Sec. 47-237. Termination of common interest community.
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.