into 
account the number of members of each association any of whose 
powers are delegated to the master association, the needs of the 
members of the master association, the allocation of liability 
for master association common expenses and the types of common 
interest communities and other real estate subject to the master 
association. 
    (i) Master association common expenses shall be allocated 
among the members of the master association in a fair and 
equitable manner.  Where applicable and appropriate, the 
formulas and principles described in section 515B.2-108 (b), 
(c), (d) and (e) should be utilized in making the allocations.  
The formulas and procedures governing the allocation and 
assessment of master association common expenses shall be set 
forth in the declaration or bylaws of the master association, 
and shall be consistent with the declarations of the common 
interest communities which may be subject to the master 
association. 
    (j) If a master association owns or controls real estate 
which is subject to use rights by members of the master 
association, an instrument describing the use rights, and the 
benefited land and parties, shall be recorded against the real 
estate. 
    (k) A master association shall not be used, directly or 
indirectly, to avoid or nullify any warranties or other 
obligations for which a declarant of a common interest community 
subject to the master association is responsible. 
    Sec. 22.  [515B.2-122] [MERGER OR CONSOLIDATION OF COMMON 
INTEREST COMMUNITIES.] 
    (a) Any two or more common interest communities of the same 
form of ownership, by agreement of the unit owners as provided 
in subsection (b), may be merged or consolidated into a single 
common interest community.  The resultant common interest 
community shall be the legal successor, for all purposes, of all 
of the preexisting common interest communities, and the 
operations and activities of the preexisting common interest 
communities are merged or consolidated into a single common 
interest community that holds all powers, rights, obligations, 
assets, and liabilities of the preexisting common interest 
communities. 
    (b) An agreement of two or more common interest communities 
to merge or consolidate pursuant to subsection (a) shall be 
evidenced by an agreement executed by the president of the 
association of each of the preexisting common interest 
communities following approval by owners of units to which are 
allocated the votes in each common interest community required 
to terminate that common interest community. 
    (c) Every merger or consolidation agreement shall contain: 
    (1) the names of the resultant common interest community 
and its association; 
    (2) the number of the resultant common interest community, 
which shall be a new common interest community number assigned 
to the resultant common interest community by the recording 
officer; 
    (3) a requirement that the associations of the common 
interest communities shall be merged pursuant to the applicable 
statute; 
    (4) a reallocation of the allocated interests in the 
preexisting common interest communities among the units of the 
resultant common interest community by stating the reallocations 
and the formulas upon which they are based; 
    (5) a statement that the common interest communities have 
approved and will, within 90 days after the execution of the 
merger agreement, record a declaration as provided in subsection 
(d) or commence an appropriate proceeding to accomplish the 
recording if necessary. 
    (d) A declaration, including a new or amended CIC plat, 
complying with this chapter and governing the resultant common 
interest community shall be recorded in every county in which a 
portion of each preexisting common interest community is 
located, and the merger or consolidation is not effective until 
the declaration is recorded.  In addition to other matters 
required by this chapter, the declaration shall contain: 
    (1) a reference to the names and numbers of the preexisting 
common interest communities, and the names of their 
associations; 
    (2) a statement that the preexisting common interest 
communities and their associations have been merged or 
consolidated pursuant to this chapter and the applicable 
corporate statute, and 
    (3) a statement that the declaration supersedes the 
declarations of the preexisting common interest communities and 
governs the resultant common interest community. 
    (e) The declaration and CIC plat for the resultant common 
interest community may be recorded without the necessity of 
paying the current or delinquent real estate taxes on any of the 
units. 
    Sec. 23.  [515B.2-123] [CHANGE OF FORM OF COMMON INTEREST 
COMMUNITY.] 
    (a) The legal form of a condominium, planned community or 
cooperative subject to this chapter may be changed to a 
condominium or planned community, subject to any requirements 
contained in the declaration or bylaws of the common interest 
community, and the following requirements: 
    (1) Subject to paragraphs (2) and (3), the change of form 
shall be approved in writing by the unit owners of units to 
which at least 80 percent of the votes in the association are 
allocated, and 80 percent of the first mortgagees of record of 
the units (each mortgagee having one vote per unit financed).  
The declaration or bylaws may specify a smaller percentage only 
if all of the units are restricted to nonresidential use.  The 
approval shall include the approval of a declaration and bylaws 
satisfying the requirements of this chapter with respect to the 
new common interest community. 
    (2) If the period of declarant control has not expired, the 
change of form shall also be approved in writing by the 
declarant. 
    (3) If the existing common interest community is a 
cooperative, the change of form shall also be approved in 
writing by (i) each holder of a blanket mortgage of record and 
(ii) 80 percent of the secured parties holding interests in 
share loans encumbering the cooperative units or memberships 
(each secured party having one vote per share loan owned). 
    (b) Upon approval as provided in subsection (a), the 
association in the existing common interest community shall have 
authority to execute the declaration of the new common interest 
community on behalf of the unit owners of, and all other persons 
holding an interest in, the units or other property which is a 
part of the existing common interest community, and to do all 
other acts necessary to create the new common interest community.
    (c) Upon approval as provided in subsection (a), the 
association in the existing common interest community shall have 
a power of attorney coupled with an interest to effect the 
conveyance of the units or any other real estate owned by the 
unit owners or the association, which is a part of the existing 
common interest community, on behalf of the unit owners and all 
other holders of interests in the common interest community, 
including without limitation the power to execute all 
instruments of conveyance and related instruments. 
    (d) In a change of legal form under this section, the 
offer, conveyance or exchange of a unit in the new common 
interest community to or with the person owning the unit in the 
existing common interest community shall not be subject to 
article 4 of this chapter. 
    (e) A change of legal form under this section shall not 
affect any preexisting obligations or liabilities of a declarant 
under any statute, or under the disclosure statement, 
declaration or bylaws of the existing common interest 
community.  The declarant of the existing common interest 
community shall continue to have the rights and obligations of a 
declarant with respect to the offer and sale of units owned by 
it or its affiliates in the new common interest community. 

                                ARTICLE 3

                       ORGANIZATION AND OPERATION
    Section 1.  [515B.3-101] [ORGANIZATION OF UNIT OWNERS' 
ASSOCIATION.] 
    A common interest community shall be administered by a unit 
owners' association.  The unit owners' association shall be 
incorporated no later than the date the common interest 
community is created.  The membership of the association at all 
times consists exclusively of all unit owners or, following 
termination of the common interest community, of all former unit 
owners entitled to distributions of proceeds under section 
515B.2-119 or their heirs, successors, or assigns.  The 
association shall be organized as a Minnesota profit or 
nonprofit corporation, or may, in the case of a cooperative, be 
organized under chapter 308A.  In the event of a conflict 
between this chapter and any other chapter under which the 
association is incorporated, this chapter shall control. 
    Sec. 2.  [515B.3-102] [POWERS OF UNIT OWNERS' ASSOCIATION.] 
    (a) Except as provided in subsection (b), and subject to 
the provisions of the declaration or bylaws, the association 
shall have the power to: 
    (1) adopt, amend and revoke rules and regulations not 
inconsistent with the articles of incorporation, bylaws and 
declaration, as follows:  (i) regulating the use of the common 
elements; (ii) regulating the use of the units, and conduct of 
unit occupants, which may jeopardize the health, safety or 
welfare of other occupants, which involves noise or other 
disturbing activity, or which may damage the common elements or 
other units; (iii) regulating or prohibiting animals; (iv) 
regulating changes in the appearance of the common elements and 
conduct which may damage the common interest community; (v) 
regulating the exterior appearance of the common interest 
community, including, for example, balconies and patios, window 
treatments, and signs and other displays, regardless of whether 
inside a unit; (vi) implementing the articles of incorporation, 
declaration and bylaws, and exercising the powers granted by 
this section; and (vii) otherwise facilitating the operation of 
the common interest community; 
    (2) adopt and amend budgets for revenues, expenditures and 
reserves, and levy and collect assessments for common expenses 
from unit owners; 
    (3) hire and discharge managing agents and other employees, 
agents, and independent contractors; 
    (4) institute, defend, or intervene in litigation or 
administrative proceedings (i) in its own name on behalf of 
itself or two or more unit owners on matters affecting the 
common elements or other matters affecting the common interest 
community or, (ii) with the consent of the owners of the 
affected units on matters affecting only those units; 
    (5) make contracts and incur liabilities; 
    (6) regulate the use, maintenance, repair, replacement and 
modification of the common elements and the units; 
    (7) cause improvements to be made as a part of the common 
elements, and, in the case of a cooperative, the units; 
    (8) acquire, hold, encumber, and convey in its own name any 
right, title, or interest to real estate or personal property, 
but (i) common elements in a condominium or planned community 
may be conveyed or subjected to a security interest only 
pursuant to section 515B.3-112, or (ii) part of a cooperative 
may be conveyed, or all or part of a cooperative may be 
subjected to a security interest, only pursuant to section 
515B.3-112; 
    (9) grant public utility easements through, over or under 
the common elements, and, subject to approval by resolution of 
unit owners other than declarant or its affiliates at a meeting 
duly called, grant other public or private easements, leases and 
licenses through, over or under the common elements; 
    (10) impose and receive any payments, fees, or charges for 
the use, rental, or operation of the common elements, other than 
limited common elements, and for services provided to unit 
owners; 
    (11) impose charges for late payment of assessments and, 
after notice and an opportunity to be heard, levy reasonable 
fines for violations of the declaration, bylaws, and rules and 
regulations of the association; 
    (12) impose reasonable charges for the review, preparation 
and recordation of amendments to the declaration, resale 
certificates required by section 515B.4-107, statements of 
unpaid assessments, or furnishing copies of association records; 
    (13) provide for the indemnification of its officers and 
directors, and maintain directors' and officers' liability 
insurance; 
    (14) provide for reasonable procedures governing the 
conduct of meetings and election of directors; 
    (15) exercise any other powers conferred by law, or by the 
declaration, articles of incorporation or bylaws; and 
    (16) exercise any other powers necessary and proper for the 
governance and operation of the association. 
    (b) Notwithstanding subsection (a) the declaration or 
bylaws may not impose limitations on the power of the 
association to deal with the declarant which are more 
restrictive than the limitations imposed on the power of the 
association to deal with other persons. 
    Sec. 3.  [515B.3-103] [BOARD; DIRECTORS AND OFFICERS; 
PERIOD OF DECLARANT CONTROL.] 
    (a) An association shall be governed by a board of 
directors.  Except as expressly prohibited by the declaration, 
the articles of incorporation, bylaws, subsection (b), or other 
provisions of this chapter, the board may act in all instances 
on behalf of the association.  In the performance of their 
duties, the officers and directors are required to exercise (i) 
if appointed by the declarant, the care required of fiduciaries 
of the unit owners and (ii) if elected by the unit owners, the 
care required of a director by section 302A.251 or 317A.251, as 
applicable. 
    (b) The board may not act unilaterally to amend the 
declaration, to terminate the common interest community, to 
elect directors to the board, or to determine the 
qualifications, powers and duties, or terms of office of 
directors, but the board may fill vacancies in its membership 
created other than by removal by the vote of the association 
members for the unexpired portion of any term. 
    (c) Subject to subsection (d), the declaration may provide 
for a period of declarant control of the association, during 
which a declarant, or persons designated by the declarant, may 
appoint and remove the officers and directors of the association.
The maximum period of declarant control may extend from the date 
of the first conveyance of a unit to a unit owner other than a 
declarant for a period not exceeding five years in the case of a 
flexible common interest community or three years in the case of 
any other common interest community.  Regardless of any longer 
period provided in the declaration or elsewhere, a period of 
declarant control shall terminate upon the earlier of (i) 
surrender of control by the declarant or (ii) 60 days after 
conveyance of 75 percent of the units to unit owners other than 
a declarant. 
    (d) Not later than 60 days after conveyance of 50 percent 
of the units that may be created to unit owners other than a 
declarant or an affiliate of a declarant, a meeting of the unit 
owners shall be held at which not less than 33-1/3 percent of 
the members of the board shall be elected by unit owners other 
than a declarant or an affiliate of a declarant. 
