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OLR Research Report


May 28, 2010

 

2010-R-0238

CHANGES TO COMMON INTEREST OWNERSHIP ACT REGARDING AMENDMENTS TO DECLARATION

By: James Orlando, Legislative Analyst

You asked about changes to the Common Interest Ownership Act regarding the process to amend the community's declaration certificate.

SUMMARY

The Common Interest Ownership Act (CIOA) was enacted in 1983 by PA 83-474 and became effective January 1, 1984. CIOA governs common interest communities created on or after January 1, 1984 and any other common interest community subjected to it. Since CIOA's inception, there have been numerous changes regarding the process to amend declarations. Notable recent changes include provisions in PA 09-225 that (1) create an exception to the unanimous consent requirement for the exercise of development rights; (2) effective July 1, 2010, permit a residential common interest community declaration to be amended by majority vote of unit owners, rather than a 67% vote; and (3) effective July 1, 2010, expand the process to deem approval of certain amendments where the declaration provides for the agreement of unit owners holding 80% or more of the association votes.

The changes to CIOA regarding the process to amend the declaration are listed chronologically below.

PA 83-474

Adoption of CIOA

PA 83-474 provides, with certain exceptions, that the declaration of a residential common interest community can be amended only by vote of unit owners to which at least 67% of the association votes are allocated. The declaration can specify a smaller percentage if all of the units are restricted exclusively to nonresidential use. The exceptions to the 67% vote requirement include certain amendments by the declarant regarding development rights and certain other matters which CIOA provides for amendment by the association or certain unit owners.

Except as otherwise permitted or required by CIOA, the act requires unanimous consent of unit owners for amendments that create or increase special declarant rights; increase the number of units; or change unit boundaries, the allocated interests of a unit, or the uses to which a unit is restricted.

The act provides that an action to challenge the validity of an amendment adopted by the association following a vote must be filed within one year after the amendment was recorded. Amendments must be recorded in the land records.

Provisions in the declaration creating special declarant rights cannot be amended without the declarant's consent (PA 83-474, 37).

PA 84-472

Pre-1984 Common Interest Communities Declaration Certificate

Prior to January 1, 1984, cooperatives created in Connecticut were considered to be personal property, not real property, and were not required to file any documents on the land records. PA 84-472 authorizes a cooperative association created before January 1, 1984 to file a certificate on the land records signed by the association president or another authorized person. If the certificate contains specified information, it constitutes the declaration. This information includes the location of the association's books and records and a description of the real property or reference to where it may be obtained.

The act authorizes the association to amend a recorded certificate any time to correct errors or to reflect transfers of interest in the units which occurred before the date of the certificate but which were not reflected in the association's books and records on that date. The certificate can be amended following a vote of unit owners necessary to amend its declaration, bylaws, surveys, or plans (PA 84-472, 2).

PA 95-187

Restrictions on Unit Use

Under prior law, an amendment to a declaration to change restrictions on a unit's uses required the unanimous consent of the unit owners. PA 95-187 instead permits an amendment to the declaration to prohibit or materially restrict the permitted uses or occupancy of a unit, or the number or qualifications of occupants, by vote or agreement of unit owners who control at least 80% of association votes, or any larger percentage specified in the declaration. The amendment must provide reasonable protection for a use or occupancy permitted when the amendment was adopted (PA 95-187, 12).

Development Rights and Related Matters

By law, a description of any development rights must be contained in the declaration, including a time limit for exercising these rights. The act authorizes an extension of the time limit, an increase in the number of units, and creation of new development rights or other special declarant rights by amendment to the declaration if those entitled to cast at least 80% of association votes, including 80% of the votes allocated to units not owned by the declarant, agree to it. The act requires (1) the amendment to identify who holds the newly created rights and (2) written notice of the proposed amendment to be delivered to all holders of development rights or security interests in them. Under the act, the amendment is effective 30 days after recording it on the land records and delivering notice, unless someone entitled to notice records a written objection within the 30 days, which voids the amendment. If all those entitled to notice give written consent when the amendment is recorded, it is effective when recorded. As under prior law, provisions in the declaration creating special declarant rights may not be amended without the declarant's consent (PA 95-187, 12).

Consent of Security Interest Holder to Amend Declaration

Under the act, if any provision in CIOA or a declaration governed by it requires the consent of a security interest holder in a unit as a condition of amending the declaration, the holder is deemed to have consented if the association does not receive a written refusal to consent within 45 days after it delivers notice of the proposed amendment or mails it by certified mail with return receipt. The act allows the association to rely on the last-recorded security interest in the chain of title when delivering or mailing notice to the interest holder (PA 95-187, 12).

Procedure to Deem Approval

Under the act, if the declaration of a pre- or post-1984 common interest community contains a provision requiring that amendments on unit use, boundary relocation between units and common elements, or extension or creation of development rights need the vote or agreement of unit owners holding 80% or more of the association votes, an amendment is deemed approved if:

1. unit owners with at least 80% of the votes approve it,

2. no unit owner votes against it, and

3. unit owners who have the right to vote but have not done so are notified of the proposed amendment and the association receives no written objection within 30 days.

The amendment also is approved if one or more unit owner objects and a court in an action brought by the association, finds that the objecting parties' interests are not unique and different from those of other unit owners that the declaration's voting requirements were intended to protect (PA 95-187, 12).

