§ 35-8A-304 — Transfer of Special Declarant Rights

(a) No special declarant right specified in Section 35-8A-103(24) created or reserved under this chapter may be transferred except by an instrument evidencing the transfer recorded in every county in which any portion of the condominium is located. The instrument is not effective unless executed by the transferor and the transferee in the same formality as a conveyance of real property.
(b) Upon transfer of any special declarant right, the liability of a transferor declarant is as follows:
(1) A transferor is not relieved of any obligation or liability arising before the transfer and remains liable for warranty obligations imposed upon him or her by this chapter. Lack of privity does not deprive any unit owner of standing to maintain an action to enforce any obligation of the transferor.
(2) If a successor to any special declarant right is an affiliate of a declarant specified in Section 35-8A-103(1), the transferor is jointly and severally liable with the successor for any obligations or liabilities of the successor relating to the condominium.
(3) If a transferor retains any special declarant right, but transfers other special declarant rights to a successor who is not an affiliate of the declarant, the transferor is liable for any obligations or liabilities imposed on a declarant by this chapter or by the declaration relating to the retained special declarant rights and arising after the transfer.
(4) A transferor has no liability for any act or omission or any breach of a contractual or warranty obligation arising from the exercise of a special declarant right by a successor declarant who is not an affiliate of the transferor.
(c) Unless otherwise provided in a mortgage instrument or deed of trust or other agreement creating a security interest, in case of foreclosure of a security interest, sale by a trustee under an agreement creating a security interest, tax sale, judicial sale, or sale under federal bankruptcy law or receivership proceedings, of any units owned by a declarant or real estate in a condominium subject to development rights, a person acquiring title to all the real estate being foreclosed or sold succeeds to all special declarant rights related to that real estate held by that declarant, or only to any rights reserved in the declaration pursuant to Section 35-8A-215 and held by that declarant to maintain models, sales offices and signs.
(d) Upon foreclosure of a security interest, sale by a trustee under an agreement creating a security interest, tax sale, judicial sale, or sale under federal bankruptcy law or receivership proceedings, of all units and other real estate in a condominium owned by a declarant:
(1) The declarant ceases to have any special declarant rights, and
(2) The period of declarant control specified in Section 35-8A-303(d) terminates unless the judgment or instrument conveying title provides for transfer of all special declarant rights held by that declarant to a successor declarant.
(e) The liabilities and obligations of a person who succeeds to special declarant rights are as follows:
(1) A successor to any special declarant right who is an affiliate of a declarant is subject to all obligations and liabilities imposed on the transferor by this chapter or by the declaration.
(2) A successor to any special declarant right, other than a successor described in subdivisions (3) or (4), who is not an affiliate of a declarant, is subject to all obligations and liabilities imposed by this chapter or the declaration:
a. On a declarant which relates to his or her exercise or nonexercise of special declarant rights; or
b. On his or her transferor, other than:
1. Misrepresentations by any previous declarant;
2. Warranty obligations on improvements made by any previous declarant, or made before the condominium was created;
3. Breach of any fiduciary obligation by any previous declarant or his or her appointees to the board; or
4. Any liability or obligation imposed on the transferor as a result of the transferor’s acts or omissions after the transfer.
(3) A successor to only a right reserved in the declaration to maintain models, sales offices, and signs pursuant to Section 35-8A-215, may not exercise any other special declarant right, and is not subject to any liability or obligation as a declarant, except the obligation to provide an offering statement and any liability arising as a result thereof.
(4) A successor to all special declarant rights held by his or her transferor who is not an affiliate of that declarant and who succeeded to those rights pursuant to a deed in lieu of foreclosure or a judgment or instrument conveying title to units under subsection (c), may declare the intention in a recorded instrument to hold those rights solely for transfer to another person. Thereafter, until transferring all special declarant rights to any person acquiring title to any unit owned by the successor, or until recording an instrument permitting exercise of all those rights, that successor may not exercise any of those rights other than any right held by his or her transferor to control the board in accordance with the provisions of Section 35-8A-303(d) for the duration of any period of declarant control, and any attempted exercise of those rights is void. So long as a successor declarant may not exercise special declarant rights under this subsection, he or she is not subject to any liability or obligation as a declarant other than liability for his or her acts and omissions under Section 35-8A-303(d).
(f) Nothing in this section subjects any successor to a special declarant right to any claims against or other obligations of a transferor declarant, other than claims and obligations arising under this chapter or the declaration.

Legislative History

(Acts 1990, No. 90-551, p. 858, §3-104; Act 2018-403, §1.)