CHAPTER 828
COMMON INTEREST OWNERSHIP ACT

Table of Contents

Sec. 47-206. Eminent domain.
Sec. 47-237. Termination of common interest community.
Sec. 47-245. Executive board members and officers. Duties. Ratification of budget. Period of declarant control. Delivery of property and documents by declarant. Current financial statement.
Sec. 47-270. Resales of units.

PART I
GENERAL PROVISIONS AND APPLICABILITY

      Sec. 47-206. Eminent domain. (a) If a unit is acquired by eminent domain or part of a unit is acquired by eminent domain leaving the unit owner with a remnant that may not practically or lawfully be used for any purpose permitted by the declaration, the award shall include compensation to the unit owner for that unit and its allocated interests, whether or not any common elements are acquired. On acquisition, unless the decree otherwise provides, that unit's allocated interests are automatically reallocated to the remaining units in proportion to the respective allocated interests of those units before the taking, and the association shall promptly prepare, execute and record an amendment to the declaration reflecting the reallocations. 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) of this section, if part of a unit is acquired by eminent domain, the award shall compensate the unit owner for the reduction in value of the unit and its interest in the common elements, whether or not any common elements are acquired. On acquisition, unless the decree otherwise provides, (1) 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 (2) 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 award shall compensate the unit owners affected by the taking for the reduction in value of the units resulting from the acquisition, and 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.

      (d) The court decree shall be recorded in every town in which any portion of the common interest community is located.

      (P.A. 83-474, S. 7, 96; P.A. 05-288, S. 165.)

      History: P.A. 05-288 made technical changes in Subsec. (b), effective July 13, 2005.

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PART II
CREATION, ALTERATION AND TERMINATION
OF COMMON INTEREST COMMUNITIES

      Sec. 47-237. Termination of common interest community. (a) Except in the case of a taking of all the units by eminent domain or in the case of foreclosure against an entire cooperative of a security interest that has priority over the declaration, a common interest community may be terminated only by agreement of unit owners of units to which at least eighty per cent of the votes in the association are allocated, or any larger percentage the declaration specifies. The declaration may specify a smaller percentage only if all of the units are restricted exclusively to nonresidential uses.

      (b) An agreement to terminate shall be evidenced by the execution of a termination agreement, or ratifications thereof, in the same manner as a deed, by the requisite number of unit owners. The termination agreement shall specify a date after which the agreement will be void unless it is recorded before that date. A termination agreement and all ratifications thereof shall be recorded in every town in which a portion of the common interest community is situated and is effective only on recordation.

      (c) In the case of a condominium or planned community containing only units having horizontal boundaries described in the declaration, a termination agreement may provide that all of the common elements and units of the common interest community shall be sold following termination. If, pursuant to the agreement, any real property in the common interest community is to be sold following termination, the termination agreement shall set forth the minimum terms of the sale.

      (d) In the case of a condominium or planned community containing any units not having horizontal 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 declaration as originally recorded provided otherwise or all the unit owners consent to the sale.

      (e) The association, on behalf of the unit owners, may contract for the sale of real property in a common interest community, but the contract is not binding on the unit owners until approved pursuant to subsections (a) and (b) of this section. If any real property is to be sold following termination, title to that real property, on termination, vests in the association as trustee for the holders of all interests in the units. Thereafter, the association has all powers necessary and appropriate to effect the sale. Until the sale has been concluded and the proceeds thereof distributed, the association continues in existence with all powers it had before termination. Proceeds of the sale shall be distributed to unit owners and lien holders, as their interests may appear, in accordance with subsections (h), (i) and (j) of this section. Unless otherwise specified in the termination agreement, as long as the association holds title to the real property, each unit owner and the unit owner's successors in interest have an exclusive right to occupancy of the portion of the real property 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 or the declaration.

      (f) In a condominium or planned community, if the real property 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 horizontal boundaries described in the declaration, title to all the real property in the common interest community, vest in the unit owners on termination as tenants in common in proportion to their respective interests as provided in subsection (j) of this section, 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 property that formerly constituted the unit.

