2006 Minnesota Statutes

515B.2-119 TERMINATION OF COMMON INTEREST COMMUNITY.
(a) Except as otherwise provided in this chapter, 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, 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 utilizing a CIC plat complying with section 515B.2-110(d)(1)
and (2), 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, or a planned community utilizing a CIC plat complying
with section 515B.2-110(c), 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
shall be measured by: (i) in a condominium, their allocations of 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 allocations
of common expenses immediately before the termination.
(l) 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.
History: 1993 c 222 art 2 s 19; 1994 c 388 art 4 s 9; 1999 c 11 art 2 s 12; 2005 c 121 s 17