2001 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 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 satisfying the 
 requirements of 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 unanimously 
 approve a 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 declaration 
 creating the new common interest community shall be recorded 
 simultaneously with the amendment to the declaration.  No later 
 than 30 days before the effective date of the severance, the 
 unit owners shall cause the association governing the new common 
 interest community to be created by filing the articles of 
 incorporation of the association with the secretary of state and 
 shall elect a board of directors to act on behalf of the new 
 association.  The board of directors of the new association 
 shall coordinate the completion of the severance with the board 
 of directors of the existing association.  The existing 
 association shall retain all authority to act on behalf of the 
 common interest community until the amendment to the declaration 
 is 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. 

    HIST: 1999 c 11 art 2 s 15