    (e) Not later than the termination of any period of 
declarant control the unit owners shall elect a board of at 
least three members.  Thereafter, a majority of the directors 
shall be unit owners other than a declarant or an affiliate of a 
declarant.  The remaining directors need not be unit owners 
unless required by the articles of incorporation, bylaws or 
declaration.  All unit owners, including the declarant and its 
affiliates, may cast the votes allocated to any units owned by 
them.  The board shall elect the officers.  The directors and 
officers shall take office upon election. 
    (f) In determining whether the period of declarant control 
has terminated under subsection (c), or whether unit owners 
other than a declarant are entitled to elect members of the 
board of directors under subsection (d), the percentage of the 
units which has been conveyed shall be calculated based upon the 
assumption that all units which the declarant has built or 
reserved the right to build in the declaration are included in 
the common interest community. 
     (g) Except as otherwise provided in this subsection, 
meetings of the board of directors must be open to the unit 
owners.  To the extent practicable, the board shall give 
reasonable notice to the unit owners of the date, time, and 
place of a board meeting.  If the date, time, and place of 
meetings are provided for in the declaration, articles, or 
bylaws, announced at a previous meeting of the board, posted in 
a location accessible to the unit owners and designated by the 
board from time to time, or if an emergency requires immediate 
consideration of a matter by the board, notice is not required.  
"Notice" has the meaning given in section 317A.011, subdivision 
14.  Meetings may be closed to discuss the following: 
    (1) personnel matters; 
    (2) pending or potential litigation, arbitration or other 
potentially adversarial proceedings, between unit owners, 
between the board or association and unit owners, or other 
matters in which any unit owner may have an adversarial 
interest, if the board determines that closing the meeting is 
necessary to discuss strategy or to otherwise protect the 
position of the board or association or the privacy of a unit 
owner or occupant of a unit; or 
    (3) criminal activity arising within the common interest 
community if the board determines that closing the meeting is 
necessary to protect the privacy of the victim or that opening 
the meeting would jeopardize investigation of the activity.  
    Nothing in this subsection imposes a duty on the board to 
provide special facilities for meetings.  The failure to give 
notice as required by this subsection shall not invalidate the 
board meeting or any action taken at the meeting. 
    Sec. 4.  [515B.3-104] [TRANSFER OF SPECIAL DECLARANT 
RIGHTS.] 
    (a) A special declarant right created or reserved under 
this chapter may be voluntarily transferred only by a separate 
instrument evidencing the transfer recorded in every county in 
which any part of the common interest community is located.  The 
separate instrument shall be recorded against all units in the 
common interest community, or in the case of a cooperative, 
against the real estate owned by the cooperative.  The 
instrument may provide for the conveyance of less than all of 
the special declarant rights, and is not effective unless 
executed by the transferor and transferee.  A deed in lieu of 
foreclosure, or other conveyance arising out of a foreclosure or 
cancellation, shall not be deemed a voluntary transfer within 
the meaning of this section. 
    (b) Upon the voluntary transfer of any special declarant 
right, the liability of a transferor declarant is as follows: 
    (1) A transferor is not relieved of any obligation or 
liability arising before the transfer and remains liable for 
warranty obligations imposed on the transferor by this chapter.  
Lack of privity does not deprive any unit owner of standing to 
maintain an action to enforce any obligation of the transferor. 
    (2) If a successor to any special declarant right is an 
affiliate of a declarant, the transferor is jointly and 
severally liable with the successor for any obligations or 
liabilities of the successor relating to the common interest 
community. 
    (3) If a transferor retains any special declarant rights, 
but transfers other special declarant rights to a successor who 
is not an affiliate of the declarant, the transferor is liable 
for any obligations or liabilities imposed on a declarant by 
this chapter or by the declaration relating to the retained 
special declarant rights and arising before or after the 
transfer. 
    (4) A transferor has no liability for any act or omission 
or any breach of a contractual or warranty obligation arising 
from the exercise of a special declarant right by a successor 
declarant who is not an affiliate of the transferor. 
    (c) Upon the voluntary transfer of any special declarant 
right, the liability of a successor declarant is as follows: 
    (1) A successor to any special declarant right who is an 
affiliate of a declarant is subject to all obligations and 
liabilities imposed on the transferor by this chapter or by the 
declaration. 
    (2) A successor to any special declarant right who is not 
an affiliate of a declarant is subject to all obligations and 
liabilities imposed by this chapter or the declaration, except:  
(i) misrepresentations by any previous declarant; (ii) warranty 
obligations on improvements made by any previous declarant, or 
made before the common interest community was created; (iii) 
breach of any fiduciary obligation by any previous declarant or 
the declarant's appointees to the board; (iv) any liability or 
obligation imposed on the transferor as a result of the 
transferor's acts or omissions after the transfer; and (v) any 
liability arising out of a special declarant right which was not 
transferred as provided in subsection (a). 
    (d) In case of foreclosure of a mortgage or cancellation of 
a contract for deed or other security interest (or conveyance in 
lieu thereof), sale by a trustee under an agreement creating a 
security interest, tax sale, judicial sale, or sale under 
bankruptcy code or receivership proceedings, of any units or 
additional real estate, or interest therein, owned by a 
declarant, a person acquiring title to the property or interests 
succeeds to all special declarant rights related to the property 
or interests held by that declarant and acquired by it unless (i)
the mortgage instrument or other instrument creating the 
security interest, (ii) the instrument conveying title or (iii) 
a separate instrument signed by the person and recorded within 
60 days after the person acquires title to the property or 
interests, provides for transfer of less than all special 
declarant rights.  The separate instrument need be recorded only 
against the title to the units or interests other than those 
being acquired under this subsection, or in the case of a 
cooperative, against the real estate owned by the cooperative.  
The declarant shall cease to have or exercise any special 
declarant rights which are transferred.  If the person has 
limited the transfer of certain special declarant rights as 
provided in this subsection, then it and its successor's 
liability shall be limited, as follows: 
    (1) If the person or its successor limits its rights and 
liabilities only to maintain models, sales office and signs, and 
if that party is not an affiliate of a declarant, it is not 
subject to any liability or obligations as a declarant, except 
the obligation to provide a disclosure statement and any 
liability arising from that obligation, and it may not exercise 
any other special declarant rights. 
    (2) If the person or its successor is not an affiliate of a 
declarant, it may declare its intention in a recorded instrument 
as provided in subsection (a) to acquire all special declarant 
rights and hold those rights solely for transfer to another 
person.  Thereafter, until the special declarant rights are 
transferred to a person acquiring title to any unit owned by the 
successor, or until a separate instrument is recorded permitting 
exercise of all of those rights, that successor may not exercise 
any of those rights other than the right to control the board of 
directors in accordance with the provisions of section 
515B.3-103 for the duration of any period of declarant control.  
So long as any successor may not exercise its special declarant 
rights under this subsection, it is not subject to any liability 
or obligation as a declarant other than liability for its acts 
and omissions under section 515B.3-103. 
    (e) Any attempted exercise by a purported successor to a 
special declarant right which is not transferred as provided in 
this section is void, and any purported successor attempting to 
exercise that right shall be liable for any damages arising out 
of its actions. 
    (f) Nothing in this section shall subject any successor to 
a special declarant right to any claims against or other 
obligations of a transferor declarant, other than claims and 
obligations arising under this chapter, or the declaration or 
bylaws. 
    Sec. 5.  [515B.3-105] [TERMINATION OF CONTRACTS AND LEASES 
OF DECLARANT.] 
    If entered into prior to expiration of the period of 
declarant control pursuant to section 515B.3-103, (i) any 
management contract, employment contract, or lease of 
recreational facilities, units, garages or other parking 
facilities, (ii) any contract, lease or license binding the 
association to which a declarant or an affiliate of a declarant 
is a party, or (iii) any contract, lease or license binding the 
association or any unit owner other than the declarant or an 
affiliate of the declarant which is not bona fide or which was 
unconscionable to the unit owners at the time entered into under 
the circumstances then prevailing, may be terminated without 
penalty by the association at any time after the expiration of 
declarant control upon not less than 90 days' notice to the 
other party.  This section does not apply to (i) any lease the 
termination of which would terminate the common interest 
community or (ii) a proprietary lease. 
    Sec. 6.  [515B.3-106] [BYLAWS; ANNUAL REPORT.] 
    (a) A common interest community shall have bylaws which 
comply with this chapter and the requirements of the statute 
under which the association is incorporated.  The bylaws and any 
amendments may be recorded, but need not be recorded to be 
effective unless so provided in the bylaws. 
     (b) The bylaws shall provide that, in addition to any 
statutory requirements: 
    (1) A meeting of the members shall be held at least once 
each year, and a specified officer of the association shall give 
notice of the meeting as provided in section 515B.3-108. 
    (2) An annual report shall be prepared by the association 
and a copy of the report shall be provided to each unit owner at 
or prior to the annual meeting. 
     (c) The annual report shall contain at a minimum: 
    (1) a statement of any capital expenditures in excess of 
two percent of the current budget or $5,000, whichever is 
greater, approved by the association for the current fiscal year 
or succeeding two fiscal years; 
    (2) a statement of the balance in any reserve or 
replacement fund; 
    (3) a copy of the statement of revenues and expenses for 
the association's last fiscal year, and a balance sheet as of 
the end of said fiscal year; 
    (4) a statement of the status of any pending litigation or 
judgments to which the association is a party; 
    (5) a statement of the insurance coverage provided by the 
association; and 
    (6) a statement of the total past due assessments on all 
units, current as of not more than 60 days prior to the date of 
the meeting. 
    Sec. 7.  [515B.3-107] [UPKEEP OF COMMON INTEREST 
COMMUNITY.] 
    (a) Except to the extent provided by the declaration, this 
subsection or section 515B.3-113, the association is responsible 
for the maintenance, repair and replacement of the common 
elements, and each unit owner is responsible for the 
maintenance, repair and replacement of the unit owner's unit.  
Damage to the common elements or any unit as a result of the 
acts or omissions of a unit owner or the association is the 
responsibility of the person causing the damage, or whose agents 
or invitees caused the damage. 
    (b) The association shall have access through and into each 
unit for purposes of performing maintenance, repair or 
replacement for which the association may be responsible.  The 
association and any public safety personnel shall also have 
access for purposes of abating or correcting any condition in 
the unit which violates any governmental law, ordinance or 
regulation, which may cause material damage to or jeopardize the 
safety of the common interest community, or which may constitute 
a health or safety hazard for occupants of units. 
    (c) Neither the association, nor any unit owner other than 
the declarant or its affiliates, is subject to a claim for 
payment of expenses incurred in connection with any additional 
real estate. 
    Sec. 8.  [515B.3-108] [MEETINGS.] 
    (a) A meeting of the association shall be held at least 
once each year.  At each annual meeting, there shall be, at a 
minimum, (i) an election of successor directors for those 
directors whose terms have expired, (ii) a report on the 
activities and financial condition of the association and (iii) 
consideration of and action on any other matters included in the 
notice of meeting.  Unless the bylaws provide otherwise, special 
meetings of the association may be called by the president and 
shall be called by the president or secretary upon the written 
petition of a majority of the board or unit owners entitled to 
cast at least 20 percent of the votes in the association. 
    (b) Not less than 21 nor more than 30 days in advance of 
any annual meeting, and not less than seven nor more than 30 
days in advance of any special meeting, the secretary or other 
officer specified in the bylaws shall cause notice to be hand 
delivered or sent postage prepaid by United States mail to the 
mailing address of each unit, or to any other address designated 
in writing by the unit owner to the association as provided in 
the bylaws or by statute. 
    (c) The notice of any meeting shall state the date, time 
and place of the meeting, the purposes of the meeting, and, if 
proxies are permitted, the procedures for appointing proxies. 
    (d) The board may provide for reasonable procedures 
governing the conduct of meetings and elections. 
    Sec. 9.  [515B.3-109] [QUORUMS.] 
