December 1, 2004
LAWS CONCERNING CONDOMINIUMS AND COOPERATIVES
By: Joseph Holstead, Research Analyst
You asked for a summary of laws concerning condominiums and cooperatives.
The Common Interest Ownership Act governs the creation, alteration, management, termination, and sale of common interest communities (i.e., condominiums, cooperatives, and other planned communities) formed in Connecticut after January 1, 1984 (CGS § 47-200 et seq.). It allows common interest communities existing before January 1, 1984, to choose to be governed by certain portions of it.
A condominium is, in general, an individually owned unit in a multi-unit complex. Owners also have an ownership interest in the areas common to all unit owners (e.g., the building's lobby, grounds, and electrical systems). Unit owners, through the Association of Unit Owners, are jointly responsible for the maintenance and operation of commonly held areas and facilities. The law allows the owner of any property to submit his property to the provisions of the condominium law by filing appropriate documents with the town clerk of the municipality where the property is located. The individual filing is known as the declarant.
Cooperative members, unlike condominium owners, do not individually own the units they occupy. Instead, they own shares that entitle them to occupy their units.
COMMON INTEREST OWNERSHIP ACT
The Common Interest Ownership Act governs the creation, alteration, management, termination, and sale of most common interest communities formed in Connecticut after January 1, 1984 (CGS § 47-200 et seq.).
Creation, Alteration, and Termination of Common Interest Communities
By law (i.e., under the act), a common interest community may only be created by recording a declaration (document containing specified information) on the land records in the town or towns where it will be located. The declaration may not be filed until all structural components of all buildings containing or comprising any units are substantially completed (CGS § 47-220). The act permits the allocation of common element interests, ownership interests, votes, and common expense liabilities to be made on different bases provided it is spelled out in the declaration. Subject to the declaration, a unit may be subdivided and the boundaries between adjoining units may be altered (CGS § 47-226).
The declaration may be amended only by vote of the unit owners' association and, with respect to a residential common interest community, at least 67% of the votes are required. Provisions in the declaration creating special declarant rights cannot be amended without the declarant's consent.
If any provision of the act, or of the declaration of any common interest community subject to the act, requires 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 is deemed granted if no written refusal is received by the association within 45 days after the association (1) delivers notice of the proposed amendment to the holder of the interest or (2) mails (by certified mail, return receipt requested) it to the interest holder. The association may rely on the last-recorded security interest of record in delivering or mailing notice to the holder of that interest.
If the declaration of a common interest community, whether created before or after January 1, 1984, contains a provision requiring that amendments relating to the use of units, the relocation of boundaries between units and common elements, or the extension or creation of development rights may be adopted only by the vote or agreement of unit owners of units to which 80% or more of the votes in the association are allocated, such a proposed amendment is deemed approved if:
1. (a) unit owners of units to which at least 80% of the votes in the association are allocated vote for or agree to the proposed amendment, (b) no unit owner votes against the proposed amendment, and (c) notice of the proposed amendment is delivered to the unit owners holding the votes in the association that have not voted or agreed to the proposed amendment and no written objection of the proposed amendment is received by the association within 30 days after the association delivers notice or
2. unit owners of units to which at least 80% of the votes in the association are allocated vote for or agree to the proposed amendment but at least one unit owner objects to the proposed amendment and, pursuant to an action brought by the association in the Superior Court against all objecting unit owners, the court finds that the objecting unit owner or owners do not have a unique minority interest, different in kind from the interests of the other unit owners, that the voting requirement of the declaration was intended to protect (CGS § 47-236).
The act explicitly authorizes master associations, mergers, or consolidations (CGS § 47-239 and 240).
Finally, the termination of such communities is provided for (e.g., a residential common interest community may be terminated only by agreement of the unit owners to which at least 80% of the votes are allocated) (CGS § 47-237).
