§ 34-36.1-3.04 - Transfer of special declarant rights.
SECTION 34-36.1-3.04
§ 34-36.1-3.04 Transfer of specialdeclarant rights. – (a) No special declarant right created or reserved under this chapter may betransferred except by an instrument evidencing the transfer recorded in everymunicipality in which any portion of the condominium is located. The instrumentis not effective unless executed by the transferee.
(b) Upon transfer of any special declarant right, theliability of a transferor declarant is as follows:
(1) A transferor is not relieved of any obligation orliability arising before the transfer and remains liable for warrantyobligations imposed upon him or her by this chapter. Lack of privity does notdeprive any unit owner of standing to bring an action to enforce anyobligations of the transferor.
(2) If the successor to any special declarant right is anaffiliate of a declarant, the transferor is jointly and severally liable withthe successor for any obligation or liability of the successor which relates tothe condominium.
(3) If a transferor retains any special declarant right, buttransfers other special declarant rights to a successor who is not an affiliateof the declarant, the transferor is liable for any obligations or liabilitiesimposed on declarant by this chapter or by the declaration relating to theretained special declarant rights and arising after the transfer.
(4) A transferor has no liability for any act or omission orany breach of a contractual or warranty obligation arising from the exercise ofa special declarant right by a successor declarant who is not an affiliate ofthe transferor.
(c) Unless otherwise provided in a mortgage instrument ordeed of trust, in case of foreclosure of a mortgage, tax sale, judicial sale,sale by a trustee under a deed of trust, or sale under the federal BankruptcyCode, 11 U.S.C. § 101 et seq., or receivership proceedings, of any unitsowned by a declarant or real estate in a condominium subject to developmentrights, a person acquiring title to all the real estate being foreclosed orsold, but only upon his or her request, succeeds to all special declarantrights related to that real estate held by that declarant, or only to anyrights reserved in the declaration pursuant to § 34-36.1-2.15 and held bythat declarant to maintain models, sales and signs. The judgment or instrumentconveying title shall provide for transfer of only the special declarant rightsrequested.
(d) Upon foreclosure, tax sale, judicial sale, sale by atrustee under a deed of trust, or sale under the federal Bankruptcy Code, 11U.S.C. § 101 et seq., or receivership proceedings, of all units and otherreal estate in a condominium owned by a declarant:
(1) The declarant ceases to have any special declarantrights, and
(2) The period of declarant control terminates unless thejudgment or instrument conveying title provides for transfer of all specialdeclarant rights held by that declarant to a successor declarant.
(e) The liabilities and obligations of persons who succeed tospecial declarant rights are as follows:
(i) A successor to any special declarant right who is anaffiliate of a declarant is subject to all obligations and liabilities imposedon the transferor by this chapter or by the declaration.
(ii) A successor to any special declarant right, other than asuccessor described in subdivision (e) (2) or (3), who is not an affiliate of adeclarant, is subject to all obligations and liabilities imposed by thischapter or the declaration:
(A) On a declarant which relates to his or her exercise ornonexercise of special declarant rights; or
(B) On his or her transferor, other than:
(I) Misrepresentations by any previous declarant;
(II) Warranty obligations on improvements made by anyprevious declarant, or made before the condominium was created;
(III) Breach of any fiduciary obligations by any previousdeclarant or his or her appointees to the executive board; or
(IV) Any liability or obligations imposed on the transferoras a result of the transferor's acts or omissions after the transfer.
(2) A successor to only a right reserved in the declarationto maintain models, sales offices, and signs, if he or she is not an affiliateof a declarant, may not exercise any other special declarant right, and is notsubject to any liability or obligation as a declarant, except the obligationsto provide a public offering statement and any liability arising as a resultthereof.
(3) A successor to all special declarant rights held by hisor her transferor who is not an affiliate of that declarant and who succeededto those rights pursuant to a deed in lieu of foreclosure or a judgment orinstrument conveying title to units under subsection (c), may declare his orher intention in a recorded instrument to hold those rights solely for transferto another person. Thereafter, until transferring all special declarant rightsto any person acquiring title to any unit owned by the successor, or untilrecording an instrument permitting exercise of all those rights, that successormay not exercise any of those rights other than any right held by his or hertransferor to control the executive board in accordance with the provisions of§ 34-36.1-3.03(d) for the duration of any period of declarant control, andany attempted exercise of those rights is void. So long as a successordeclarant may not exercise special declarant rights under this subsection, heor she is not subject to any liability or obligation as a declarant other thanliability for his or her acts and omissions under § 34-36.1-3.03(d).
(f) Nothing in this section subjects any successor to aspecial declarant right to any claims against or other obligations of atransferor declarant, other than claims and obligations arising under thischapter or the declaration.