    (a) Unless the bylaws provide otherwise, a quorum is 
present throughout any meeting of the association if unit owners 
entitled to cast in excess of 20 percent of the votes in the 
association are present in person or by proxy at the beginning 
of the meeting. 
    (b) Unless the bylaws provide otherwise, a quorum is 
present throughout any meeting of the board if persons entitled 
to cast in excess of 50 percent of the votes on that board are 
present in person at the beginning of the meeting. 
    Sec. 10.  [515B.3-110] [VOTING; PROXIES.] 
    (a) At any meeting of the association an owner or the 
holder of the owner's proxy shall be entitled to cast the vote 
which is allocated to the unit.  If there is more than one owner 
of a unit, only one of the owners may cast the vote.  If the 
owners of a unit fail to agree as to who shall cast the vote, 
the vote shall not be cast. 
    (b) If permitted by the articles or bylaws, votes allocated 
to a unit may be cast pursuant to a proxy executed by the unit 
owner entitled to cast the vote for that unit.  The board may 
specify the form of proxy and proxy rules, consistent with law. 
    (c) The entire vote on any single issue (except the 
election of directors), may be by mailed ballots, subject to (i) 
any prohibition or requirement contained in the articles of 
incorporation, bylaws, or declaration and (ii) any requirements 
of the statute under which the association is created.  Such a 
vote shall have the force and effect of a vote taken at a 
meeting; provided, that the total votes cast are at least equal 
to the votes required for a quorum.  The board shall set a 
voting period within which the ballots must be returned, which 
period shall be not less than 10 nor more than 30 days after the 
date of mailing or hand delivery of the ballots to the owners.  
The board of directors shall provide written notice of the 
results of the vote to the members within 30 days after the 
expiration of the voting period.  All requirements in this 
chapter, the declaration or the bylaws for a meeting of the 
members, or being present in person, shall be deemed satisfied 
by a vote taken by mail in compliance with the requirements of 
this section. 
    (d) The declaration or bylaws may provide that votes on 
specified matters affecting the common interest community be 
cast by lessees or secured parties rather than unit owners; 
provided that (i) the provisions of subsections (a), (b) and (c) 
apply to those persons as if they were unit owners; (ii) unit 
owners who have so delegated their votes to other persons may 
not cast votes on those specified matters; (iii) lessees or 
secured parties are entitled to notice of meetings, access to 
records, and other rights respecting those matters as if they 
were unit owners, and (iv) the lessee or secured party has filed 
satisfactory evidence of its interest with the secretary of the 
association prior to the meeting.  Unit owners must also be 
given notice, in the manner provided in section 515B.3-108(b), 
of meetings at which lessees or secured parties are entitled to 
vote. 
    (e) No votes allocated to a unit owned by the association 
may be cast nor counted toward a quorum. 
    Sec. 11.  [515B.3-111] [TORT AND CONTRACT LIABILITY.] 
    (a) Neither the association nor any unit owner except the 
declarant is liable for that declarant's torts in connection 
with any part of the common interest community.  An action 
alleging a tort or contract violation by the association shall 
not be brought against a unit owner solely by reason of 
ownership.  If the tort or contract violation occurred during 
any period of declarant control and the association or a unit 
owner gives the declarant reasonable notice of and an 
opportunity to defend against the action, the declarant who then 
controlled the association is liable to the association or to 
any unit owner for (i) all losses not covered by insurance 
suffered by the association or that unit owner, and (ii) all 
costs that the association would not have incurred but for the 
tort or contract violation. 
    (b) Whenever the declarant is liable to the association or 
a unit owner under this section, the declarant is also liable 
for all expenses of litigation, including reasonable attorney's 
fees, incurred by the association or unit owner.  Any statute of 
limitation affecting a right of action under this section is 
tolled until the period of declarant control terminates.  A unit 
owner is not precluded from maintaining an action contemplated 
by this section because of being a unit owner or an officer or 
director of the association. 
    (c) Except as provided in subsections (a) and (b) with 
respect to a declarant, no unit owner shall have tort liability 
arising out of ownership of the common elements if the 
association has liability insurance coverage on the occurrence 
in an amount not less than $1,000,000. 
    Sec. 12.  [515B.3-112] [CONVEYANCE OR ENCUMBRANCE OF COMMON 
ELEMENTS.] 
    (a) In a condominium or planned community, unless the 
declaration provides otherwise, portions of the common elements 
may be conveyed or subjected to a security interest by the 
association if persons entitled to cast at least 67 percent of 
the votes in the association, including 67 percent of the votes 
allocated to units not owned by a declarant, or any larger 
percentage the declaration specifies, approve that action in 
writing or at a meeting; but all unit owners of units to which 
any limited common element is allocated must agree in order to 
convey that limited common element or subject it to a security 
interest.  The declaration may specify a smaller percentage only 
if all of the units are restricted to nonresidential use. 
    (b) In a cooperative, unless the declaration provides 
otherwise, part of a cooperative may be conveyed, or all or a 
part subjected to a security interest, by the association if 
persons entitled to cast at least 67 percent of the votes in the 
association, including 67 percent of the votes allocated to 
units in which the declarant has no interest, or any larger 
percentage the declaration specifies, approves that action in 
writing or at a meeting.  If fewer than all of the units or 
limited common elements are to be conveyed or subjected to a 
security interest, then all unit owners of those units, or the 
units to which those limited common elements are allocated, must 
agree in order to convey those units or limited common elements 
or subject them to a security interest.  The declaration may 
specify a smaller percentage only if all of the units are 
restricted to nonresidential use.  Any purported conveyance or 
other voluntary transfer of an entire cooperative is void, 
unless made pursuant to section 515B.2-119. 
    (c) The association, on behalf of the unit owners, may 
contract to convey or encumber an interest in the common 
elements of a common interest community pursuant to this 
subsection, subject to the required approval.  After the 
approval has been obtained, the association shall have a power 
of attorney coupled with an interest to effect the conveyance or 
encumbrance on behalf of all unit owners in the common interest 
community, including the power to execute deeds, mortgages, or 
other instruments of conveyance or security.  The instrument 
conveying or creating the interest in the common interest 
community shall be recorded and shall include as exhibits (i) an 
affidavit of the secretary of the association certifying that 
the approval required by this section has been obtained and (ii) 
a schedule of the names of all unit owners and units in the 
common interest community as of the date of the approval. 
    (d) Except as provided in section 515B.3-102(a)(9), unless 
made pursuant to this section, any purported conveyance, 
encumbrance, or other voluntary transfer of common elements, or 
of any part of a cooperative, is void. 
    (e) In the case of conveyance, the association shall 
record, simultaneously with the recording of the instrument of 
conveyance, an amended CIC plat showing the real estate 
constituting the common interest community exclusive of the real 
estate conveyed.  Upon recording of the amended CIC plat, the 
original CIC plat shall be deemed vacated as to the real estate 
conveyed, the declaration shall be deemed terminated as to said 
real estate and the interests of any secured party shall be 
deemed released as to said real estate. 
    (f) A conveyance or encumbrance of common elements, or of a 
cooperative, pursuant to this section shall not deprive any unit 
of its rights of support, reasonable access or utility services. 
    (g) Except as provided in subsection (a), or unless the 
declaration otherwise provides, a conveyance or encumbrance of 
common elements pursuant to this section does not affect the 
priority or validity of preexisting encumbrances. 
    (h) Any proceeds of the conveyance or creation of a 
security interest under this section are an asset of the 
association. 
    (i) This section shall not apply to any conveyance or 
encumbrance of any interest in a proprietary lease. 
    Sec. 13.  [515B.3-113] [INSURANCE.] 
    (a) Commencing not later than the time of the first 
conveyance of a unit to a unit owner other than a declarant, the 
association shall maintain, to the extent reasonably available: 
    (1) subject to subsection (b), property insurance (i) on 
the common elements and, in a planned community, also on 
property that must become common elements, (ii) for broad form 
covered causes of loss, and (iii) in a total amount of not less 
than the full insurable replacement cost of the insured 
property, less deductibles, at the time the insurance is 
purchased and at each renewal date, exclusive of items normally 
excluded from property policies; and 
    (2) commercial general liability insurance against claims 
and liabilities arising in connection with the ownership, 
existence, use or management of the property in an amount, if 
any, specified by the common interest community instruments or 
otherwise deemed sufficient in the judgment of the board, 
insuring the board, the association, the management agent, and 
their respective employees, agents and all persons acting as 
agents.  The declarant shall be included as an additional 
insured in its capacity as a unit owner or board member.  The 
unit owners shall be included as additional insureds but only 
for claims and liabilities arising in connection with the 
ownership, existence, use or management of the common elements.  
The insurance shall cover claims of one or more insured parties 
against other insured parties. 
    (b) In the case of a common interest community that 
contains units sharing or having contiguous walls, siding or 
roofs, the insurance maintained under subsection (a)(1) shall 
include the units and the common elements.  The insurance need 
not cover improvements and betterments to the units installed by 
unit owners, but if improvements and betterments are covered, 
any increased cost may be assessed by the association against 
the units affected.  The association may, in the case of a claim 
for damage to a unit or units, (i) pay the deductible amount as 
a common expense, (ii) assess the deductible amount against the 
units affected in any reasonable manner, or (iii) require the 
unit owners of the units affected to pay the deductible amount 
directly. 
    (c) If the insurance described in subsections (a) and (b) 
is not reasonably available, the association shall promptly 
cause notice of that fact to be hand delivered or sent prepaid 
by United States mail to all unit owners.  The declaration may 
require the association to carry any other insurance, and the 
association in any event may carry any other insurance it 
considers appropriate to protect the association, the unit 
owners or officers, directors or agents of the association. 
    (d) Insurance policies carried pursuant to subsections (a) 
and (b) shall provide that: 
    (1) each unit owner and secured party is an insured person 
under the policy with respect to liability arising out of the 
unit owner's interest in the common elements or membership in 
the association; 
    (2) the insurer waives its right to subrogation under the 
policy against any unit owner of the condominium or members of 
the unit owner's household and against the association and 
members of the board of directors; 
    (3) no act or omission by any unit owner or secured party, 
unless acting within the scope of authority on behalf of the 
association, shall void the policy or be a condition to recovery 
under the policy; and 
    (4) if at the time of a loss under the policy there is 
other insurance in the name of a unit owner covering the same 
property covered by the policy, the association's policy is 
primary insurance. 
    (e) Any loss covered by the property policy under 
subsection (a)(1) shall be adjusted by and with the association. 
The insurance proceeds for that loss shall be payable to the 
association, or to an insurance trustee designated by the 
association for that purpose.  The insurance trustee or the 
association shall hold any insurance proceeds in trust for unit 
owners and secured parties as their interests may appear.  The 
proceeds shall be disbursed first for the repair or restoration 
of the damaged common elements and units.  Unit owners and 
secured parties are not entitled to receive any portion of the 
proceeds unless there is a surplus of proceeds after the common 
elements and units have been completely repaired or restored or 
the common interest community is terminated. 
    (f) Unit owners may obtain insurance for personal benefit 
in addition to insurance carried by the association. 
    (g) An insurer that has issued an insurance policy under 
this section shall issue certificates or memoranda of insurance, 
upon request, to any unit owner or secured party.  The insurance 
may not be canceled until 30 days after notice of the proposed 
cancellation has been mailed to the association, each unit owner 
and each secured party for an obligation to whom certificates of 
insurance have been issued. 
    (h) Any portion of the common interest community which is 
damaged or destroyed as the result of a loss covered by the 
association's insurance shall be promptly repaired or replaced 
by the association unless (i) the common interest community is 
terminated and the association votes not to repair or replace 
all or part thereof, (ii) repair or replacement would be illegal 
under any state or local health or safety statute or ordinance, 
or (iii) 80 percent of the unit owners, including every owner 
and holder of a first mortgage on a unit or assigned limited 
common element which will not be rebuilt, vote not to rebuild.  
The cost of repair or replacement of the common elements in 
excess of insurance proceeds and reserves shall be paid a common 
expense, and the cost of repair of a unit in excess of insurance 
proceeds shall be paid by the respective unit owner. 