      (g) Following termination of the common interest community, the proceeds of any sale of real property, together with the assets of the association, are held by the association as trustee for unit owners and holders of liens on the units as their interests may appear.

      (h) Following termination of a condominium or planned community, creditors of the association holding liens on the units, which were recorded before termination, may enforce those liens in the same manner as any lien holder. All other creditors of the association are to be treated as if they had perfected liens on the units immediately before termination.

      (i) 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 recorded before termination may enforce their liens in the same manner as any lien holder, and any other creditor of the association is to be treated as if he 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, on 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 on 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 subdivisions (1) and (2) of this subsection 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 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 above. 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.

      (j) The respective interests of unit owners referred to in subsections (e), (f), (g), (h) and (i) of this section are as follows:

      (1) Except as provided in subdivision (2) of this subsection, 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 shall be distributed to the unit owners and becomes final unless disapproved within thirty days after distribution by unit owners of units to which twenty-five per cent of the votes in the association are allocated. The proportion of any unit owner's interest to that of all unit owners is determined by dividing the fair market value of that unit owner's unit and its allocated interests by the total fair market values of all the units and their allocated interests.

      (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 their respective common expense liabilities immediately before the termination.

      (k) In a condominium or planned community, except as provided in subsection (l) of this section, 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, other than withdrawable real property, does not withdraw that portion from the common interest community. Foreclosure or enforcement of a lien or encumbrance against withdrawable real property, or against common elements that have been subjected to a security interest by the association under section 47-254, does not withdraw, of itself, that real property from the common interest community, but the person taking title thereto may require from the association, on request, an amendment excluding the real property from the common interest community.

      (l) In a condominium or planned community, if a lien or encumbrance against a portion of the real property 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, on foreclosure, may record an instrument excluding the real property subject to that lien or encumbrance from the common interest community.

      (P.A. 83-474, S. 38, 96; P.A. 95-187, S. 13; P.A. 05-288, S. 166.)

      History: P.A. 95-187 amended Subsec. (k) to provide that foreclosure or enforcement of a lien or encumbrance "against common elements that have been subjected to a security interest by the association under section 47-254" does not withdraw, of itself, that real property from the community; P.A. 05-288 made technical changes in Subsec. (e), effective July 13, 2005.

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PART III
MANAGEMENT OF COMMON INTEREST COMMUNITIES

      Sec. 47-245. Executive board members and officers. Duties. Ratification of budget. Period of declarant control. Delivery of property and documents by declarant. Current financial statement. (a) Except as provided in the declaration, the bylaws, subsection (b) of this section, or other provisions of this chapter, the executive board may act in all instances on behalf of the association. In the performance of their duties, officers and members of the executive board appointed by the declarant shall exercise the degree of care and loyalty required of a trustee and officers and members of the executive board not appointed by a declarant shall exercise the degree of care and loyalty required of an officer or director of a corporation organized under chapter 602.

      (b) The executive board may not act on behalf of the association to amend the declaration, to terminate the common interest community or to elect members of the executive board or determine the qualifications, powers and duties, or terms of office of executive board members, but the executive board may fill vacancies in its membership for the unexpired portion of any term.

      (c) Within thirty days after adoption of any proposed budget for the common interest community, the executive board shall provide a summary of the budget to all the unit owners and shall set a date for a meeting of the unit owners to consider ratification of the budget not less than fourteen nor more than thirty days after mailing of the summary. Unless at that meeting a majority of all unit owners, or any larger vote specified in the declaration, reject the budget, the budget is ratified, whether or not a quorum is present. In the event the proposed budget is rejected, the periodic budget last ratified by the unit owners shall be continued until such time as the unit owners ratify a subsequent budget proposed by the executive board.

