D R A F T

 

FOR APPROVAL

 

 

 

AMENDMENTS TO UNIFORM COMMON

INTEREST OWNERSHIP ACT

 

 

 

NATIONAL CONFERENCE OF COMMISSIONERS

 

ON UNIFORM STATE LAWS

 

 

 

 

MEETING IN ITS ONE-HUNDRED-AND-SEVENTEENTH YEAR

BIG SKY, MONTANA

JULY 18 - JULY 25, 2008

 

 

AMENDMENTS TO UNIFORM COMMON

INTEREST OWNERSHIP ACT

 

 

WITHOUT PREFATORY NOTE AND WITH PARTIAL NEW COMMENTS

 

Copyright 82008

By

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

 

 

 

The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments or reporter=s notes, have not been passed upon by the National Conference of Commissioners on Uniform State Laws or the Drafting Committee.  They do not necessarily reflect the views of the Conference and its Commissioners and the Drafting Committee and its Members and Reporter.  Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal.

DRAFTING COMMITTEE ON AMENDMENTS TO

UNIFORM COMMON INTEREST OWNERSHIP ACT

The Committee appointed by and representing the National Conference of Commissioners on Uniform State Laws in amending this Act consists of the following individuals:

CARL H. LISMAN, 84 Pine St., P.O. Box 728, Burlington, VT 05402, Chair

OWEN L. ANDERSON, University of Oklahoma College of Law, 300 Timberdell Rd., Norman, OK 73019

MARION W. BENFIELD, JR., 10 Overlook Circle, New Braunfels, TX 78132

DAVID D. BIKLEN, 153 N. Beacon St., Hartford, CT 06105

ELLEN F. DYKE, Legal Department 52/923, 10400 Fernwood Rd., Bethesda, MD 20817

JOHN S. GILLIG, P.O. Box 4285, 91 C Michael Davenport Blvd., Frankfort, KY 40604

DALE G. HIGER, 1302 Warm Springs Ave., Boise, ID 83712

DONALD E. MIELKE, 7472 S. Shaffer Ln., Suite 100, Littleton, CO 80127

HIROSHI SAKAI, 3773 Diamond Head Circle, Honolulu, HI 96815

NATHANIEL STERLING, 4180 Oak Hill Ave., Palo Alto, CA 94306

YVONNE L. THARPES, Legislature of the Virgin Islands, P.O. Box 1690, St. Thomas, VI 00804

NORA WINKELMAN, Office of General Counsel, 333 Market St., 17th Flr., Harrisburg, PA 17101

LEE YEAKEL, Western District of Texas, P.O. Box 164196, Austin, TX 78716‑4196

WILLIAM R. BREETZ, JR., Connecticut Urban Legal Initiative, 35 Elizabeth St. Rm K‑202, Hartford, CT 06105, National Conference Reporter

 

EX OFFICIO

MARTHA LEE WALTERS, Oregon Supreme Court, 1163 State St., Salem, OR 97301‑2563, President

WILLIAM H. HENNING, University of Alabama, Box 870382, Tuscaloosa, AL 35487‑0382, Division Chair

 

AMERICAN BAR ASSOCIATION ADVISOR

GARY A. POLIAKOFF, 3111 Stirling Rd., Ft. Lauderdale, FL 33312‑6525, ABA Advisor

REBECCA ANDERSON FISCHER, 633 17th St., Suite 3000, Denver, CO 80202, ABA Section Advisor

 

EXECUTIVE DIRECTOR

JOHN A. SEBERT, 111 N. Wabash Ave, Suite 1010, Chicago, IL 60602, Executive Director

 

Copies of this Act may be obtained from:

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

111 N. Wabash Ave., Suite 1010

Chicago, Illinois  60602

312/450-6600

www.nccusl.org

AMENDMENTS TO UNIFORM COMMON INTEREST OWNERSHIP ACT

 

TABLE OF CONTENTS

 

[ARTICLE] 1GENERAL PROVISIONS

 