Management of Common Interest Community (CGS § 47-243 to 261)
The act contains comprehensive rules for managing a common interest community. Among other things, the act:
1. requires a unit owners' association, which can exercise broad powers over commonly owned property;
2. requires a board of directors which, unless restricted by the declaration or bylaws, exercises extensive powers in the running of the association;
3. requires the declarant to relinquish control of the association shortly after 60% of the units have been transferred or when certain other things take place;
4. authorizes the assessment of common expenses against each unit and gives the association a lien on each unit for unpaid assessments which has priority over most other;
5. creates and reserves for the declarant certain special rights (such as the right to add land, create units or common elements, convert units into common elements, withdraw real estate, merge or consolidate);
6. permits the declarant to transfer such rights and specifies the liability of the transferor and transferee with respect to such rights;
7. permits the association to terminate specified types of contracts after the declarant relinquishes control of the association;
8. establishes certain rules and guidelines for association voting including the use of proxies;
9. explicitly authorizes the association to convey or mortgage common elements under specified circumstances; and
10. requires the association to maintain certain types of insurance.
The law requires the declarant (1) 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 the unit owners, other than the declarant, elect a majority of the members of the board and (2) to provide the unit owners with a current financial statement of the association at least every six months during the period of declarant control (CGS § 47-245, PA 84-472).
By January 1, 1992, each unit owner's association that is not incorporated in Connecticut must appoint and maintain a statutory agent for service of process. It requires that when a unit owner other than a declarant is selling his residential unit he provide the name of the agent to the buyer or his attorney before the transfer of title (CGS § 47-244a, PA 91-341).
A resident who holds an interest in a mutual housing association by virtue of a state contract for financial assistance or an individual occupancy agreement does not "own" the unit he lives in. Thus, such housing is not a condominium, cooperative, or other common interest form of ownership and is not governed by the common interest ownership law.
Purchaser Protection (CGS § 47-262 to 281)
The act contains many residential purchaser protection provisions including:
1. the duty to substantially complete a residential unit with certain exceptions, before conveying it;
2. the delivery by a declarant of a public offering statement (POS) to a purchaser of a residential unit, before the conveyance;
3. the requirement that a POS contain specified information with additional disclosure required in the case of conversions, time-share common interest communities and where the declarant has development rights;
4. the imposition of certain liability for failure to deliver POS;
5. a 15-day right of cancellation with regard to the purchase of a residential unit;
6. certain disclosures with respect to the resale of a residential unit;
7. the creation of certain express and implied warranties from a declarant;
8. the requirement that promotional material be labeled “must be built' or “need not be built,” and that declarants build those labeled “must be built,” and
9. the requirement that before a declaration or an amendment to a declaration adding units may be recorded, all structural components all buildings containing any units must be substantially completed as evidenced by a recorded certificate of completion by a registered engineer, surveyor, or architect.
Protection of Tenants Where Conversion Occurs. A tenant has exclusive right to purchase a converted unit for 90 days (CGS § 47-284).
APPLICABILITY (CGS § 47-214 to 219)
The act (1) allows communities covered under the Condominium Act of 1976 to adopt additional provisions of it (i.e., of the Common Interest Ownership Act) and (2), except as noted below, applies to all common interest communities created in Connecticut after January 1, 1984. The Condominium Act of 1976 did not apply to condominiums created on or after January 1, 1984.
Applicability to Preexisting Common Interest Communities
The act makes the following provisions applicable to any common interest community created in Connecticut before January 1, 1984, but only with respect to events and circumstances occurring after December 31, 1983 (i.e., that were formerly covered by the Condominium Act of 1976):
2. local laws may not prohibit conversions;
3. eminent domain;
4. construction of bylaws and declaration; description of units;
5. description of units;
6. merger or consolidation;
7. powers of association;
8. tort and contract liability;
9. liens for assessments;
10. association records;
11. resale of units;
12. statutory right of action; and
13. definitions to the extent necessary.
Preexisting common interest communities may choose to come under portions of the act. The act allows common interest communities created before January 1, 1984, to amend their governing instruments (declaration, bylaws, survey, or plans) to conform to portions of the Common Interest act. Any amendment must be adopted in conformity with the law that applied when it was created and with the procedures and requirements specified by those instruments.
The law exempts common interest communities created before January 1, 1984 formed pursuant to a special act of the Legislature from the Common Interest Ownership Act, unless a majority of unit owners vote, in conformity with applicable law, to subject it to the provisions of that Act (CGS § 47-217).
