§38-33.3-312 Conveyance or encumbrance of common elements
Title 38 – Property – Real and Personal
Article 33.3 – Colorado Common Interest Ownership Act
Conveyance or encumbrance of common elements
38-33.3-312. Conveyance or encumbrance of common elements
(1) In a condominium or planned community, portions of the common elements may be conveyed or subjected to a security interest by the association if persons entitled to cast at least sixty-seven percent of the votes in the association, including sixty-seven percent of the votes allocated to units not owned by a declarant, or any larger percentage the declaration specifies, agree to that action; except that all owners of units to which any limited common element is allocated must agree in order to convey that limited common element or subject it to a security interest. The declaration may specify a smaller percentage only if all of the units are restricted exclusively to nonresidential uses. Proceeds of the sale are an asset of the association.
(2) Part of a cooperative may be conveyed and all or part of a cooperative may be subjected to a security interest by the association if persons entitled to cast at least sixty-seven percent of the votes in the association, including sixty-seven percent of the votes allocated to units not owned by a declarant, or any larger percentage the declaration specifies, agree to that action; except that, if fewer than all of the units or limited common elements are to be conveyed or subjected to a security interest, then all unit owners of those units, or the units to which those limited common elements are allocated, must agree in order to convey those units or limited common elements or subject them to a security interest. The declaration may specify a smaller percentage only if all of the units are restricted exclusively to nonresidential uses. Proceeds of the sale are an asset of the association. Any purported conveyance or other voluntary transfer of an entire cooperative, unless made in compliance with section 38-33.3-218, is void.
(3) An agreement to convey, or subject to a security interest, common elements in a condominium or planned community, or, in a cooperative, an agreement to convey, or subject to a security interest, any part of a cooperative, must be evidenced by the execution of an agreement, in the same manner as a deed, by the association. The agreement must specify a date after which the agreement will be void unless approved by the requisite percentage of owners. Any grant, conveyance, or deed executed by the association must be recorded in every county in which a portion of the common interest community is situated and is effective only upon recordation.
(4) The association, on behalf of the unit owners, may contract to convey an interest in a common interest community pursuant to subsection (1) of this section, but the contract is not enforceable against the association until approved pursuant to subsections (1) and (2) of this section and executed and ratified pursuant to subsection (3) of this section. Thereafter, the association has all powers necessary and appropriate to effect the conveyance or encumbrance, including the power to execute deeds or other instruments.
(5) Unless in compliance with this section, any purported conveyance, encumbrance, judicial sale, or other transfer of common elements or any other part of a cooperative is void.
(6) A conveyance or encumbrance of common elements pursuant to this section shall not deprive any unit of its rights of ingress and egress of the unit and support of the unit.
(7) Unless the declaration otherwise provides, a conveyance or encumbrance of common elements pursuant to this section does not affect the priority or validity of preexisting encumbrances.
(8) In a cooperative, the association may acquire, hold, encumber, or convey a proprietary lease without complying with this section.
History
Source: L. 91: Entire article added, p. 1747, § 1, effective July 1, 1992. L. 93: (1) and (5) amended, p. 652, § 18, effective April 30. L. 98: (1) to (3) amended, p. 484, § 17, effective July 1.
State Notes
ANNOTATION
Subsection (3) requires that, when requisite number of unit owners approve the sale of new units, such approval be executed as a written agreement demonstrating that association has authority to enter into contracts to sell the new units.Nothing in the record shows that the unit owners executed any type of agreement approving the sale of new units. Platt v. Aspenwood Condo. Ass’n, 214 P.3d 1060 (Colo. App. 2009).
“Contract” referred to in subsection (4) must be ratified by the unit owners to be enforceable.Subsection (4) allows an association to enter into a contract but requires ratification for the contract to be enforceable. Association could enter into a contract but it could not also ratify the contract; therefore, the unit owners were required to ratify the contract to render it enforceable. Platt v. Aspenwood Condo. Ass’n, 214 P.3d 1060 (Colo. App. 2009).
Under subsection (5), a “purported conveyance”, not “the agreement to convey” or “the contract”, is void for noncompliance with subsections (1) through (4).Although plaintiffs entered into contract to purchase new condominium unit, the unit was not conveyed to them; therefore, because the contract was not ratified by the unit owners, it was unenforceable, and the plaintiffs specific performance claim cannot stand. Platt v. Aspenwood Condo. Ass’n, 214 P.3d 1060 (Colo. App. 2009).
Trial court erred in dismissing plaintiffs’ breach of implied covenant of good faith and fair dealing claimbecause subsection (5) pertains to conveyances and not to the contract. Platt v. Aspenwood Condo. Ass’n, 214 P.3d 1060 (Colo. App. 2009).
Contract for sale of condominium unit is not void under subsection (5).Because contract was not ratified by the unit owners, it is unenforceable, and purchasers’ specific performance claim cannot stand. Nothing in the record shows that unit owners executed any type of agreement approving the sale of two new units. Reading subsections (3) and (4) together, “contract” referred to in subsection (4) must be ratified by the unit owners to render it enforceable. Moreover, subsection (5) pertains to conveyances and not to the contract. Although purchasers entered into contract to purchase a new condominium unit, the unit was not conveyed to them. Thus, subsection (5) was not triggered. Platt v. Aspenwood Condo. Ass’n, 214 P.3d 1060 (Colo. App. 2009).