[PART] 1DEFINITIONS AND OTHER GENERAL PROVISIONS

SECTION 1-101.  SHORT TITLE................................................................................................. 1

SECTION 1-102.  APPLICABILITY............................................................................................. 1

SECTION 1-103.  DEFINITIONS................................................................................................. 1

SECTION 1-104.  NO VARIATION BY AGREEMENT............................................................ 10

SECTION 1-105.  SEPARATE TITLES AND TAXATION...................................................... 10

SECTION 1-106.  APPLICABILITY OF LOCAL ORDINANCES, REGULATIONS, AND BUILDING CODES........................................................................................................................................... 11

SECTION 1-107.  EMINENT DOMAIN..................................................................................... 11

SECTION 1-108.  SUPPLEMENTAL GENERAL PRINCIPLES OF LAW APPLICABLE. 13

SECTION 1-109.  CONSTRUCTION AGAINST IMPLICIT REPEAL.................................... 13

SECTION 1-110.  UNIFORMITY OF APPLICATION AND CONSTRUCTION..................... 13

SECTION 1-111.  SEVERABILITY............................................................................................ 13

SECTION 1-112.  UNCONSCIONABLE AGREEMENT OR TERM OF CONTRACT........ 14

SECTION 1-113.  OBLIGATION OF GOOD FAITH................................................................ 14

SECTION 1-114.  REMEDIES TO BE LIBERALLY ADMINISTERED................................. 14

SECTION 1-115.  ADJUSTMENT OF DOLLAR AMOUNTS................................................. 15

 

[PART] 2APPLICABILITY

SECTION 1-201.  APPLICABILITY TO NEW COMMON INTEREST COMMUNITIES....... 16

SECTION 1-202.  EXCEPTION FOR SMALL COOPERATIVES......................................... 16

SECTION 1-203.  EXCEPTION FOR SMALL AND LIMITED EXPENSE LIABILITY PLANNED COMMUNITIES............................................................................................................... 16

SECTION 1-204.  APPLICABILITY TO PRE-EXISTING COMMON INTEREST COMMUNITIES       17

SECTION 1-205.  SAME; EXCEPTION FOR APPLICABILITY TO SMALL PRE-

EXISTING COOPERATIVES AND PLANNED COMMUNITIES............................... 18

SECTION 1-206.  AMENDMENTS TO GOVERNING INSTRUMENTS............................... 19

SECTION 1-207.  APPLICABILITY TO NONRESIDENTIAL AND MIXED-USE

COMMON INTEREST COMMUNITIES........................................................................ 19

SECTION 1-208.  APPLICABILITY TO OUT-OF-STATE COMMON INTEREST COMMUNITIES     21

SECTION 1-209.  OTHER EXEMPT REAL ESTATE ARRANGEMENTS.......................... 21

SECTION 1-210.  OTHER EXEMPT COVENANTS.............................................................. 21

 

[ARTICLE] 2CREATION, ALTERATION, ANDTERMINATION OF COMMON INTEREST COMMUNITIES

SECTION 2-101.  CREATION OF COMMON INTEREST COMMUNITIES......................... 23

SECTION 2-102.  UNIT BOUNDARIES.................................................................................... 23

SECTION 2-103.  CONSTRUCTION AND VALIDITY OF DECLARATION AND

BYLAWS.......................................................................................................................... 24