      (d) Subject to the provisions of subsection (e) of this section, the declaration may provide for a period of declarant control of the association, during which a declarant, or persons designated by him, may appoint and remove the officers and members of the executive board. Regardless of the period provided in the declaration, a period of declarant control terminates no later than the earlier of: (1) Sixty days after conveyance of sixty per cent of the units that may be created to unit owners other than a declarant, except that in the case of a master planned community, control terminates no later than sixty days after conveyance to unit owners other than the declarant of sixty per cent of the maximum number of units that may be built, if that number is specified, or, if no such number is specified, after conveyance to unit owners other than the declarant of three hundred units; (2) two years after all declarants have ceased to offer units for sale in the ordinary course of business; (3) two years after any right to add new units was last exercised; or (4) the date the declarant, after giving written notice to unit owners, records an instrument voluntarily surrendering all rights to control activities of the association. A declarant may voluntarily surrender the right to appoint and remove officers and members of the executive board before termination of that period, but in that event the declarant may require, for the duration of the period of declarant control, that specified actions of the association or executive board, as described in a recorded instrument executed by the declarant, be approved by the declarant before they become effective.

      (e) Not later than sixty days after conveyance of one-third of the units that may be created to unit owners other than a declarant, at least one member and not less than one-third of the members of the executive board shall be elected by unit owners other than the declarant.

      (f) Except as otherwise provided in subsection (e) of section 47-239, not later than the termination of any period of declarant control, the unit owners shall elect an executive board of at least three members, at least a majority of whom shall be unit owners. The executive board shall elect the officers. The executive board members and officers shall take office upon election.

      (g) Notwithstanding any provision of the declaration or bylaws to the contrary, the unit owners, by a two-thirds vote of all persons present and entitled to vote at any meeting of the unit owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant.

      (h) Within thirty days after unit owners other than the declarant elect a majority of the members of the executive board, the declarant shall deliver to the association all property of the unit owners and of the association held by or controlled by the declarant, including without limitation the following items: (1) The original or a certified copy of the recorded declaration as amended; the association articles of incorporation, if the association is incorporated; bylaws; minute books and other books and records of the association; and any rules and regulations which may have been promulgated; (2) an accounting for association funds and financial statements, from the date the association received funds and ending on the date the period of declarant control ends. The financial statements shall be audited by an independent certified public accountant and shall be accompanied by the accountant's letter, expressing either (A) the opinion that the financial statements present fairly the financial position of the association in conformity with generally accepted accounting principles or (B) a disclaimer of the accountant's ability to attest to the fairness of the presentation of the financial information in conformity with generally accepted accounting principles, and the reasons therefor. The expense of the audit shall not be paid for or charged to the association; (3) association funds or control thereof; (4) all of declarant's tangible personal property that has been represented by the declarant to be the property of the association or, unless the declarant has disclosed in the public offering statement that all such personal property used in the common interest community will remain the declarant's property, all of the declarant's tangible personal property that is necessary for, and has been used exclusively in, the operation and enjoyment of the common elements, and inventories of these properties; (5) a copy of any plans and specifications used in the construction of the improvements in the common interest community which were completed within two years before the declaration was recorded; (6) all insurance policies then in force, in which the unit owners, the association or its directors and officers are named as insured persons; (7) copies of any certificates of occupancy that may have been issued with respect to any improvements comprising the common interest community; (8) any other permits issued by governmental bodies applicable to the common interest community and which are currently in force or which were issued within one year prior to the date on which unit owners other than the declarant took control of the association; (9) written warranties of the contractor, subcontractors, suppliers and manufacturers that are still effective; (10) a roster of unit owners and mortgagees and their addresses and telephone numbers, if known, as shown on the declarant's records; (11) employment contracts in which the association is a contracting party; and (12) any service contract in which the association is a contracting party or in which the association or the unit owners have any obligation to pay a fee to the persons performing the services.

      (i) During the period of declarant control, the declarant shall, at least every six months, provide the unit owners with a current financial statement of the association. The statement shall be on a cash basis and need not be audited by an independent accountant. It shall include, without limitation, (1) all income and expenses for the calendar year to date; (2) all accounts payable and receivable, including the ages of those accounts and showing all sums due to and from the declarant and affiliates of the declarant; (3) the amount of any funded replacement reserves; and (4) the balance of any other funds of the association.

