448.2-118. Termination of a condominium.
Termination of a condominium.
448.2-118. 1. Except in the case of a taking of all theunits by eminent domain, a condominium may be terminated only byagreement of unit owners of units to which at least eightypercent of the votes in the association are allocated, or anylarger percentage the declaration specifies. The declaration mayspecify a smaller percentage only if all of the units in thecondominium are restricted exclusively to nonresidential uses.
2. An agreement to terminate shall be evidenced by theexecution of a termination agreement or ratifications thereof,in the same manner as a deed, by the requisite number of unitowners. The termination agreement shall specify a date afterwhich the agreement will be void unless it is recorded beforethat date. A termination agreement and all ratifications thereofshall be recorded in every county in which a portion of thecondominium is situated, and is effective only upon recordation.
3. In the case of a condominium containing only units havinghorizontal boundaries described in the declaration, a terminationagreement may provide that all the common elements and units ofthe condominium shall be sold following termination. If,pursuant to the agreement, any real estate in the condominium isto be sold following termination, the termination agreement shallset forth the minimum terms of the sale.
4. In the case of a condominium containing any units nothaving horizontal boundaries described in the declaration, atermination agreement may provide for sale of the commonelements, but may not require that the units be sold followingtermination, unless the declaration as originally recordedprovided otherwise or unless all the unit owners consent to thesale.
5. The association, on behalf of the unit owners, maycontract for the sale of real estate in the condominium, but thecontract is not binding on the unit owners until approvedpursuant to subsections 1 and 2 of this section. If any realestate in the condominium is to be sold following termination,title to that real estate, upon termination, vests in theassociation as trustee for the holders of all interests in theunits. Thereafter, the association has all powers necessary andappropriate to effect the sale. Until the sale has beenconcluded and the proceeds thereof distributed, the associationcontinues in existence with all powers it had before termination.Proceeds of the sale shall be distributed to unit owners andlienholders as their interests may appear, in proportion to therespective interests of unit owners as provided in subsection 8of this section. Unless otherwise specified in the terminationagreement, as long as the association holds title to the realestate, each unit owner and his successors in interest have anexclusive right to occupancy of the portion of the real estatewhich formerly constituted his unit. During the period of thatoccupancy, each unit owner and his successors in interest remainliable for all assessments and other obligations imposed on unitowners by sections 448.1-101 to 448.4-120 or the declaration.
6. If the real estate constituting the condominium is not tobe sold following termination, title to the common elements and,in a condominium containing only units having horizontalboundaries described in the declaration, title to all the realestate in the condominium vests upon termination in the unitowners as tenants in common in proportion to their respectiveinterests as provided in subsection 8 of this section, and lienson the units shift accordingly. While the tenancy in commonexists, each unit owner and his successors in interest have anexclusive right to occupancy of the portion of the real estatewhich formerly constituted his unit.
7. Following termination of the condominium, the proceeds ofany sale of real estate, together with the assets of theassociation, are held by the association as trustee for unitowners and holders of liens on the units as their interests mayappear. Following termination, creditors of the associationholding liens on the units, which were recorded prior totermination, may enforce such liens in the same manner as anylienholder. All other creditors of the association shall betreated as if they had perfected liens on the unit immediatelyprior to termination.
8. The respective interests of unit owners referred to insubsections 3, 4, and 5 of this section are as follows:
(1) Except as provided in subdivision (2) of thissubsection, the respective interests of unit owners are the fairmarket values of their units, limited common elements, and commonelement interests immediately before the termination, asdetermined by one or more independent appraisers selected by theassociation. The decision of the independent appraisers shall bedistributed to the unit owners and becomes final unlessdisapproved within thirty days after distribution by unit ownersof units to which twenty-five percent of the votes in theassociation are allocated. The proportion of any unit owner'sinterest to that of all unit owners is determined by dividing thefair market value of that unit owner's unit and common elementinterest by the total fair market values of all the units andcommon elements;
(2) If any unit or any limited common element is destroyedto the extent that an appraisal of the fair market value thereofprior to destruction cannot be made, the interests of all unitowners are their respective common element interests immediatelybefore the termination.
9. Except as provided in subsection 10 of this section,foreclosure or enforcement of a lien or encumbrance against theentire condominium does not of itself terminate the condominium,and foreclosure or enforcement of a lien or encumbrance against aportion of the condominium, other than withdrawable real estate,does not withdraw that portion from the condominium. Foreclosureor enforcement of a lien or encumbrance against withdrawable realestate does not of itself withdraw that real estate from thecondominium.
10. If a lien or encumbrance against a portion of the realestate comprising the condominium has priority over thedeclaration, and the lien or encumbrance has not been partiallyreleased, the parties foreclosing the lien or encumbrance may,upon foreclosure, record an instrument excluding the real estatesubject to that lien or encumbrance from the condominium.
(L. 1983 H.B. 177)