    (i) If less than the entire common interest community is 
repaired or replaced, (i) the insurance proceeds attributable to 
the damaged common elements shall be used to restore the damaged 
area to a condition compatible with the remainder of the common 
interest community, (ii) the insurance proceeds attributable to 
units and limited common elements which are not rebuilt shall be 
distributed to the owners of those units, including units to 
which the limited common elements were assigned, and the secured 
parties of those units, as their interests may appear, and (iii) 
the remainder of the proceeds shall be distributed to all the 
unit owners and secured parties as their interests may appear in 
proportion to their common element interest in the case of a 
condominium or in proportion to their common expense liability 
in the case of a planned community or cooperative. 
    (j) If the unit owners and holders of first mortgages vote 
not to rebuild a unit, that unit's entire common element 
interest, votes in the association, and common expense liability 
are automatically reallocated upon the vote as if the unit had 
been condemned under section 515B.1-107, and the association 
shall promptly prepare, execute and record an amendment to the 
declaration reflecting the reallocations.  Notwithstanding the 
provisions of this subsection, if the common interest community 
is terminated, insurance proceeds not used for repair or 
replacement shall be distributed in the same manner as sales 
proceeds pursuant to section 515B.2-119. 
    (k) The provisions of this section may be varied or waived 
in the case of a common interest community in which all units 
are restricted to nonresidential use. 
    Sec. 14.  [515B.3-114] [RESERVES; SURPLUS FUNDS.] 
    The annual budgets of the association shall provide from 
year to year, on a cumulative basis, for adequate reserve funds 
to cover the replacement of those parts of the common elements 
and limited common elements which the association is obligated 
to maintain, repair, or replace.  Unless the declaration 
provides otherwise, any surplus funds that the association has 
remaining after payment of or provision for common expenses and 
reserves shall be (i) credited to the unit owners to reduce 
their future common expense assessments or (ii) credited to 
reserves, or any combination thereof, as determined by the board 
of directors. 
    Sec. 15.  [515B.3-115] [ASSESSMENTS FOR COMMON EXPENSES.] 
    (a) If a common expense assessment has not been levied, the 
declarant shall pay all accrued expenses of the common interest 
community.  If a common expense assessment has been levied, all 
unit owners including the declarant shall pay the assessments 
allocated to their units, except as otherwise permitted by this 
section.  Subject to the requirements of this section, a 
declarant may institute an alternative assessment program 
whereby: 
    (1) if a common expense assessment has been levied, the 
declarant shall pay when due only the common expenses in excess 
of a specified guaranty limit; or 
    (2) if a common expense assessment has been levied in a 
planned community, the declarant may limit its liability for 
assessments on units owned by it to 25 percent or any greater 
percentage of any assessment levied until such time as a 
certificate of occupancy is issued by the municipality in which 
the common interest community is located for the unit or units 
owned by the declarant. 
    (b) The alternative assessment programs described in 
subsection (a)(1) or (2), shall be permitted only by including 
in the declaration, and the disclosure statement required by 
section 515B.4-102, provisions authorizing declarant to 
establish an alternative assessment program and a detailed 
explanation of the program, including at a minimum, as 
applicable, (i) the maximum amount of any guaranty on a monthly 
and aggregate basis with respect to each type of unit, (ii) the 
minimum and maximum duration of the alternative assessment 
program, (iii) the time when the declarant's authority to 
commence the alternative assessment program expires, which shall 
be no later than the expiration of any period of declarant 
control, and (iv) a statement that the alternative assessment 
program will have no effect on the level of services for items 
set forth in the association's budget, or a statement that no 
assurances are made in those regards. 
    (c) Notwithstanding any disclosure in the declaration or 
disclosure statement, the declarant shall give the unit owners 
at least 60 days prior notice of the termination of the 
alternative assessment program, subject to any minimum duration 
described in the declaration and disclosure statement. 
    (d) Any alternative assessment program instituted by 
declarant shall not affect declarant's obligation to fund the 
reserves disclosed in the association's budget included in the 
disclosure statement or otherwise approved by the association. 
    (e) Any representations or agreements made by a declarant 
with respect to an alternative assessment program shall be 
enforceable against declarant by any unit owner or by the 
association. 
    (f) After an assessment has been levied by the association, 
assessments shall be levied at least annually, based upon a 
budget approved at least annually by the association. 
    (g) Except as modified by subsections (a)(1) and (2), (h), 
(i) and (j), all common expenses shall be assessed against all 
the units in accordance with the allocations established by the 
declaration pursuant to section 515B.2-108. 
    (h) Unless otherwise required by the declaration: 
    (1) any common expense associated with the maintenance, 
repair, or replacement of a limited common element shall be 
assessed against the units to which that limited common element 
is assigned, equally, or in any other proportion the declaration 
provides; 
    (2) any common expense or portion thereof benefiting fewer 
than all of the units may be assessed exclusively against the 
units benefited, equally, or in any other proportion the 
declaration provides; and 
    (3) the costs of insurance may be assessed in proportion to 
risk or coverage, and the costs of utilities may be assessed in 
proportion to usage. 
    (4) reasonable attorneys fees incurred by the association 
in connection with (i) the collection of assessments and, (ii) 
the enforcement of this chapter, the articles, bylaws, 
declaration, or rules and regulations, against a unit owner, may 
be assessed against the unit owner's unit. 
    (5) fees, charges, late charges, fines and interest may be 
assessed as provided in section 515B.3-116(a). 
    (i) Assessments levied under section 515B.3-116 to pay a 
judgment against the association may be levied only against the 
units in the common interest community at the time the judgment 
was entered, in proportion to their common expense liabilities. 
    (j) If any damage to the common elements or another unit is 
caused by the act or omission of any unit owner, or occupant of 
a unit, or their invitees, the association may assess the costs 
of repairing the damage exclusively against the unit owner's 
unit to the extent not covered by insurance. 
    (k) Subject to any shorter period specified by the 
declaration or bylaws, if any installment of an assessment 
becomes more than 60 days past due, then the association may, 
upon 10 days written notice to the unit owner, declare the 
entire amount of the assessment immediately due and payable in 
full. 
    (l) If common expense liabilities are reallocated for any 
purpose authorized by this act, common expense assessments and 
any installment thereof not yet due shall be recalculated in 
accordance with the reallocated common expense liabilities. 
    Sec. 16.  [515B.3-116] [LIEN FOR ASSESSMENTS.] 
    (a) The association has a lien on a unit for any assessment 
levied against that unit from the time the assessment becomes 
due.  If an assessment is payable in installments, the full 
amount of the assessment is a lien from the time the first 
installment thereof becomes due.  Unless the declaration 
otherwise provides, fees, charges, late charges, fines and 
interest charges pursuant to section 515B.3-102(a)(10), (11) and 
(12) are liens, and are enforceable as assessments, under this 
section.  
    (b) A lien under this section is prior to all other liens 
and encumbrances on a unit except (i) liens and encumbrances 
recorded before the declaration and, in a cooperative, liens and 
encumbrances which the association creates, assumes, or takes 
subject to, (ii) any first mortgage on the unit, or, in a 
cooperative, any first security interest encumbering only the 
unit owner's interest in the unit, and (iii) liens for real 
estate taxes and other governmental assessments or charges 
against the unit.  If a first mortgage on a unit is foreclosed, 
the first mortgage was recorded after the effective date of this 
chapter, and no owner redeems during the owner's period of 
redemption provided by chapter 580, 581, or 582, the holder of 
the sheriff's certificate of sale from the foreclosure of the 
first mortgage shall take title to the unit subject to unpaid 
assessments for common expenses levied pursuant to section 
515B.3-115(a), (h)(1) to (3), (i), and (l) which became due, 
without acceleration, during the six months immediately 
preceding the first day following the end of the owner's period 
of redemption.  If a first security interest encumbering a unit 
owner's interest in a cooperative unit which is personal 
property is foreclosed, the secured party or the purchaser at 
the sale shall take title to the unit subject to unpaid 
assessments for common expenses levied pursuant to section 
515B.3-115(a), (h)(1) to (3), (i), and (l) which became due, 
without acceleration, during the six months immediately 
preceding the first day following either the date of sale 
pursuant to section 336.9-504 or the date on which the 
obligation of the unit owner is discharged pursuant to section 
336.9-505.  This subsection shall not affect the priority of 
mechanics' liens. 
    (c) Recording of the declaration constitutes record notice 
and perfection of any lien under this section, and no further 
recordation of any notice of or claim for the lien is required. 
    (d) Proceedings to enforce an assessment shall be 
instituted within three years after the last installment of the 
assessment becomes payable, or shall be barred. 
    (e) The unit owner of a unit at the time an assessment is 
due shall be personally liable to the association for payment of 
the assessment levied against the unit.  If there are multiple 
owners of the unit, they shall be jointly and severally liable. 
    (f) This section does not prohibit actions to recover sums 
for which subsection (a) creates a lien nor prohibit an 
association from taking a deed in lieu of foreclosure. 
    (g) The association shall furnish to a unit owner or the 
owner's authorized agent upon written request of the unit owner 
or the authorized agent a statement setting forth the amount of 
unpaid assessments currently levied against the owner's unit.  
If the unit owner's interest is real estate, the statement shall 
be in recordable form.  The statement shall be furnished within 
ten business days after receipt of the request and is binding on 
the association and every unit owner. 
    (h) The association's lien may be foreclosed as provided in 
this subsection. 
    (1) In a condominium or planned community, the 
association's lien may be foreclosed in a like manner as a 
mortgage containing a power of sale pursuant to chapter 580, or 
by action pursuant to chapter 581.  The association shall have a 
power of sale to foreclose the lien pursuant to chapter 580. 
    (2) In a cooperative whose unit owners' interests are real 
estate, the association's lien shall be foreclosed in a like 
manner as a mortgage on real estate as provided in paragraph (1).
    (3) In a cooperative whose unit owners' interests in the 
units are personal property, the association's lien shall be 
foreclosed in a like manner as a security interest under article 
9 of chapter 336.  In any disposition pursuant to section 
336.9-504 or retention pursuant to section 336.9-505, the rights 
of the parties shall be the same as those provided by law, 
except (i) notice of sale, disposition, or retention shall be 
served on the unit owner 90 days prior to sale, disposition, or 
retention, (ii) the association shall be entitled to its 
reasonable costs and attorney fees not exceeding the amount 
provided by section 582.01, subdivision 1a, (iii) the amount of 
the association's lien shall be deemed to be adequate 
consideration for the unit subject to disposition or retention, 
notwithstanding the value of the unit, and (iv) the notice of 
sale, disposition, or retention shall contain the following 
statement in capital letters with the name of the association or 
secured party filled in: 
    "THIS IS TO INFORM YOU THAT BY THIS NOTICE (fill in name of 
association or secured party) HAS BEGUN PROCEEDINGS UNDER 
MINNESOTA STATUTES, CHAPTER 515B, TO FORECLOSE ON YOUR INTEREST 
IN YOUR UNIT FOR THE REASON SPECIFIED IN THIS NOTICE.  YOUR 
INTEREST IN YOUR UNIT WILL TERMINATE 90 DAYS AFTER SERVICE OF 
THIS NOTICE ON YOU UNLESS BEFORE THEN: 
    (a) THE PERSON AUTHORIZED BY (fill in the name of 
association or secured party) AND DESCRIBED IN THIS NOTICE TO 
RECEIVE PAYMENTS RECEIVES FROM YOU: 
    (1) THE AMOUNT THIS NOTICE SAYS YOU OWE; PLUS 
    (2) THE COSTS INCURRED TO SERVE THIS NOTICE ON YOU; PLUS 
    (3) $500 TO APPLY TO ATTORNEYS FEES ACTUALLY EXPENDED OR 
INCURRED; PLUS 
    (4) ANY ADDITIONAL AMOUNTS FOR YOUR UNIT BECOMING DUE TO 
(fill in name of association or secured party) AFTER THE DATE OF 
THIS NOTICE; OR 
    (b) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE 
FORECLOSURE OF YOUR RIGHTS TO YOUR UNIT BE SUSPENDED UNTIL YOUR 
CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING, OR 
SETTLEMENT.  YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND 
GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES. 
    IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS 
WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR OWNERSHIP 
RIGHTS IN YOUR UNIT WILL TERMINATE AT THE END OF THE PERIOD, YOU 
WILL LOSE ALL THE MONEY YOU HAVE PAID FOR YOUR UNIT, YOU WILL 
LOSE YOUR RIGHT TO POSSESSION OF YOUR UNIT, YOU MAY LOSE YOUR 
RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE, AND 
YOU WILL BE EVICTED.  IF YOU HAVE ANY QUESTIONS ABOUT THIS 
NOTICE, CONTACT AN ATTORNEY IMMEDIATELY." 
    (4) In any foreclosure pursuant to chapter 580, 581, or 
582, the rights of the parties shall be the same as those 
provided by law, except (i) the period of redemption for unit 
owners shall be six months from the date of sale or a lesser 
period authorized by law, (ii) in a foreclosure by advertisement 
under chapter 580, the foreclosing party shall be entitled to 
costs and disbursements of foreclosure, and attorneys fees in 
the amount provided by section 582.01, subdivision 1a, (iii) in 
a foreclosure by action under chapter 581, the foreclosing party 
shall be entitled to costs and disbursements of foreclosure and 
attorneys fees as the court shall determine, and (iv) the amount 
of the association's lien shall be deemed to be adequate 
consideration for the unit subject to foreclosure, 
notwithstanding the value of the unit. 
    (i) If a holder of a sheriff's certificate of sale, prior 
to the expiration of the period of redemption, pays any past due 
or current assessments, or any other charges lienable as 
assessments, with respect to the unit described in the sheriff's 
certificate, then the amount paid shall be a part of the sum 
required to be paid to redeem under section 582.03. 
    (j) In a cooperative, following foreclosure, the 
association may bring an action for unlawful detainer against 
the unit owner and any persons in possession of the unit, and in 
that case section 504.02 shall not apply. 
    (k) An association may assign its lien rights in the same 
manner as any other secured party. 
    Sec. 17.  [515B.3-117] [OTHER LIENS.] 
    (a) Except in a cooperative and except as otherwise 
provided in this chapter or in a security instrument, an 
individual unit owner may have the unit owner's unit released 
from a lien if the unit owner pays the lienholder the portion of 
the lien amount attributable to the unit.  Upon the receipt of 
payment, the lienholder shall promptly deliver to the unit owner 
a recordable partial satisfaction and release of lien releasing 
the unit from the lien.  The release shall be deemed to include 
a release of any rights in the common elements appurtenant to 
the unit.  The portion of the amount which a lien secures that 
is attributable to a unit owner's unit shall be equal to the 
total amount of the lien multiplied by a percentage calculated 
by dividing the common expense liability of the unit owner's 
unit by the common expense liability of all units which are 
subject to the lien.  At the request of a lien claimant or unit 
owners, the association shall provide a written statement of the 
percentage of common expense liability of all units subject to a 
lien.  After a unit owner's payment pursuant to this section, 
the association may not assess the unit for any common expense 
incurred thereafter in connection with the satisfaction or 
defense against the lien. 
    (b) Labor performed or materials furnished for the 
improvement of a unit shall be the basis for the filing of a 
lien against that unit pursuant to the provisions of chapter 514 
but shall not be the basis for the filing of a lien against the 
common elements.  Labor performed or materials furnished for the 
improvement of common elements, if duly authorized by the 
association, shall be deemed to be performed or furnished with 
the express consent of each unit owner and shall be the basis 
for the filing of a lien against each unit in the common 
interest community pursuant to the provisions of chapter 514, 
but shall not be the basis for the filing of a lien against the 
common elements.  Where a lien is filed against one or more 
units for labor performed or material furnished for the 
improvement of common elements, the association shall be deemed 
to be the authorized agent of the unit owners for purposes of 
receiving the notice required under section 514.08, subdivision 
1, clause (2). 
     (c) A security interest in a cooperative whose unit owners' 
interests in the units are personal property may be perfected by 
the filing of a financing statement in the office of the 
recording officer for the county in which the unit is located.  
In any disposition by a secured party pursuant to section 
336.9-504 or retention pursuant to section 336.9-505, the rights 
of the parties shall be the same as those provided by law, 
subject to the exceptions and requirements set forth in section 
515B.3-116 (h)(3), and except that the unit owner has the right 
to reinstate the debt owing to the secured party by paying to 
the secured party, prior to the effective date of the 
disposition or retention, the amount which would be required to 
reinstate the debt under section 580.30 if the unit were wholly 
real estate. 
    Sec. 18.  [515B.3-118] [ASSOCIATION RECORDS.] 
    The association shall keep adequate records of its 
membership, unit owners meetings, board of directors meetings, 
committee meetings, contracts, leases and other agreements to 
which the association is a party, and material correspondence 
and memoranda relating to its operations.  The association shall 
keep financial records sufficiently detailed to enable the 
association to comply with sections 515B.3-106(b) and 
515B.4-107.  All records shall be made reasonably available for 
examination by any unit owner or the unit owner's authorized 
agent, subject to the applicable statutes. 
    Sec. 19.  [515B.3-119] [ASSOCIATION AS TRUSTEE.] 
    With respect to a third person dealing with the association 
in the association's capacity as a trustee, the existence of 
trust powers and their proper exercise by the association may be 
assumed without inquiry.  A third person is not bound to inquire 
whether the association has power to act as trustee or is 
properly exercising trust powers and third person, without 
actual knowledge that the association is exceeding its powers or 
improperly exercising them, is fully protected in dealing with 
the association as if it possessed and properly exercised the 
powers it purports to exercise.  A third person is not bound to 
assure the proper application of trust assets paid or delivered 
to the association in its capacity as trustee. 
    Sec. 20.  [515B.3-120] [DECLARANT OBLIGATIONS, TURNOVER OF 
ASSOCIATION RECORDS.] 
    (a) During any period of declarant control, declarant and 
any of its representatives who are acting as officers or 
directors of the association shall: 
    (1) cause the association to be operated and administered 
in accordance with its articles of incorporation and bylaws, the 
declaration and applicable law; 
    (2) be subject to all fiduciary obligations and obligations 
of good faith applicable to any persons serving a corporation in 
that capacity; 
    (3) cause the association's funds to be maintained in a 
separate bank account or accounts solely in the association's 
name, from and after the date of creation of the association; 
and 
    (4) cause the association to maintain complete and accurate 
records in compliance with section 515B.3-118. 
    (b) At such time as any period of declarant control 
terminates, declarant shall cause to be delivered to the board 
elected by the unit owners exclusive control of all funds of the 
association, all contracts and agreements to which the 
association was or is a party, all corporate records of the 
association including financial records, copies of all CIC plats 
and supplementary CIC plats, personal property owned or 
represented to be owned by the association, assignments of all 
declarant's rights and interests under the warranties if not in 
the name of the association, and, to the extent they are in the 
control or possession of the declarant, copies of all plans and 
specifications relating to the common interest community 
buildings and related improvements, and operating manuals and 
warranty materials relating to any equipment or personal 
property utilized in the operation of the common interest 
community.  The declarant's obligation to turn over the 
foregoing items shall continue to include additional new or 
changed items in its possession or control. 
    (c) A declarant in control of a master association, and the 
master association's officers and directors, shall be subject to 
the same duties and obligations with respect to the master 
association as are described in subsections (a), (b) and (c).  
The period of declarant control of the master association shall 
terminate as provided in section 515B.2-121(f).  A master 
association may not be used to circumvent or avoid any 
obligation or restriction imposed on a declarant or its 
affiliates by this chapter. 
    Sec. 21.  [515B.3-121] [ACCOUNTING CONTROLS.] 
     (a) Subject to any additional or greater requirements set 
forth in the declaration or bylaws, a review of the 
association's financial statements shall be made at the end of 
the association's fiscal year, unless prior to 30 days after the 
end of that fiscal year, at a meeting or by mailed ballot, unit 
owners of units to which at least 30 percent of the votes in the 
association are allocated vote to waive the review requirement 
for that fiscal year.  A waiver vote shall not apply to more 
than one fiscal year, and shall not affect the board's authority 
to cause a review or audit to be made.  The reviewed financial 
statements shall be delivered to all members of the association 
within 120 days after the end of the association's fiscal year. 
     (b) The review shall be made by a licensed, independent 
certified public accountant.  A licensed, independent certified 
public accountant means an accountant who (i) is not an employee 
of the declarant or its affiliates, (ii) is professionally 
independent of the control of the declarant or its affiliates, 
(iii) is licensed by the Minnesota state board of accountancy 
and (iv) satisfies the tests for independence as promulgated by 
the American Institute of Certified Public Accountants. 
     (c) The financial statements shall be prepared in 
accordance with generally accepted accounting principles as 
established from time to time by the American Institute of 
Certified Public Accountants, and shall be reviewed in 
accordance with standards for accounting and review services.  
The financial statements shall be presented on the full accrual 
basis using an accounting format that separates operating 
activity from replacement reserve activity. 

                                ARTICLE 4

                        PROTECTION OF PURCHASERS
    Section 1.  [515B.4-101] [APPLICABILITY; DELIVERY OF 
DISCLOSURE STATEMENT.] 
    (a) Sections 515B.4-101 through 515B.4-118 apply to all 
units subject to this chapter, except as provided in subsection 
(c) or as modified or waived by agreement of purchasers of a 
unit which is restricted to nonresidential use. 
    (b) Subject to subsection (c), a declarant who offers a 
unit to a purchaser shall deliver to the purchaser a current 
disclosure statement which complies with the requirements of 
section 515B.4-102.  The disclosure statement shall include any 
material amendments to the disclosure statement made prior to 
the conveyance of the unit to the purchaser.  The declarant 
shall be liable to the purchaser to whom it delivered the 
disclosure statement for any false or misleading statement set 
forth therein or for any omission of a material fact therefrom. 
    (c) Neither a disclosure statement nor a resale disclosure 
certificate need be prepared or delivered in the case of: 
    (1) a gratuitous transfer; 
    (2) a transfer pursuant to a court order; 
    (3) a transfer to a government or governmental agency; 
    (4) a transfer to a secured party by foreclosure or deed in 
lieu of foreclosure; 
    (5) an option to purchase a unit, until exercised; 
    (6) a transfer to a person who "controls" or is "controlled 
by," the grantor as those terms are defined with respect to a 
declarant under section 515B.1-103(2); 
    (7) a transfer by inheritance; 
    (8) a transfer of special declarant rights under section 
515B.3-104; or 
    (9) a transfer in connection with a change of form of 
common interest community under section 515B.2-123. 
    (d) A purchase agreement for a unit shall contain the 
following notice:  "The following notice is required by 
Minnesota Statutes.  The purchaser is entitled to receive a 
disclosure statement or resale disclosure certificate, as 
applicable.  The disclosure statement or resale disclosure 
certificate contains important information regarding the common 
interest community and the purchaser's cancellation rights." 
    Sec. 2.  [515B.4-102] [DISCLOSURE STATEMENT; GENERAL 
PROVISIONS.] 
    (a) A disclosure statement shall fully and accurately 
disclose: 
    (1) the name and, if available, the number of the common 
interest community; 
    (2) the name and principal address of the declarant; 
    (3) the number of units in the common interest community 
and a statement that the common interest community is either a 
condominium, cooperative, or planned community; 
    (4) a general description of the common interest community, 
including, to the extent possible, the types and number of 
buildings; 
    (5) declarant's schedule of commencement and completion of 
construction of any buildings and other improvements that the 
declarant is obligated to build pursuant to section 515B.4-117; 
    (6) any expenses or services, not reflected in the budget, 
that the declarant pays or provides, which may become a common 
expense of the association; the projected common expense 
attributable to each of those expenses or services for the 
association; and a detailed explanation of any alternative 
assessment program established pursuant to section 515B.3-115(b) 
and (d); 
    (7) any initial or special fee due from the purchaser to 
the declarant or the association at closing, together with a 
description of the purpose and method of calculating the fee; 
    (8) identification of any liens, defects, or encumbrances 
which will continue to affect the title to a unit or to any real 
property owned by the association after the contemplated 
conveyance; 
    (9) a description of any financing offered or arranged by 
the declarant; 
    (10) a statement as to whether the common interest 
community has received any final project approvals from the 
Federal National Mortgage Association (FNMA), Federal Home Loan 
Mortgage Corporation (FHLMC), Department of Housing and Urban 
Development (HUD) or Department of Veterans Affairs (VA); 
    (11) the terms of any warranties provided by the declarant, 
including copies of chapter 327A, and sections 515B.4-112 
through 515B.4-115, and a statement of any limitations on the 
enforcement of warranties or on damages; 
    (12) a statement that:  (i) within 15 days after the 
receipt of a disclosure statement, a purchaser may cancel any 
contract for the purchase of a unit from a declarant; provided, 
that the right to cancel terminates upon the purchaser's 
voluntary acceptance of a conveyance of the unit from the 
declarant; (ii) if a purchaser receives a disclosure statement 
more than 15 days before signing a purchase agreement, the 
purchaser cannot cancel the purchase agreement; and (iii) if a 
declarant obligated to deliver a disclosure statement fails to 
deliver a disclosure statement which substantially complies with 
this chapter to a purchaser to whom a unit is conveyed, the 
declarant shall be liable to the purchaser as provided in 
section 515B.4-106(d); 
    (13) a statement disclosing to the extent of the 
declarant's or an affiliate of a declarant's actual knowledge, 
after reasonable inquiry, any unsatisfied judgments or lawsuits 
to which the association is a party, and the status of those 
lawsuits which are material to the common interest community or 
the unit being purchased; 
    (14) a statement that any earnest money paid in connection 
with the purchase of a unit will be held in an escrow account 
until closing, or until the termination of the purchase 
agreement, and will be returned to the purchaser if the 
purchaser cancels the contract pursuant to section 515B.4-106, 
together with the name and address of the escrow agent; 
    (15) a detailed description of the insurance coverage 
provided for the benefit of unit owners, including any fixtures, 
decorating items or construction items within a unit which are 
not required to be insured by the association; 
    (16) any current or expected fees or charges, other than 
assessments for common expenses, to be paid by unit owners for 
the use of the common elements or any other improvements or 
facilities; 
    (17) the financial arrangements, including any 
contingencies, which have been made to provide for completion of 
all improvements that the declarant is obligated to build 
pursuant to section 515B.4-118, or a statement that no such 
arrangements have been made; 
    (18) in a cooperative:  (i) whether the unit owners will be 
entitled for federal and state tax purposes, to deduct payments 
made by the association for real estate taxes and interest paid 
to the holder of a security interest encumbering the 
cooperative; and (ii) a statement as to the effect on the unit 
owners if the association fails to pay real estate taxes or 
payments due the holder of a security interest encumbering the 
cooperative; 
    (19) a statement:  (i) that real estate taxes for the unit 
or any real property owned by the association are not delinquent 
or, if there are delinquent real estate taxes, describing the 
property for which the taxes are delinquent; stating the amount 
of the delinquent taxes, interest and penalties; and stating the 
years for which taxes are delinquent; and (ii) of the real 
estate taxes, including the amount of any special assessment 
certified for payment with the real estate taxes, due and 
payable with respect to the unit for which the disclosure 
statement is given in the year in which the disclosure statement 
is given; 
    (20) if the association or the purchaser of the unit will 
be a member of a master association, a statement to that effect, 
and all of the following information with respect to the master 
association:  (i) a copy of the declaration, if any, (other than 
any CIC plat), the articles of incorporation, bylaws, and rules 
and regulations for the master association, together with any 
amendments thereto; (ii) the name, address and general 
description of the master association, including a general 
description of any other association, unit owners, or other 
persons which are or may become members, and a general 
description of the relationship between the master association 
and its members; (iii) a description of any nonresidential use 
permitted on any property subject to the master association; 
(iv) a statement as to the estimated maximum number of 
associations, unit owners or other persons which may become 
members of the master association, and the degree and period of 
control of the master association by a declarant or other 
person; (v) a description of, and the schedule of commencement 
and completion of, any buildings and other improvements that the 
master association, a declarant or other person, as the case may 
be, is obligated to build in which the members of the master 
association have or may have an interest; (vi) the financial 
arrangements, including any contingencies, which have been made 
to provide for completion of the buildings and improvements 
referred to in subsection (v), or a statement that no 
arrangements have been made; (vii) any current balance sheet of 
the master association, which shall include with respect to the 
master association those items set forth in section 
515B.4-102(a)(23)(i) to (iv), and a projected or current annual 
budget, as applicable; (viii) a description of any services 
provided by the master association to its members and any 
current or projected assessments attributable to the members of 
the master association for the services; (ix) a description of 
any powers delegated to and accepted by the master association 
pursuant to section 515B.2-121(c); (x) identification of any 
liens, defects or encumbrances on or affecting title to property 
in which the members of the master association have or may have 
any interest; (xi) the terms of any warranties provided by any 
person for construction of buildings or other improvements in 
which the members of the master association have or may have an 
interest by virtue of membership in the master association, and 
any known defects in the buildings or other improvements which 
would violate the standards described in section 515B.4-112(b); 
(xii) a statement disclosing, to the extent of the declarant's 
knowledge, after inquiry of the master association, any 
unsatisfied judgments or lawsuits to which the master 
association is a party, and the status of those lawsuits which 
are material to the master association; (xiii) a description of 
any insurance coverage provided for the benefit of its members 
by the master association; and (xiv) any current or expected 
fees or charges, other than assessments by the master 
association, to be paid by members of the master association for 
the use of any improvements, facilities or amenities in which 
they have or may have an interest; 
    (21) a statement as to whether the unit will be 
substantially completed at the time of conveyance to a 
purchaser, and if not substantially completed, who is 
responsible to complete and pay for the construction of the 
unit; 
    (22) a copy of the declaration and any amendments thereto, 
(exclusive of the CIC plat), any other recorded covenants, 
conditions restrictions, and reservations affecting the common 
interest community; the articles of incorporation, bylaws and 
any rules or regulations of the association; any agreement 
excluding or modifying any implied warranties; any agreement 
reducing the statute of limitations for the enforcement of 
warranties; any contracts or leases to be signed by purchaser at 
closing; and a brief narrative description of any contracts or 
leases that are or may be subject to cancellation by the 
association under section 515B.3-105; and 
    (23) any current balance sheet for the association; a 
projected annual budget for the association for the year in 
which the first unit is conveyed to a purchaser, and thereafter 
the current annual budget of the association; and a statement 
identifying the party responsible for the preparation of the 
budget.  The budget shall include, without limitation:  (i) a 
statement of the amount included in the budget as a reserve for 
maintenance, repair and replacement; (ii) a statement of any 
other reserves; (iii) the projected common expense for each 
category of expenditures for the association; and (iv) the 
projected monthly common expense assessment for each type of 
unit. 
    (b) A declarant shall promptly amend the disclosure 
statement to reflect any material change in the information 
required by this chapter. 
    (c) The master association, within ten days after a request 
by a declarant, or any holder of declarant rights, or the 
authorized representative of any of them, shall furnish the 
information required to be provided by subsection (a)(20).  A 
declarant or other person who provides information pursuant to 
subsection (a)(20) is not liable to the purchaser for any 
erroneous information if the declarant or other person:  (i) is 
not an affiliate of or related in any way to a person authorized 
to appoint the master association board pursuant to section 
515B.2-121(h), and (ii) has no actual knowledge that the 
information is incorrect. 
    Sec. 3.  [515B.4-103] [COMMON INTEREST COMMUNITIES SUBJECT 
TO RIGHTS TO ADD ADDITIONAL REAL ESTATE.] 
    If the declaration provides that a common interest 
community is subject to any rights to add additional real estate:
    (1) the disclosure statement shall include the following 
notice: 
    "The following notice is required by Minnesota Statutes.  
The declarant has reserved in the declaration certain rights to 
add additional real estate.  These rights allow a declarant to 
add units or common elements to a common interest community, and 
to make other changes to the community over a specified period 
of time.  These changes may have a substantial effect upon the 
units or rights of unit owners, by changing relative voting 
power and share of common expenses, by increasing the number of 
persons using the common elements, by altering the size and 
appearance of the common interest community and by making other 
changes which may affect the value or utility of the units.  A 
purchaser of units in this common interest community should 
consider the possible effects of the declarant's rights reserved 
for this project"; and 
    (2) the disclosure statement shall include, in addition to 
the information required by section 515B.4-102, a statement 
referencing the provisions of the declaration where rights to 
add additional real estate are reserved. 
    Sec.  4.  [515B.4-104] [TIME SHARES.] 
    If the declaration permits time shares, the disclosure 
statement shall contain or disclose, in addition to the 
information required by sections 515B.4-102 and 515B.4-103: 
    (1) the unit identifiers of the units in which time shares 
may be created; 
    (2) the total number of time shares that may be created; 
    (3) the minimum duration of any time shares that may be 
created; 
    (4) the extent to which the creation of time shares will or 
may affect the enforceability of the association's lien for 
assessments provided in section 515B.3-116; 
    (5) a statement as to whether the time share interest is a 
fixed time period in a designated unit or if either the time 
period or unit may vary; 
    (6) copies of all organizational documents, contracts, 
leases and other documents affecting the time share association 
or the time shares, or the purchaser's rights therein; 
    (7) any state or federal ruling or nonaction letter 
regarding the time shares classification as a security or a 
statement that there is no ruling or nonaction letter; 
    (8) a statement as to whether the time share is registered 
with the state under the Subdivided Land Sales Act or with the 
federal government under the Interstate Land Sales Act and, if 
the time share is so registered, a copy of the public offering 
statement or other disclosure document required by those acts; 
and 
    (9) if the time share owners are to be permitted or 
required to become members of or to participate in a program for 
the exchange of occupancy rights among themselves or with the 
owners of time shares in other projects or both, a general 
description of the program. 
    Sec. 5.  [515B.4-105] [COMMON INTEREST COMMUNITIES 
CONTAINING PREVIOUSLY OCCUPIED BUILDINGS.] 
    The disclosure statement of a common interest community 
containing any building that was at any time before the creation 
of the common interest community wholly or partially occupied, 
for any purpose, by persons other than purchasers or persons who 
occupied with the consent of purchasers, shall contain, in 
addition to the information required by sections 515B.4-102, 
515B.4-103 and 515B.4-104: 
    (1) a professional opinion prepared by a registered 
professional architect or engineer, licensed in this state, 
describing the present condition of all structural components, 
and mechanical and electrical installations, material to the use 
and enjoyment of the building to the extent reasonably 
ascertainable without disturbing the improvements or dismantling 
the equipment; 
    (2) a statement by the declarant of the expected useful 
life of each item reported on in paragraph (1) or a statement 
that no representations are made in that regard; and 
    (3) a list of any outstanding notices of uncured violations 
of building code or other municipal regulations, together with 
the estimated cost of curing those violations. 
    Sec. 6.  [515B.4-106] [PURCHASER'S RIGHT TO CANCEL.] 
    (a) A person required to deliver a disclosure statement 
pursuant to section 515B.4-101(b) shall provide at least one of 
the purchasers of the unit with a copy of the disclosure 
statement and all amendments thereto before conveyance of the 
unit.  If a purchaser is not given a disclosure statement more 
than 15 days before execution of the purchase agreement, the 
purchaser may, before conveyance, cancel the purchase agreement 
within 15 days after first receiving the disclosure statement. 
If a purchaser is given the disclosure statement more than 15 
days before execution of a purchase agreement for the unit, the 
purchaser may not cancel the purchase agreement pursuant to this 
section. 
    (b) If an amendment to the disclosure statement materially 
and adversely affects a purchaser, then the purchaser shall have 
15 days after delivery of the amendment to cancel the purchase 
agreement in accordance with this section. 