      (P.A. 83-474, S. 46, 96; P.A. 84-472, S. 12, 23; P.A. 95-187, S. 17; P.A. 96-180, S. 126, 166; 96-256, S. 204, 209; P.A. 05-288, S. 167.)

      History: P.A. 84-472 added Subsec. (h) requiring the declarant to deliver to the association all property of unit owners and of the association held by or controlled by the declarant within thirty days after unit owners other than the declarant elect a majority of the members of the executive board and added Subsec. (i) requiring the declarant to provide the unit owners with a current financial statement of the association at least every six months during the period of declarant control; P.A. 95-187 amended Subsec. (a) to revise and heighten the standard of care required of officers and members of the executive board and amended Subsec. (d) to add exception re a master planned community in Subdiv. (1) and add Subdiv. (4) re the date the declarant records an instrument voluntarily surrendering control; P.A. 96-180 made technical change in Subsec. (a), effective June 3, 1996; P.A. 96-256 amended Subsec. (a) to replace reference to chapter 600 with chapter 602, effective January 1, 1997; P.A. 05-288 made technical changes in Subsec. (d), effective July 13, 2005.

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PART IV
PROTECTION OF PURCHASERS

      Sec. 47-270. Resales of units. (a) Except in the case of a sale in which delivery of a public offering statement is required under either this chapter or chapter 825, or unless exempt under subsection (b) of section 47-262, a unit owner shall furnish to a purchaser or such purchaser's attorney, before the earlier of conveyance or transfer of the right to possession of a unit, a copy of the declaration, other than any surveys and plans, the bylaws, the rules or regulations of the association, and a certificate containing: (1) A statement disclosing the effect on the proposed disposition of any right of first refusal or other restraint on the free alienability of the unit held by the association; (2) a statement setting forth the amount of the periodic common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner; (3) a statement of any other fees payable by the owner of the unit being sold; (4) a statement of any capital expenditures in excess of one thousand dollars approved by the executive board for the current and next succeeding fiscal year; (5) a statement of the amount of any reserves for capital expenditures; (6) the current operating budget of the association; (7) a statement of any unsatisfied judgments against the association and the existence of any pending suits in which the association is a defendant; (8) a statement of the insurance coverage provided for the benefit of unit owners; (9) a statement of any restrictions in the declaration affecting the amount that may be received by a unit owner on sale, condemnation, casualty loss to the unit or the common interest community or termination of the common interest community; (10) in a cooperative, an accountant's statement, if any was prepared, as to the deductibility for federal income tax purposes by the unit owner of real property taxes and interest paid by the association; (11) if the association is unincorporated, the name of the statutory agent for service of process filed with the Secretary of the State pursuant to section 47-244a; (12) a statement describing any pending sale or encumbrance of common elements; and (13) a statement disclosing the effect on the unit to be conveyed of any restrictions on the owner's right to use or occupy the unit or to lease the unit to another person.

      (b) (1) Not later than ten business days after receipt of a written request from a unit owner and payment by the unit owner of a fee established by the association that reflects the actual printing, photocopying and related costs, but in no event in excess of one hundred twenty-five dollars, for the preparation of the certificate and other documents, the association shall furnish a certificate containing the information necessary to enable the unit owner to comply with this section and any other documents required by this section. The association shall itemize the actual printing, photocopying and related costs and provide a list of the itemized costs to the unit owner with the certificate and documents. An additional fee of not more than ten dollars for expedited preparation may be established if the certificate and all required documents are furnished to the unit owner not later than three business days after the written request is received by the association. No fee under this subsection may include costs for services provided by an attorney or paralegal.

      (2) A unit owner providing a certificate and documents pursuant to subsection (a) of this section is not liable to the purchaser for any erroneous information provided by the association and included in the certificate and documents.