Amendment of Pre-1984 Common Interest Community Governing Instruments to Conform to CIOA

Under prior law, common interest communities created prior to January 1, 1984, could amend their governing instruments (declarations, bylaws, surveys, or plans) to conform to portions of CIOA. But the amendments had to be adopted in conformity with the law that applied when they were created and with the procedures and

requirements specified by those instruments. PA 95-187, instead, requires that amendments be adopted in conformity with procedures and requirements specified by these instruments or, if there are none, in conformity with CIOA (PA 95-187, 8).

PA 04-132

Procedure to Deem Approval

Under PA 95-187, if the declaration of a pre- or post-1984 condominium or other common interest community contained a provision requiring that amendments on unit use, boundary relocation between units and common elements, or extension or creation of

development rights needed the vote or agreement of unit owners holding 80% or more of the association votes, an amendment was deemed approved if certain conditions were met (see above).

PA 04-132 ( 4) specifies that this procedure applies only if the provision requires a vote of higher than 80% and not if the provision requires an 80% vote.

PA 09-225

Exception to Unanimous Consent Requirement

The law requires unanimous consent of the unit owners for an amendment that would create or increase special declarant rights or the number of units, or change the boundaries of any unit or the allocated interests of a unit, except to the extent otherwise expressly permitted or required by CIOA. PA 09-225 creates an exception to this unanimous consent requirement for the exercise of development rights. It also specifies that the unanimous consent requirement and the exception apply to all common interest communities, not just those created on or after January 1, 1984 (PA 09-225, 15).

Amendments Affecting the Priority of a Security Holder's Interest

Under prior law, if CIOA or the declaration of any common interest community required the consent of a person holding a security interest in a unit as a condition to the effectiveness of any amendment to the declaration, that consent was deemed granted if no written refusal to consent was received by the association within 45 days after the association delivered notice of the proposed amendment to the interest holder or mailed it to the holder by certified mail, return receipt requested. PA 09-225 also applies this (1) if the requirement is contained in the association's bylaws and (2) to common interest communities created before January 1, 1984. It also specifies that the refusal must be in a record instead of a writing.

The act creates an exception to this provision by requiring actual consent in a record for an amendment that affects the priority of a holder's security interest or the ability of that holder to foreclose its security interest if the declaration requires consent as a condition to the amendment's effectiveness. This exception does not apply to amendments affecting the priority of the association's lien (PA 09-225, 15).

PA 09-225

The following provisions are effective July 1, 2010

Percentage of Votes Required to Amend Declaration

Under prior law, with certain exceptions, the declaration could be amended only by a vote or an agreement of owners of units to which at least 67% of the votes in the association were allocated, or any larger majority the declaration specified. PA 09-225 specifies that (1) the declaration may establish a smaller percentage, but not less than a majority and (2) that percentage may be for all amendments or specific subjects only. The law continues to provide that the declaration may specify a smaller number if all of the units are restricted exclusively to nonresidential use.

PA 09-225 allows a declaration to provide that all or specific subjects of amendment may be approved by the owners of units having more than a majority of a specified group of units that would be affected by the amendment, rather than all of the units in the common interest community (PA 09-225, 16).

Restrictions on Unit Use

By law, an amendment to the declaration may prohibit or materially restrict the permitted uses or occupancy of a unit or the number or other qualifications of people who may occupy units by vote or agreement of owners of units to which at least 80% of the votes in the association are allocated, or any larger percentage specified in the declaration. PA 09-225 allows the declaration to permit an amendment to do so if it is approved by a vote of unit owners with at least 80% of the votes of a specified group of units that the amendment would affect instead of by all the votes in the association (PA 09-225, 16).

Development Rights and Special Declarant Rights

By law, the time limits the declaration specifies for exercising reserved development rights may be extended, the number of units may be increased, and new development rights or other special declarant rights may be created by amendment if people entitled to cast at least 80% of the votes in the association, including 80% of the votes allocated to units

not owned by the declarant, agree to that action. The amendment must identify the association or other persons who hold any new rights that are created. PA 09-225 extends this requirement to extending the time to exercise special declarant rights.

Under prior law, written notice of the proposed amendment to the declaration had to be delivered to anyone holding development rights or security interests in those rights. The amendment was effective 30 days after it was recorded and notice was delivered unless any of the parties entitled to notice recorded a written objection within 30 days, in which case the amendment was void, or unless all of those entitled to notice consented in writing when the amendment was recorded. PA 09-225 allows the notice, objection, and consent to be in a record, instead of in writing (PA 09-225, 16).

Procedure to Deem Approval

Pursuant to PA 95-187, if the declaration of a pre- or post-1984 common interest community contains a provision requiring that amendments on unit use, boundary relocation between units and common elements, or extension or creation of development rights need the vote or agreement of unit owners holding 80% or more of the association votes, an amendment is deemed approved if certain conditions are met (see above).

PA 09-225 expands this approval process to include any amendment, not just those specified above, except amendments that (1) create or increase special declarant rights; (2) increase the number of units; or (3) change the boundaries of any unit or the allocated interests of a unit, which require unanimous consent of the unit owners.

The act also applies this approval process to requirements contained in bylaws requiring the approval of 80% or more of votes for the adoption of amendments. It requires that any objection to the amendment be in a record instead of written (PA 09-225, 16).

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