    (c) If a purchaser elects to cancel a purchase agreement 
pursuant to this section, the purchaser may do so by giving 
notice thereof pursuant to section 515B.1-115.  Cancellation is 
without penalty, and all payments made by the purchaser before 
cancellation shall be refunded promptly.  Notwithstanding 
anything in this section to the contrary, the purchaser's 
cancellation rights under this section terminate upon the 
purchaser's acceptance of a conveyance of the unit. 
    (d) If a declarant obligated to deliver a disclosure 
statement fails to deliver to the purchaser a disclosure 
statement which substantially complies with this chapter, the 
declarant shall be liable to the purchaser in the amount of 
$1,000, in addition to any damages or other amounts recoverable 
under this chapter or otherwise. 
    Sec. 7.  [515B.4-107] [RESALE OF UNITS.] 
    (a) In the event of a resale of a unit by a unit owner 
other than a declarant, unless exempt under section 
515B.4-101(c), the unit owner shall furnish to a purchaser, 
before execution of any purchase agreement for a unit or 
otherwise before conveyance, the following documents relating to 
the association or to the master association, if applicable: 
    (1) copies of the declaration (other than any CIC plat), 
the articles of incorporation and bylaws, any rules and 
regulations, and any amendments thereto; 
    (2) the organizational and operating documents relating to 
the master association, if any; and 
    (3) a resale disclosure certificate from the association 
dated not more than 90 days prior to the date of the purchase 
agreement or the date of conveyance, whichever is earlier, 
containing the information set forth in subsection (b). 
    (b) The resale disclosure certificate shall contain the 
following information: 
    (1) a statement disclosing any right of first refusal or 
other restraint on the free alienability of the unit contained 
in the declaration, articles of incorporation, bylaws, rules and 
regulations, or any amendment thereof; 
    (2) a statement setting forth the amount of the monthly 
installments of common expense assessments, including special 
assessments, if any, and the amount of any due and unpaid 
regular or special assessments, fines or other charges payable 
with respect to the unit; 
    (3) a statement of any fees or charges other than 
assessments payable by unit owners; 
    (4) a statement of any capital expenditures approved by the 
association for the current and two succeeding fiscal years; 
    (5) a statement of the amount of any reserves for 
maintenance, repair or replacement and of any portions of those 
reserves designated by the association for any specified 
projects or uses; 
    (6) the most recent regularly prepared balance sheet and 
income and expense statement of the association; 
    (7) the current budget of the association; 
    (8) a statement of any unsatisfied judgments against the 
association and the status of any pending suits in which the 
association is party; 
    (9) a detailed description of the insurance coverage 
provided for the benefit of unit owners, including any fixtures, 
decorating items or construction items within a unit which are 
not required to be insured by the association; 
    (10) a statement as to whether the board has notified the 
unit owner (i) that any alterations or improvements to the unit 
or to the limited common elements assigned thereto violate any 
provision of the declaration or (ii) that the unit is in 
violation of any governmental statute, ordinance, code or 
regulation; and 
    (11) a statement of the remaining term of any leasehold 
estate affecting the common interest community and the 
provisions governing any extension or renewal thereof. 
    (c) If the association is subject to a master association 
to which has been delegated the association's powers under 
section 515B.3-102(a)(2), then the financial information 
required to be disclosed under subsection (b) may be disclosed 
on a consolidated basis. 
    (d) The association, within ten days after a request by a 
unit owner, or the unit owner's authorized representative, shall 
furnish the certificate required in subsection (a).  The 
association may charge a reasonable fee for furnishing the 
certificate and any association documents related thereto.  A 
unit owner providing a certificate pursuant to subsection (a) is 
not liable to the purchaser for any erroneous information 
provided by the association and included in the certificate. 
    (e) A purchaser is not liable for any unpaid common expense 
assessments, including special assessments, if any, not set 
forth in the certificate required in subsection (a).  A 
purchaser is not liable for the amount by which the annual or 
special assessments exceed the amount of annual or special 
assessments stated in the certificate for assessments payable in 
the year in which the certificate was given, except to the 
extent of any increases subsequently approved in accordance with 
the declaration or bylaws.  A unit owner is not liable to a 
purchaser for the failure of the association to provide the 
certificate, or a delay by the association in providing the 
certificate in a timely manner. 
    Sec. 8.  [515B.4-108] [PURCHASER'S RIGHT TO CANCEL RESALE.] 
    (a) Unless a purchaser is given the information required to 
be delivered by section 515B.4-107 more than 15 days prior to 
the execution of the purchase agreement for the unit the 
purchaser may, prior to the conveyance, cancel the purchase 
agreement within 15 days after receiving the information. 
    (b) A purchaser who elects to cancel a purchase agreement 
pursuant to subsection (a), may do so by hand delivering notice 
thereof or mailing notice by postage prepaid United States mail 
to the seller or the agent.  Cancellation is without penalty and 
all payments made by the purchaser shall be refunded promptly. 
    Sec. 9.  [515B.4-109] [ESCROW DEPOSITS.] 
    All earnest money paid or deposits made in connection with 
the purchase or reservation of units from or with a declarant 
shall be deposited in an escrow account controlled jointly by 
the declarant and the purchaser, or controlled by a licensed 
title insurance company or agent thereof, an attorney 
representing either the declarant or the purchaser, a licensed 
real estate broker or an independent bonded escrow company.  The 
escrow account shall be in an institution whose deposits are 
insured by a governmental agency or instrumentality.  The money 
or deposits shall be held in the escrow account until (i) 
delivered to the declarant at closing; (ii) delivered to the 
declarant because of the purchaser's default under a reservation 
agreement or a contract to purchase the unit; (iii) delivered to 
the purchaser pursuant to the provisions of section 515B.4-106 
or the provisions of a reservation agreement or a contract to 
purchase; or (iv) delivered for payment of construction costs 
pursuant to a written agreement between the declarant and the 
purchaser. 
    Sec. 10.  [515B.4-110] [OBLIGATION TO RELEASE LIENS.] 
    (a) In the case of a transfer of a unit where a disclosure 
statement is required, the declarant, before conveying the unit, 
shall: 
    (1) record or furnish to the purchaser recordable releases 
of all liens that the purchaser does not agree in writing to 
take subject to or assume, that encumber: 
    (i) in a condominium, that unit and its common element 
interest, and 
    (ii) in a cooperative or planned community, that unit and 
any common elements; or 
    (2) if the purchaser agrees in writing, provide the 
purchaser with a surety bond, substitute collateral or title 
insurance assuring against loss or damage from the enforcement 
of the lien. 
    (b) Before conveying real estate to the association, the 
declarant shall have the real estate released from:  (1) all 
liens the foreclosure of which would deprive unit owners of any 
material right of access to a unit or any material easements 
appurtenant to a unit, and (2) all other liens on that real 
estate, unless the disclosure statement specifically states that 
the declarant may convey the real estate to the association 
subject to liens and discloses the maximum amount and all other 
relevant terms of the lien. 
    Sec. 11.  [515B.4-111] [CONVERSION PROPERTY.] 
    (a) A declarant of a common interest community containing 
conversion property, shall give the occupants of residential 
units in the conversion property notice of the conversion no 
later than 120 days before they are required to vacate.  The 
notice shall be given by hand delivering or mailing one notice 
to each residential unit, addressed to the occupants thereof.  
If the holder of the lessee's interest in the unit has given the 
owner of the building an address different than that of the 
unit, then the notice shall also be given to the holder of the 
lessee's interest at the designated address.  The notice shall 
satisfy the following requirements: 
    (1) The notice shall set forth generally the rights 
conferred by this section. 
    (2) The notice shall have attached to the notice intended 
for the holder of the lessee's interest a form of purchase 
agreement setting forth the terms of sale contemplated by 
subsection (d) and a statement of any significant restrictions 
on the use and occupancy of the unit to be imposed by the 
declarant. 
    (3) The notice shall state that the occupants of the 
residential unit may demand to be given 60 additional days 
before being required to vacate, if any of them, or any person 
residing with them, is (i) 62 years of age or older, (ii) a 
person with a disability as defined in section 268A.01, or (iii) 
a minor child on the date the notice is given.  This demand must 
be in writing, contain reasonable proof of qualification, and be 
given to the declarant within 30 days after the notice of 
conversion is delivered or mailed. 
    (4) The notice shall be contained in an envelope upon which 
the following shall be boldly printed: "Notice of Conversion." 
    (b) No occupant of a unit in a conversion property may be 
required to vacate upon less than 120 days' notice, except by 
reason of nonpayment of rent, waste, or conduct that disturbs 
other tenants' peaceful enjoyment of the premises.  Nor may the 
terms of the tenancy be altered during that period, except that 
a tenant or other party in possession may vacate and terminate 
the lease upon one month's written notice to the declarant.  
Nothing in this section prevents the declarant and any occupant 
from agreeing to an extension of the tenancy on a month-to-month 
basis beyond the 120-day notice period, or to an earlier 
termination of the tenancy. 
    (c) No repair work or remodeling may be commenced or 
undertaken in the occupied units or common areas of the building 
during the notice period, unless reasonable precautions are 
taken to ensure the safety and security of the occupants. 
    (d) For 60 days after delivery or mailing of the notice 
described in subsection (a), the holder of the lessee's interest 
in the unit on the date the notice is mailed or delivered shall 
have an option to purchase that unit on the terms set forth in 
the purchase agreement attached to the notice.  The purchase 
agreement shall contain no terms or provisions which violate any 
state or federal law relating to discrimination in housing.  If 
the holder of the lessee's interest fails to purchase the unit 
during that 60-day period, the declarant may not offer to 
dispose of an interest in that unit during the following 180 
days at a price or on terms more favorable to the offeree than 
the price or terms offered to the holder.  This subsection does 
not apply to any unit in a conversion building if that unit will 
be restricted exclusively to nonresidential use or if the 
boundaries of the converted unit do not substantially conform to 
the boundaries of the residential unit before conversion. 
    (e) If a declarant, in violation of subsection (b), conveys 
a unit to a purchaser for value who has no knowledge of the 
violation, the recording of the deed conveying the unit or, in a 
cooperative, the conveyance of the right to possession of the 
unit, extinguishes any right a holder of a lessee's interest who 
is not in possession of the unit may have under subsection (d) 
to purchase that unit, but the conveyance does not affect the 
right of the holder to recover damages from the declarant for a 
violation of subsection (d). 
    (f) If a notice of conversion specifies a date by which a 
unit or proposed unit must be vacated or otherwise complies with 
the provisions of chapter 566, the notice also constitutes a 
notice to vacate specified by that statute. 
    (g) Nothing in this section permits termination of a lease 
by a declarant in violation of its terms. 
    (h) Failure to give notice as required by this section is a 
defense to an action for possession until a notice complying 
with this section is given and the applicable notice period 
terminates. 
    Sec. 12.  [515B.4-112] [EXPRESS WARRANTIES.] 
    (a) Express warranties made by a declarant or an affiliate 
of a declarant to a purchaser of a unit, if reasonably relied 
upon by the purchaser, are created as follows: 
    (1) Any affirmation of fact or promise which relates to the 
unit; use of the unit; rights appurtenant to the unit; 
improvements to the common interest community that would 
directly benefit the purchaser or the unit; or the right to use 
or have the benefit of facilities which are not a part of the 
common interest community, creates an express warranty that the 
unit and related rights and uses will conform to the affirmation 
or promise. 
    (2) Any model or description of the physical 
characteristics of a unit or the common interest community, 
including plans and specifications of or for a unit or other 
improvements located in the common interest community, creates 
an express warranty that the unit and the common interest 
community will conform to the model or description.  A notice 
prominently displayed on a model or included in a description 
shall prevent a purchaser from reasonably relying upon the model 
or description to the extent of the disclaimer set forth in the 
notice. 
    (3) Any description of the quantity or extent of the real 
estate compromising the common interest community, including 
plats or surveys, creates an express warranty that the common 
interest community will conform to the description, subject to 
customary tolerances. 