      (c) A purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the association. A unit owner is not liable to a purchaser for the failure or delay of the association to provide the certificate and documents in a timely manner, but the purchase contract is voidable by the purchaser until (1) the expiration of five days, excluding Saturdays, Sundays and legal holidays, after the certificate and documents have been delivered to such purchaser or such purchaser's attorney, or seven days, excluding Saturdays, Sundays and legal holidays, after the certificate and documents have been sent by registered or certified mail or mail evidenced by a certificate of mailing to such purchaser or such purchaser's attorney, or (2) conveyance, whichever first occurs.

      (d) A dealer who offers a unit which he owns shall, in addition to the material provided to a purchaser or such purchaser's attorney under subsection (a) of this section, furnish to such purchaser or such purchaser's attorney a copy of any public offering statement that the dealer received at the time he purchased his unit.

      (e) The association shall, during the month of January in each year, file in the office of the town clerk of the municipality or municipalities where such common interest community is located a certificate setting forth the name and mailing address of the officer of the association or the managing agent from whom a resale certificate may be requested, and shall, thereafter, file such a certificate within thirty days of any change in the name or address of such officer or agent. The town clerk shall keep such certificate on file in his office and make it available for inspection.

      (P.A. 83-474, S. 71, 96; P.A. 84-472, S. 19, 23; 84-546, S. 104, 173; P.A. 88-322, S. 1; P.A. 91-341, S. 18, 19; P.A. 95-187, S. 24; P.A. 05-125, S. 1.)

      History: P.A. 84-472 amended Subsec. (a) by adding "under either this chapter or chapter 825", deleting provision allowing unit owner to furnish a purchaser certain documents "before execution of any contract for sale of a unit", deleting requirement that unit owner furnish a purchaser with "the most current public offering statement of any person still holds special declarant rights", and replacing in Subdiv. (4) "anticipated by the association" with "in excess of one thousand dollars approved by the executive board", amended Subsec. (b) by replacing "within ten days after a request" with "within ten business days after receipt of a written request", adding a provision for the "payment by the unit owner of any reasonable fee for preparation of the certificate and other materials" and adding "and documents" and amended Subsec. (c) by adding "and documents" and excluding Saturdays, Sundays and legal holidays from the five-day period during which the contract is voidable; P.A. 84-546 made technical change in Subsec. (d); P.A. 88-322 amended Subsec. (a) to provide option of furnishing the documents to "such purchaser's attorney", amended Subsec. (b) to provide that for the preparation of the certificate and other materials the unit owner pay "a fee of not more than seventy-five dollars, including printing, photocopying and related costs" rather than "any reasonable fee", amended Subsec. (c) to rephrase the provisions re the voidability of contracts and to add provision that the contract is voidable until the expiration of "seven days, excluding Saturdays, Sundays and legal holidays, after the certificate and documents have been sent by registered or certified mail or mail evidenced by a certificate of mailing to such purchaser or such purchaser's attorney", amended Subsec. (d) to add references to "such purchaser's attorney" and added Subsec. (e) re the filing in the town clerk's office of a certificate with the name and address of the officer of the association or managing agent from whom a resale certificate may be requested; P.A. 91-341 amended Subsec. (a) to add Subdiv. (11) re the name of an unincorporated association's statutory agent for service of process; P.A. 95-187 amended Subsec. (a) to require unit owner to furnish the documents "before the earlier of conveyance or transfer of the right to possession of a unit" rather than "before conveyance", add in Subdiv. (1) "held by the association", replace in Subdiv. (2) "monthly" with "periodic", replace in Subdiv. (3) "selling unit owner" with "owner of the unit being sold", add Subdiv. (12) re a statement describing any pending sale or encumbrance of common elements and add Subdiv. (13) re a statement disclosing the effect on the unit to be conveyed of any restrictions on the use or occupancy or leasing of the unit; P.A. 05-125 amended Subsec. (b) to revise provisions re allowed costs, substitute "one hundred twenty-five dollars" for "seventy-five dollars", allow an expedited preparation fee of not more than ten dollars, prohibit fees for services provided by an attorney or paralegal, insert Subdiv. designators (1) and (2) and make technical changes.

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