Non-applicability to Certain Newly Created Common Interest Communities
If a newly created common interest community contains only units restricted to nonresidential use, it is only subject to the sections dealing with taxation, local control, and eminent domain. PA 84-472 also made nonresidential communities created before January 1,1984, subject to the same three sections.
If a common interest community contains a conversion building, the sections of the act dealing with the rights of tenants apply whether or not the community is otherwise exempt.
If the declaration of a newly created planned community, or one existing before January 1, 1984, provides that the average annual common expense liability of all residential units will not exceed $100, as adjusted by the act, excluding user fees and insurance premiums, the planned community is only be subject to the sections dealing with taxation, local control, and eminent domain, unless the declaration makes the entire act applicable.
Certain Purchasers Protections Would Not Apply to Small Common Interest Communities
Under the act, the declarant of a common interest community containing no more than 12 units, which are not subject to development rights, is not required to deliver a public offering statement (POS). Further, resale certificates are not required to maintain certain records. But 12-unit condominiums are subject to the act's sections dealing with taxation, local control, and eminent domain.
Condominium Bylaws and Declaration
Condominium Bylaws. The law requires that a condominium association's bylaws must provide for: (1) the number of executive board members and the titles of the association's officers; (2) election by the executive board of an association president, treasurer, secretary and any other officers the bylaws specify; (3) the qualifications, powers and duties, terms of office and manner of electing and removing executive board members and officers and filling vacancies; (4) which, if any, of its powers the executive board or officers may delegate to other people or to a managing agent; (5) which of its officers may prepare, execute, certify and record amendments to the declaration on the association's behalf ; and (6) a method for amending the bylaws(CGS § 47-248(a)).
The law allows bylaws to provide for any other matters the association deems necessary and appropriate, subject to whatever requirements and restrictions a condominium's declaration provides (CGS § 47-248(b)).
Declaration. The law requires that the declaration contain:
1. the names of the condominium and the association and a statement that the condominium is either a condominium, cooperative or planned community;
2. the name of every town in which any part of the condominium is situated;
3. a legally sufficient description of the real property included in the condominium;
4. a statement of the maximum number of units that the declarant reserves the right to create;
5. a description of the boundaries of each unit created by the declaration, including the unit's identifying number;
6. a description of any limited common elements;
7. a description of any real property, except real property subject to development rights, that may be allocated subsequently as limited common elements, other than certain limited common elements together with a statement that they may be so allocated;
8. a description of any development rights, and other special declarant rights, reserved by the declarant, together with a legally sufficient description of the real property to which each of those rights applies and a time limit within which each of those rights must be exercised;
9. if any development right may be exercised with respect to different parcels of real property at different times, a statement to that effect together with (A) either a statement fixing the boundaries of those portions and regulating the order in which those portions may be subjected to the exercise of each development right or a statement that no assurances are made in those regards, and (B) a statement as to whether, if any development right is exercised in any portion of the real property subject to that development right, that development right must be exercised in all or in any other portion of the remainder of that real property;
10. any other conditions or limitations under which development and special declarant rights may be exercised or will lapse;
11. an allocation to each unit of the allocated interests in the manner described in statute;
12. any restrictions (A) on alienation of the units, including any restrictions on leasing which exceed the restrictions on leasingunits which executive boards may impose (B) on the amount for which a unit may be sold or on the amount that may be received by a unit owner on sale, condemnation or casualty loss to the unit or to the condominium, or on termination of the condominium;
13. the recording data for recorded easements and licenses appurtenant to or included in the condominium or to which any portion of the condominium is or may become subject by virtue of a reservation in the declaration; and
14. all matters required by law relating to leasehold condominiums, limited common elements, surveys and plans, the use of the premises for sales purposes, easement rights, and any period of declarant control (CGS § 47-224(a)).
The declaration may also contain any other matters not inconsistent with the law that the declarant considers appropriate, including any restrictions on the uses of a unit or the number or other qualifications of persons who may occupy units (CGS § 47-224(b)).