December 1, 2006
CONDOMINIUMS- MERGERS AND AMENDMENTS TO BYLAWS BY CHAPTER 825 CONDOMINIUMS
By: George Coppolo, Chief Attorney
You asked whether condominiums organized under Chapter 825 may merge with other condominiums organized under that chapter. You also asked whether the law prohibits unit owners of such condominiums from amending their bylaws to require that the unit owners of condominiums that create a master association vote for any budget for common expenses approved by the master association board.
The law allows any two or more condominium developments created under Chapter 825 of the General Statutes to be merged or consolidated into a single condominium by agreement of the unit owners of those condominiums. Mergers are governed by CGS § 47-240, a provision of the Common Interest Ownership Act (CIOA).
The law does not prohibit unit owners from amending their bylaws or declaration to require that the unit owners of condominiums that have created a master association vote for any budget for common expenses approved by the master association board.
MERGER OF CONDOMINIUMS ESTABLISHED UNDER CHAPTER 825 OF THE GENERAL STATUTES
The Common Interest Ownership Act (CIOA) governs the creation, alteration, management, termination, and sale of condominiums and other common interest communities formed in Connecticut after January 1, 1984 (CGS § 47-200 et seq.). Condominiums created before CIOA was adopted were governed by Chapter 825 of the General Statutes (CGS §§ 47-68a to 47-90c).
But certain provisions of CIOA automatically apply to any condominium created in Connecticut before January 1, 1984, but only with respect to events and circumstances that occur after December 31, 1983. These provisions include the merger or consolidation of condominiums, which is governed by CGS § 47-240. The former condominium law also permitted mergers (CGS § 47-88a). But this law no longer controls mergers by condominiums established before CIOA.
Mergers Under CIOA
Any two or more common interest communities of the same form of ownership, may be merged or consolidated into a single common interest community by agreement of the unit owners (CGS § 47-240). In the event of a merger or consolidation, unless the agreement otherwise provides, (1) the resulting common interest community is the legal successor, for all purposes, of all of the preexisting common interest communities, and (2) the operations and activities of all associations of the preexisting common interest communities are merged or consolidated into a single association that holds all powers, rights, obligations, assets, and liabilities of all preexisting associations.
An agreement of two or more common interest communities to merge or consolidate must be evidenced by an agreement executed, recorded, and certified by the president of the association of each of the preexisting common interest communities following approval by unit owners to which are allocated the percentage of votes in each common interest community required to terminate that common interest community. The agreement must be recorded in every town in which a portion of the common interest community is located and is not effective until recorded.
Every merger or consolidation agreement must provide for the reallocation of the allocated interests in the new association among the units of the resulting common interest community either by stating (1) the reallocations or (2) the formulas on which they are based.
Mergers Under Chapter 825
The former condominium also allowed condominiums to merge. Following is a summary of this law (CGS § 47-88a). As noted before, this law no longer controls mergers of pre-CIOA condominiums because the law species that mergers of these condominiums is governed by CGS § 47-240.
Under CGS § 47-88a, two or more condominiums established pursuant to chapter 825 could agree to merge the operations and activities of their respective associations of unit owners into a single association of unit owners.
The merger agreement could only take effect following the agreement in writing of three-fourths of the unit owners and the mortgagees of three-fourths of the units subject to mortgage of each condominium.
Each residential unit in the resulting condominium was entitled to a vote in the unit owners' association in proportion to its interest in the common elements. The percentage interests in the common elements assigned to each unit of each condominium had to remain unchanged, and the title, description, and separate character of each condominium had to remain unchanged.
The law required that the amended bylaws, and if necessary the declaration, had to be recorded on the land records in the same manner as required for other amendments.
The merger agreement had to include whatever terms and conditions that were necessary to effectuate the merger, and not otherwise inconsistent with chapter 825 or any provision of the general statutes.
Amended bylaws had to conform to the provisions of chapter 825.
The resultant association had the power to assess common charges and distribute common profits on all member unit owners in the same manner and based upon the same percentage interest in the common expenses and profits of each condominium as its predecessor associations.