SECTION 2-104.  DESCRIPTION OF UNITS.......................................................................... 24

SECTION 2-105.  CONTENTS OF DECLARATION.............................................................. 24

SECTION 2-106.  LEASEHOLD COMMON INTEREST COMMUNITIES........................... 27

SECTION 2-107.  ALLOCATION OF ALLOCATED INTERESTS........................................ 28

SECTION 2-108.  LIMITED COMMON ELEMENTS.............................................................. 29

SECTION 2-109.  PLATS AND PLANS................................................................................... 30

SECTION 2-110.  EXERCISE OF DEVELOPMENT RIGHTS.............................................. 33

SECTION 2-111.  ALTERATIONS OF UNITS......................................................................... 34

SECTION 2-112.  RELOCATION OF UNIT BOUNDARIES................................................... 34

SECTION 2-113.  SUBDIVISION OF UNITS............................................................................ 36

[SECTION 2-114.  EASEMENT FOR ENCROACHMENTS................................................. 36

[SECTION 2-114.  MONUMENTS AS BOUNDARIES........................................................... 36

SECTION 2-115.  USE FOR SALES PURPOSES................................................................ 37

SECTION 2-116.  EASEMENT RIGHTS.................................................................................. 37

SECTION 2-117.  AMENDMENT OF DECLARATION.......................................................... 38

SECTION 2-118.  TERMINATION OF COMMON INTEREST COMMUNITY....................... 41

SECTION 2-119.  RIGHTS OF SECURED LENDERS.......................................................... 46

SECTION 2-120.  MASTER ASSOCIATIONS........................................................................ 46

SECTION 2-121.  MERGER OR CONSOLIDATION OF COMMON INTEREST COMMUNITIES      48

SECTION 2-122.  ADDITION OF UNSPECIFIED REAL ESTATE....................................... 49

SECTION 2-123.  MASTER PLANNED COMMUNITIES...................................................... 49

SECTION 2-124.  TERMINATION FOLLOWING CATASTROPHE...................................... 50

 

[ARTICLE] 3MANAGEMENT OF THE COMMON INTEREST COMMUNITY

SECTION 3-101.  ORGANIZATION OF UNIT OWNERS ASSOCIATION............................ 52

SECTION 3-102.  POWERS AND DUTIES OF UNIT OWNERS ASSOCIATION.............. 52

SECTION 3-103.  EXECUTIVE BOARD MEMBERS AND OFFICERS.............................. 58

SECTION 3-104.  TRANSFER OF SPECIAL DECLARANT RIGHTS................................. 61

SECTION 3-105.  TERMINATION OF CONTRACTS AND LEASES OF DECLARANT... 64

SECTION 3-106.  BYLAWS....................................................................................................... 65

SECTION 3-107.  UPKEEP OF COMMON INTEREST COMMUNITY................................. 66

SECTION 3-108.  MEETINGS................................................................................................... 66

SECTION 3-109.  QUORUMS QUORUM................................................................................ 71

SECTION 3-110.  VOTING; PROXIES; BALLOTS................................................................. 71

SECTION 3-111.  TORT AND CONTRACT LIABILITY; TOLLING OF LIMITATION PERIOD 75

SECTION 3-112.  CONVEYANCE OR ENCUMBRANCE OF COMMON ELEMENTS.... 76

SECTION 3-113.  INSURANCE................................................................................................ 78

SECTION 3-114.  SURPLUS FUNDS...................................................................................... 82

SECTION 3-115.  ASSESSMENTS FOR COMMON EXPENSES..................................... 83

SECTION 3-116.  LIEN FOR ASSESSMENTS; SUMS DUE THE ASSOCIATION; ENFORCEMENT        84

SECTION 3-117.  OTHER LIENS............................................................................................. 90

SECTION 3-118.  ASSOCIATION RECORDS........................................................................ 91

SECTION 3-119.  ASSOCIATION AS TRUSTEE................................................................... 93

SECTION 3-120.  RULES.......................................................................................................... 94

SECTION 3-121.  NOTICE TO UNIT OWNERS...................................................................... 95

SECTION 3-122.  REMOVAL OF OFFICERS AND DIRECTORS....................................... 96

SECTION 3-123.  ADOPTION OF BUDGETS........................................................................ 97

SECTION 3-124.  LITIGATION INVOLVING THE DECLARANT........................................... 98

 

[ARTICLE] 4PROTECTION OF PURCHASERS

SECTION 4-101.  APPLICABILITY; WAIVER....................................................................... 101

SECTION 4-102.  LIABILITY FOR PUBLIC OFFERING STATEMENT

REQUIREMENTS......................................................................................................... 101