    (b) Neither the form of the word "warranty" or "guaranty", 
nor a specific intention to make a warranty, are necessary to 
create an express warranty of quality, but a statement 
purporting to be merely an opinion or commendation of the real 
estate or its value does not create a warranty. 
    (c) Any conveyance of a unit transfers to the purchaser all 
express warranties. 
    Sec. 13.  [515B.4-113] [IMPLIED WARRANTIES.] 
    (a) A declarant warrants to a purchaser that a unit will be 
in at least as good condition at the earlier of the time of the 
conveyance or delivery of possession as it was at the time of 
contracting, reasonable wear and tear excepted. 
    (b) A declarant warrants to a purchaser that: 
     (1) a unit and the common elements in the common interest 
community are suitable for the ordinary uses of real estate of 
its type; and 
    (2) any improvements subject to use rights by the 
purchaser, made or contracted for by the declarant, or made by 
any person in contemplation of the creation of the common 
interest community, will be (i) free from defective materials 
and (ii) constructed in accordance with applicable law, 
according to sound engineering and construction standards, and 
in a workmanlike manner. 
    (c) In addition, a declarant warrants to a purchaser of a 
unit which under the declaration is available for residential 
use that the residential use will not violate applicable law at 
the earlier of the time of conveyance or delivery of possession. 
    (d) Warranties imposed by this section may be excluded or 
modified only as specified in section 515B.4-114. 
    (e) For purposes of this section, improvements made or 
contracted for by an affiliate of a declarant are made or 
contracted for by the declarant. 
    (f) Any conveyance of a unit transfers to the purchaser all 
implied warranties. 
    (g) This section does not in any manner abrogate the 
provisions of chapter 327A relating to statutory warranties for 
housing, or affect any other cause of action under a statute or 
the common law. 
    Sec. 14.  [515B.4-114] [EXCLUSION OR MODIFICATION OF 
IMPLIED WARRANTIES.] 
    (a) With respect to a unit available for residential use, 
no general disclaimer of implied warranties is effective, but a 
declarant may disclaim liability in an instrument separate from 
the purchase agreement signed by the purchaser for a specified 
defect or specified failure to comply with applicable law, if 
the defect or failure entered into and became a part of the 
basis of the bargain. 
    (b) With respect to a unit restricted to nonresidential 
use, implied warranties: 
    (1) may be excluded or modified by agreement of the 
parties; and 
    (2) are excluded by expression of disclaimer, such as "as 
is," "with all faults," or other language that in common 
understanding calls the purchaser's attention to the exclusion 
of warranties. 
    Sec. 15.  [515B.4-115] [STATUTE OF LIMITATIONS FOR 
WARRANTIES.] 
    (a) A judicial proceeding for breach of an obligation 
arising under section 515B.4-106(d), shall be commenced within 
six months after the conveyance of the unit; 
    (b) A judicial proceeding for breach of an obligation 
arising under section 515B.4-112 or 515B.4-113 shall be 
commenced within six years after the cause of action accrues, 
but the parties may agree to reduce the period of limitation to 
not less than two years.  With respect to a unit that may be 
occupied for residential use, an agreement to reduce the period 
of limitation must be evidenced by an instrument separate from 
the purchase agreement signed by the purchaser. 
    (c) Subject to subsection (d), a cause of action under 
section 515B.4-112 or 515B.4-113, regardless of the purchasers 
lack of knowledge of the breach, accrues: 
    (1) as to a unit, at the earlier of the time of conveyance 
of the unit by the declarant to a bona fide purchaser of the 
unit other than an affiliate of a declarant, or the time the 
purchaser enters into possession of the unit; and 
    (2) as to each common element, the latest of (i) the time 
the common element is completed, (ii) the time the first unit in 
the condominium is conveyed to a bona fide purchaser, or if the 
common element is located on property that is additional real 
estate at the time the first unit therein is conveyed to a bona 
fide purchaser, or (iii) the termination of the period of 
declarant control. 
    (d) If a warranty explicitly extends to future performance 
or duration of any improvement or component of the common 
interest community, the cause of action accrues at the time the 
breach is discovered or at the end of the period for which the 
warranty explicitly extends, whichever is earlier. 
    Sec. 16.  [515B.4-116] [RIGHTS OF ACTION; ATTORNEY'S FEES.] 
    (a) In addition to any other rights to recover damages, 
attorney's fees, costs or expenses, whether authorized by this 
chapter or otherwise, if a declarant or any other person 
violates any provision of this chapter, or any provision of the 
declaration, bylaws, or rules and regulations any person or 
class of persons adversely affected by the failure to comply has 
a claim for appropriate relief.  The association shall have 
standing to pursue claims on behalf of the unit owners of two or 
more units.  
    (b) The court may award reasonable attorney's fees and 
costs of litigation to the prevailing party.  Punitive damages 
may be awarded for a willful failure to comply. 
    (c) The remedies provided for under this chapter are not 
exclusive and do not abrogate any remedies under other statutes 
or the common law, notwithstanding whether those remedies are 
referred to in this chapter. 
    Sec. 17.  [515B.4-117] [LABELING OF PROMOTIONAL MATERIAL.] 
    No promotional material may be displayed or delivered to 
prospective purchasers which describes or portrays an 
improvement that is not in existence unless the description or 
portrayal of the improvement in the promotional material is 
conspicuously labeled or identified either as "MUST BE BUILT" or 
as "NEED NOT BE BUILT". 
    Sec. 18.  [515B.4-118] [DECLARANT'S OBLIGATION TO COMPLETE 
AND RESTORE.] 
    (a) Except for improvements labeled "NEED NOT BE BUILT", 
the declarant shall complete all improvements depicted on any 
CIC plat prepared pursuant to section 515B.2-110, whether or not 
the plat is contained in the disclosure statement. 
    (b) The declarant is liable for the prompt repair and 
restoration of any portion of the common interest community 
damaged by the declarant's exercise of any special declarant 
rights. 

                                ARTICLE 5

                          CONFORMING AMENDMENTS
    Section 1.  Minnesota Statutes 1992, section 308A.011, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ONLY BUSINESS SUBJECT TO THIS CHAPTER MAY 
USE TERM COOPERATIVE.] (a) A corporation or association 
organized in this state may not use the term "cooperative" as 
part of its corporate or business name or title, or to represent 
itself as a cooperative, unless the corporation or association 
has complied with and is subject to this chapter or has 
incorporated under other laws of this state authorizing 
incorporation of business on a cooperative plan. 
    (b) A cooperative formed pursuant to chapter 515B is 
subject to this chapter, except that in the event of a conflict 
between chapter 515B and this chapter, chapter 515B is 
controlling. 
    Sec. 2.  Minnesota Statutes 1992, section 500.20, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [RESTRICTION OF DURATION OF CONDITION.] Except 
for any right to reenter or to repossess as provided in 
subdivision 3, all private covenants, conditions, or 
restrictions created by which the title or use of real property 
is affected, cease to be valid and operative 30 years after the 
date of the deed, or other instrument, or the date of the 
probate of the will, creating them, and may be disregarded.  
    This subdivision does not apply to covenants, conditions, 
or restrictions:  
    (1) that were created before August 1, 1988, by deed or 
other instrument dated on or after August 1, 1982, or by will 
the date of death of the testator of which was on or after 
August 1, 1982; 
       (2) that were created before August 1, 1959, under which a 
person who owns or has an interest in real property against 
which the covenants, conditions, or restrictions have been filed 
claims a benefit of the covenant, condition, or restriction if 
the person records in the office of the county recorder or files 
in the office of the registrar of titles in the county in which 
the real estate affected is located, on or before March 30, 
1989, a notice sworn to by the claimant or the claimant's agent 
or attorney:  setting forth the name of the claimant; describing 
the real estate affected; describing the deed, instrument, or 
will creating the covenant, condition, or restriction; and 
stating that the covenant, condition, or restriction is not 
nominal and may not be disregarded under subdivision 1; 
      (3) that are created by the declaration, bylaws, floor 
plans, or condominium plat of a condominium created before 
August 1, 1980, under sections 515.01 to 515.29 or created on or 
after August 1, 1980, under sections 515A.1-101 to 515A.4-117, 
or by any amendments of the declaration, bylaws, floor plans, or 
condominium plat; 
      (4) that are created by the articles of incorporation, 
bylaws, or proprietary leases of a cooperative association 
formed under chapter 308A; 
      (5) that are created by a declaration or other instrument 
that authorizes and empowers a corporation of which the 
qualification for being a stockholder or member is ownership of 
certain parcels of real estate, to hold title to common real 
estate for the benefit of the parcels; 
    (6) that are created by a deed, declaration, reservation, 
or other instrument by which one or more portions of a building, 
set of connecting or adjacent buildings, or complex or project 
of related buildings and structures share support, structural 
components, ingress and egress, or utility access with another 
portion or portions; or 
    (7) that were created after July 31, 1959, and before 
August 1, 1982, under which a person who owns or has an interest 
in real estate against which covenants, conditions, or 
restrictions have been filed claims a benefit of the covenants, 
conditions, or restrictions if the person records in the office 
of the county recorder or files in the office of the registrar 
of titles in the county in which the real estate affected is 
located during the period commencing on the 28th anniversary of 
the date of the deed or instrument, or the date of the probate 
of the will, creating them and ending on the 30th anniversary, a 
notice as described in clause (2); or 
    (8) that are created by a declaration or bylaws of a common 
interest community created under or governed by chapter 515B, or 
by any amendments thereto. 
    A notice filed in accordance with clause (2) or (7) delays 
application of this subdivision to the covenants, conditions, or 
restrictions for a period ending on the later of seven years 
after the date of filing of the notice, or until final judgment 
is entered in an action to determine the validity of the 
covenants, conditions, or restrictions, provided in the case of 
an action the summons and complaint must be served and a notice 
of lis pendens must be recorded in the office of the county 
recorder or filed in the office of the registrar of titles in 
each county in which the real estate affected is located within 
seven years after the date of recording or filing of the notice 
under clause (2) or (7). 
    County recorders and registrars of titles shall accept for 
recording or filing a notice conforming with this subdivision 
and charge a fee corresponding with the fee charged for filing a 
notice of lis pendens of similar length.  The notice may be 
discharged in the same manner as a notice of lis pendens and 
when discharged, together with the information included with it, 
ceases to constitute either actual or constructive notice. 
    Sec. 3.  Minnesota Statutes 1992, section 508.71, is 
amended by adding a subdivision to read: 
    Subd. 7.  [CONDOMINIUMS.] Prior to filing with the 
registrar of titles a declaration or bylaws for a condominium, 
or an amendment to the declaration adding additional real estate 
to the condominium, the declarant shall have a determination 
made by an order of court in a proceeding subsequent to initial 
registration or by a written directive of the examiner of titles 
that the documents comply with the requirements of the 
applicable condominium statute. 
    Sec. 4.  Minnesota Statutes 1992, section 541.023, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPLICATION.] (a) This section shall apply to 
every right, claim, interest, incumbrance, or lien founded by 
any instrument, event, or transaction 40 years old at the date 
hereof, or which will be 40 years old prior to January 1, 1948, 
except those under which the claimant thereunder shall file a 
notice as herein provided prior to January 1, 1948. 
    (b) This section applies to repurchase options or other 
rights of repurchase that encumber an interest in land based 
upon an instrument other than a deed of conveyance granted by a 
governmental body, agency, or subdivision, unless within 40 
years of the recording or filing of the instrument a notice is 
recorded or filed under subdivision 1.  This paragraph does not 
revive repurchase options or rights of repurchase barred by 
subdivision 1. 
    (c) This section does not apply to actions to enforce 
rights, claims, interests, encumbrances, or liens arising out of 
private covenants, conditions, or restrictions to which section 
500.20, subdivision 2a, or successor statutes do not apply. 

                               ARTICLE 6 

                            EFFECTIVE DATE 
     Section 1.  [EFFECTIVE DATE.] 
     Articles 1 to 5 are effective June 1, 1994. 
    Presented to the governor May 14, 1993 
    Signed by the governor May 17, 1993, 10:58 a.m.