2006 Minnesota Statutes

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, or in the case of a condominium on registered
land, the instrument must be filed pursuant to section 508.351, subdivision 3, or 508A.351,
subdivision 3 . 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.
History: 1993 c 222 art 3 s 4; 2001 c 50 s 29