2006 Minnesota Statutes

515B.2-124 SEVERANCE OF COMMON INTEREST COMMUNITY.
(a) Unless the declaration provides otherwise, a part of a common interest community
containing one or more units, with or without common elements, may be severed from the
common interest community, subject to the requirements of this section. Subject to any additional
requirements contained in the declaration, the severance shall be approved in a written severance
agreement complying with this section, executed by:
(1) unit owners entitled to cast at least 67 percent of the votes in the association, which
approval shall include the approval of unit owners entitled to cast a majority of the votes allocated
to units in the remaining common interest community and the approval of unit owners entitled
to cast a majority of the votes allocated to units in the part of the common interest community
being severed;
(2) declarant until the earlier of five years after the recording of the declaration or the time at
which declarant no longer owns an unsold unit; and
(3) in the case of a cooperative, all holders of mortgages or contracts for deed on the entire
real estate constituting the cooperative.
(b) The declaration may specify a smaller percentage for unit owner approval only if all of
the units are restricted to nonresidential use.
(c) The severance agreement shall specify a severance date by which the severance of the
common interest community shall be accomplished, after which the severance agreement is
void. The severance agreement shall be deemed to grant to the association a power of attorney
coupled with an interest to effect the severance of the common interest community on behalf of
the unit owners and the holders of all other interests in the units, including without limit the
power to execute the amendment to the declaration, any instruments of conveyance, and all
related instruments.
(d) The severance agreement shall:
(1) Approve an amendment to the declaration complying with this chapter, in substantially
the same form to be recorded, which, at a minimum (i) legally describes the real estate constituting
the remaining common interest community and the real estate being severed, (ii) restates the
number of units in the remaining common interest community, (iii) reallocates the interests of
the unit owners in the remaining common interest community among the remaining units in
accordance with the allocation formula set forth in the declaration, and (iv) recites any easements
to which the severed portion of the common interest community remains subject.
(2) Approve an amendment to the articles of incorporation and bylaws of the remaining
common interest community, if necessary.
(3) Authorize the association to execute and record the amended declaration, articles of
incorporation or bylaws on behalf of the unit owners and all other persons holding an interest in
the remaining common interest community, and to take other actions necessary to accomplish the
severance of the common interest community.
(4) Allocate the assets and liabilities of the association between the association and (i) a new
association formed pursuant to subsection (g), or (ii) the owners of the units being severed,
subject to a lien against their interest in the severed real estate or their share in the assets of the
association in favor of any person that held a security interest in their unit.
(5) If the units that are being severed from the common interest community will not be
included in a new common interest community that is (i) formed simultaneously with the
severance of the common interest community, and (ii) includes all of the units and substantially
all of the common elements being severed, then the agreement shall contain the written consent
of holders of first mortgages on all units that are being severed, and shall describe in detail the
proposed disposition of all real estate to be severed and all assets of the association allocated to
the severed units, and the distribution of the proceeds of the disposition, if any.
(e) The severance agreement or a memorandum of it shall be recorded in every county
in which a part of the common interest community is located. The recording of the severance
agreement or memorandum of it shall, from the date of recording, constitute notice to all persons
subsequently acquiring an interest in the common interest community that the common interest
community is being severed, and that those persons acquire their interests subject to the terms and
conditions contained in the severance agreement and the amendment to the declaration.
(f) The amendment to the declaration of the remaining common interest community shall
be recorded on or before the severance date or the severance agreement and the amendment to
the declaration is void as of the day after the severance date. The recording of the amendment
to the declaration shall complete the severance of the common interest community and release
the severed part of the common interest community from the declaration without further action
by any person.
(g) If the unit owners whose units are being severed from the common interest community
intend to form a new common interest community, then said unit owners shall, by at least 80
percent of the votes allocated by the existing declaration to said units, approve a new declaration,
articles of incorporation and bylaws to govern the new common interest community no later
than 60 days before the effective date of the severance. The new declaration shall be recorded
simultaneously with the amendment to the existing declaration. No later than 30 days after the
date of the severance agreement, the articles of incorporation creating the association intended to
govern the new common interest community shall be filed with the secretary of state and promptly
thereafter the unit owners whose units are being severed shall elect a board of directors to act
on behalf of the new association. The board of directors of the new association shall cooperate
with the board of directors of the existing association to complete the severance. The existing
association shall retain all authority to act on behalf of the common interest community until the
amendment to the existing declaration and the new declaration are recorded.
(h) The legal descriptions of the real estate constituting (i) the remaining common interest
community, and (ii) the severed portion of the common interest community shall, at the time of
recording of the amendment to the declaration referred to in subsection (e), be as follows:
(1) In a planned community using a CIC plat that complies with section 515B.2-110,
subsection (d) , the lot and block descriptions contained in the CIC plat, and any amendments to
it, with respect to (i) the remaining common interest community, and (ii) the severed portion
of the common interest community.
(2) In a condominium, or cooperative or planned community using a CIC plat that complies
with section 515B.2-110, subsection (c), (i) the CIC plat description relating to the remaining
common interest community, and (ii) the part of the underlying legal description of the real estate
in the declaration creating the common interest community, and any amendments to it, relating to
the severed part of the common interest community.
(3) 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 descriptions required
by this subsection as of the date of recording of the amendment to the declaration. In the case
of registered property, the registrar of titles shall cancel the existing certificates of title for the
severed part of the common interest community and issue certificates of title for the property
using the legal descriptions required by this subsection.
(i) In a condominium or planned community, if the severed part of the common interest
community is not to be reconstituted as a new common interest community following severance,
title to the common elements and, in a common interest community in which all units have upper
and lower boundaries described in the declaration title to all the real estate in the severed part of the
common interest community, vests in the unit owners of the units being severed, upon severance,
as tenants in common in proportion to their respective allocated interests in the declaration, 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, and a nonexclusive easement across, over and under
any common elements contained in the severed portion of the common interest community for
enjoyment, access, utilities, communication services, and other essential services, as applicable.
(j) No common interest community shall be severed in such a manner as to materially impair
access, utility services, communication services, or other essential services with respect to either
the remaining common interest community or the severed part of the common interest community.
History: 1999 c 11 art 2 s 15; 2005 c 121 s 20