SECTION 4-103.  PUBLIC OFFERING STATEMENT; GENERAL PROVISIONS........... 102

SECTION 4-104.  SAME; COMMON INTEREST COMMUNITIES SUBJECT TO DEVELOPMENT RIGHTS........................................................................................................................................ 107

SECTION 4-105.  SAME; TIME SHARES............................................................................. 109

SECTION 4-106.  SAME; COMMON INTEREST COMMUNITIES CONTAINING CONVERSION BUILDINGS........................................................................................................................................ 109

SECTION 4-107.  SAME; COMMON INTEREST COMMUNITY SECURITIES................. 109

SECTION 4-108.  PURCHASER'S RIGHT TO CANCEL.................................................... 110

SECTION 4-109.  RESALES OF UNITS............................................................................... 111

SECTION 4-110.  ESCROW OF DEPOSITS....................................................................... 113

SECTION 4-111.  RELEASE OF LIENS............................................................................... 113

SECTION 4-112.  CONVERSION BUILDINGS..................................................................... 114

SECTION 4-113.  EXPRESS WARRANTIES OF QUALITY............................................... 115

SECTION 4-114.  IMPLIED WARRANTIES OF QUALITY................................................... 116

SECTION 4-115.  EXCLUSION OR MODIFICATION OF IMPLIED WARRANTIES

OF QUALITY.................................................................................................................. 117

SECTION 4-116.  STATUTE OF LIMITATIONS FOR WARRANTIES................................ 118

SECTION 4-117.  EFFECT OF VIOLATIONS ON RIGHTS OF ACTION;

ATTORNEY=S FEES.................................................................................................... 119

SECTION 4-118.  LABELING OF PROMOTIONAL MATERIAL......................................... 120

SECTION 4-119.  DECLARANT'S OBLIGATION TO COMPLETE AND RESTORE...... 120

SECTION 4-120.  SUBSTANTIAL COMPLETION OF UNITS............................................. 120

 

 

 

 

 

AMENDMENTS TO UNIFORM COMMON INTEREST OWNERSHIP ACT

[ARTICLE] 1

GENERAL PROVISIONS

[PART] 1

DEFINITIONS AND OTHER GENERAL PROVISIONS

SECTION 1‑101.  SHORT TITLE.  This [act] may be cited as the Uniform Common Interest Ownership Act.

SECTION 1‑102.  APPLICABILITY.  Applicability of this [act] is governed by [Part] 2 of this [article].

SECTION 1‑103.  DEFINITIONS.  In the declaration and bylaws (Section 3‑106), unless specifically provided otherwise or the context otherwise requires, and in In this [act]:

(1)  AAffiliate of a declarant@ means any person who controls, is controlled by, or is under common control with a declarant. 

(A)  A person Acontrols@ a declarant if the person:

(i)  is a general partner, officer, director, or employer of the declarant,;

(ii)  directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than 20 percent of the voting interest in the declarant,;

(iii)  controls in any manner the election of a majority of the directors of the declarant,; or

(iv)  has contributed more than 20 percent of the capital of the declarant. 

(B)  A person Ais controlled by@ a declarant if the declarant:

(i)  is a general partner, officer, director, or employer of the person,;

(ii)  directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than 20 percent of the voting interest in the person,;

(iii)  controls in any manner the election of a majority of the directors of the person,; or

(iv)  has contributed more than 20 percent of the capital of the person. 

Control does not exist if the powers described in this paragraph are held solely as security for an obligation and are not exercised.

(2)  AAllocated interests@ means the following interests allocated to each unit:

(i)(A)  In in a condominium, the undivided interest in the common elements, the common expense liability, and votes in the association;

(ii)(B)  in a cooperative, the common expense liability, and the ownership interest, and votes in the association; and

(iii)(C)  in a planned community, the common expense liability and votes in the association.

