Office of the Revisor of Statutes
Minnesota Session Laws - 1993, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes