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. 47-245. 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) Notwithstanding any provision of the declaration or bylaws to the contrary,
within thirty days after adoption of any proposed budget for the common interest community, the executive board shall provide a summary of the proposed budget to all the
unit owners and shall set a date for a meeting of the unit owners to consider ratification
of the proposed budget not less than fourteen or more than thirty days after hand-delivery
or mailing of the summary. At such meeting, or on a day prior to such meeting, the
executive board shall provide a reasonable opportunity for all unit owners to express
their views concerning the proposed budget before its ratification. At least one copy of
the proposed budget shall be available for inspection at such meeting. Unless at such
meeting a majority of all unit owners, or any larger vote specified in the declaration,
reject the proposed 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 as provided in this subsection.
(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; P.A. 07-243, S. 6.)
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 30 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; P.A. 07-243 amended Subsec.
(c) by adding provisions re notwithstanding declaration or bylaws, re hand-delivery of summary, re opportunity for unit
owners to express views concerning proposed budget and re copy of budget available at meeting and by making technical
changes.
Cited. 208 C. 318.
Cited. 38 CA 420.
Subsec. (c):
Trial court properly found that assessments based on a prior year's budget were proper when no subsequent budget
was properly adopted. 62 CA 462. The majority of all unit owners are needed to reject budget proposal, not simply majority
of all unit owners present at meeting. 108 CA 426.