(3)  AAssessment@ means the sum attributable to each unit and due to the association pursuant to Section 3-115.

(3)(4)  AAssociation@ or Aunit owners= owners association@ means the unit owners= owners  association organized under Section 3‑101.

(5)  ABylaws@ means the instruments, however denominated, that contain the procedures for conduct of the affairs of the association regardless of the form in which the association is organized, including any amendments to the instruments.

(4)(6)  ACommon elements@ means:

(i)(A)  in the case of:

(A)(i)  a condominium or cooperative, all portions of the common interest community other than the units; and

(B)(ii)  a planned community, any real estate within a planned community which is owned or leased by the association, other than a unit; and

(ii)(B)  in all common interest communities, any other interests in real estate for the benefit of unit owners which are subject to the declaration.

(5)(7)  ACommon expenses@ means expenditures made by, or financial liabilities of, the association, together with any allocations to reserves.

(6)(8)  ACommon expense liability@ means the liability for common expenses allocated to each unit pursuant to Section 2‑107.

(7)(9)  ACommon interest community@ means real estate described in a declaration with respect to which a person, by virtue of his the person=s ownership of a unit, is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or services or other expenses related to, common elements, other units, or other real estate described in a that declaration. The term does not include an arrangement described in Section 1-209 or 1B210. For purposes of this paragraph, AOwnership ownership of a unit@ does not include holding a leasehold interest of less than [20] years in a unit, including renewal options.

(8)(10)  ACondominium@ means a common interest community in which portions of the real estate are designated for separate ownership and the remainder of the real estate is designated for common ownership solely by the owners of those portions.  A common interest community is not a condominium unless the undivided interests in the common elements are vested in the unit owners.

(9)(11)  AConversion building@ means a building that at any time before creation of the common interest community was occupied wholly or partially by persons other than purchasers and persons who occupy with the consent of purchasers.

(10)(12)  ACooperative@ means a common interest community in which the real estate is owned by an association, each of whose members is entitled by virtue of his the member=s ownership interest in the association to exclusive possession of a unit.

(11)(13)  ADealer@ means a person in the business of selling units for his the person=s own account.

(12)(14)  ADeclarant@ means any person or group of persons acting in concert who:

(i)(A)  as part of a common promotional plan, offers to dispose of his or its the interest of the person or group of persons in a unit not previously disposed of;or

(ii)(B)  reserves or succeeds to any special declarant right [,; or

(iii)(C)  applies for registration of a common interest community under [Article] 5].

(13)(15)  ADeclaration@ means any the instruments, however denominated, that creates a common interest community, including any amendments to those that instruments instrument.

(14)(16)  ADevelopment rights@ means any right or combination of rights reserved by a declarant in the declaration to:

(i)(A)  add real estate to a common interest community;

(ii)(B)  create units, common elements, or limited common elements within a common interest community;

(iii)(C)  subdivide units or convert units into common elements; or

(iv)(D)  withdraw real estate from a common interest community.

(15)(17)  ADispose@ or Adisposition@ means a voluntary transfer to a purchaser of any legal or equitable interest in a unit, but the term does not include the transfer or release of a security interest.

(16)(18)  AExecutive board@ means the body, regardless of name, designated in the declaration or bylaws to act on behalf of the association.

(17)(19)  AIdentifying number@ means a symbol or address that identifies only one unit in a common interest community.

(18)(20)  ALeasehold common interest community@ means a common interest community in which all or a portion of the real estate is subject to a lease the expiration or termination of which will terminate the common interest community or reduce its size.

(19)(21)  ALimited common element@ means a portion of the common elements allocated by the declaration or by operation of Section 2‑102(2) or (4) for the exclusive use of one or more but fewer than all of the units.

(20)(22)  AMaster association@ means an organization described in Section 2‑120, whether or not it is also an association described in Section 3‑101.

(23)  ANonresidential purposes@ means use for a purpose other than a residential purpose.