§ 38-33.3-304 — Transfer of special declarant rights

Colorado § 38-33.3-304

• Jurisdiction: Colorado
• Title 38: Property -
• Art.: Colorado Common Interest Ownership Act

Text

(1) A special declarant
right created or reserved under this article may be transferred only by an
instrument evidencing the transfer recorded in every county in which any portion of
the common interest community is located. The instrument is not effective unless
executed by the transferee.

(2) Upon transfer of any special declarant right, the liability of a transferor
declarant is as follows:

(a) A transferor is not relieved of any obligation or liability arising before the
transfer and remains liable for warranty obligations imposed upon such transferor
by this article. Lack of privity does not deprive any unit owner of standing to bring
an action to enforce any obligation of the transferor.

(b) If a successor to any special declarant right is an affiliate of a declarant,
the transferor is jointly and severally liable with the successor for the liabilities and
obligations of the successor which relate to the common interest community.

(c) If a transferor retains any special declarant rights 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
article or by the declaration relating to the retained special declarant rights and
arising after the transfer.

(d) 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.

(3) Unless otherwise provided in a mortgage instrument, 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 bankruptcy or receivership proceedings of any units
owned by a declarant or real estate in a common interest community subject to
development rights, a person acquiring title to all the property being foreclosed or
sold succeeds to only those special declarant rights related to that property held
by that declarant which are specified in a written instrument prepared, executed,
and recorded by such person at or about the same time as the judgment or
instrument or by which such person obtained title to all of the property being
foreclosed or sold.

(4) Upon foreclosure of a security interest, sale by a trustee under an
agreement creating a security interest, tax sale, judicial sale, or sale under
bankruptcy act or receivership proceedings of all interests in a common interest
community owned by a declarant:

(a) The declarant ceases to have any special declarant rights; and

(b) The period of declarant control terminates unless the instrument which is
required by subsection (3) of this section to be prepared, executed, and recorded at
or about the same time as the judgment or instrument conveying title provides for
transfer of all special declarant rights to a successor declarant.

(5) The liabilities and obligations of persons who succeed to special
declarant rights are as follows:

(a) A successor to any special declarant right who is an affiliate of a
declarant is subject to all obligations and liabilities imposed on any declarant by
this article or by the declaration.

(b) A successor to any special declarant right, other than a successor
described in paragraph (c) or (d) of this subsection (5) or a successor who is an
affiliate of a declarant, is subject to all obligations and liabilities imposed by this
article or the declaration:

(I) On a declarant which relate to the successor's exercise or nonexercise of
special declarant rights; or

(II) On the declarant's transferor, other than:

(A) Misrepresentations by any previous declarant;

(B) Warranty obligations on improvements made by any previous declarant
or made before the common interest community was created;

(C) Breach of any fiduciary obligation by any previous declarant or such
declarant's appointees to the executive board; or

(D) Any liability or obligation imposed on the transferor as a result of the
transferor's acts or omissions after the transfer.

(c) A successor to only a right reserved in the declaration to maintain
models, sales offices, and signs, if such successor is not an affiliate of a declarant,
may not exercise any other special declarant right and is not subject to any liability
or obligation as a declarant.

(d) A successor to all special declarant rights held by a transferor who
succeeded to those rights pursuant to the instrument prepared, executed, and
recorded by such person pursuant to the provisions of subsection (3) of this section
may declare such successor's intention in such 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 or real estate subject to
development rights 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 the right held by such successor's transferor to control the
executive board in accordance with the provisions of section 38-33.3-303 (5) 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 (5), such successor declarant is not subject
to any liability or obligation as a declarant, other than liability for the successor's
acts and omissions under section 38-33.3-303 (4).

(6) 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 article or the declaration.

Legislative History

Source: L. 91: Entire article added, p. 1740, � 1, effective July 1, 1992.