Chapter 2 - § 2.4 • DECLARATION CONTENTS — OPTIONS
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§ 2.4.1—Permitted Declaration Provisions
A number of CCIOA statutes grant explicit permission for a declaration to address specific issues. However, the Act also states broadly that, in addition to the contents required of all declarations, a declaration may contain "any other matters the declarant considers appropriate."159 That is not, however, an open invitation to restrict the applicability of CCIOA provisions since the Act specifically says that the provisions of the CCIOA may not be varied by agreement, and rights conferred by it may not be waived, except as expressly provided in the CCIOA.160 Thus, the attorney drafting a declaration needs to refer to the many sections of the Act — most cited in this section of the chapter — to see what provisions of it may be varied, and to what extent.
The CCIOA grants explicit permission for a declaration to address specific issues in the following circumstances:
• The declaration, bylaws, or rules of the association may specify situations in which disputes must be resolved by binding arbitration under the Uniform Arbitration Act or Dispute Resolution Act.161
• The declaration may provide that different allocations of votes will be made to units on particular matters specified in the declaration, for cumulative voting for the election of governing board members, for class voting on specified issues,162 and for assessments on retail sales and services and real estate transfers.163
• The declaration may specify a smaller percentage for termination of a common interest community than 67 percent of the votes in the association, but only if all of the units are restricted exclusively to nonresidential uses.164
• The declaration of a cooperative may provide that all creditors of the association have priority over any interests of unit owners and creditors of unit owners.165
• The declaration may require that all or a specified number or percentage of lenders who hold security interests encumbering units must approve specified actions of the unit owners or association as a condition to the effectiveness of those actions.166
• A budget proposed by a governing board may be vetoed at a noticed meeting by a majority of all unit owners, or if permitted in the declaration, a majority of a class of unit owners, or any larger percentage specified in the declaration, whether or not a quorum is present.167
• The declaration may provide for a period of declarant control.168
• To convey portions of the common elements in a condominium or planned community, to convey part of a cooperative, or to subject any common interest community to a security interest, 67 percent of the unit owners must approve, but the declaration may specify a smaller percentage if all of the units are restricted exclusively to nonresidential uses.169
• The declaration may require the association to carry any insurance not mandated by the CCIOA.170
There are three statutes that allow actions "expressly permitted" or "expressly provided for" in a declaration.
• If a declaration expressly so permits, a unit may be subdivided into two or more units.171
• Unless it is acting in the capacity of an association, a master association may exercise powers to adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners172 only to the extent those powers are expressly permitted to be exercised by a master association in the declarations of common interest communities that are part of the master association or expressly described in the delegations of power from those common interest communities to the master association.173
• An association may assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly so provides.174
There are some statutes that by implication permit the declaration to address certain topics. For example, the CCIOA does not say that there must be an executive — that is, governing — board, but the definition of "executive board" is the body designated in the declaration to act on behalf of the association.175 While the CCIOA does not specifically say that a declaration may contain a provision allowing an association to delegate any of its powers to a master association, the statute on master associations clearly implies that is the case.176 The Act does not explicitly empower associations to include in the declaration standards and procedures for reviewing applications by unit owners for architectural or landscaping changes, but it obviously contemplates that a declaration or some other document may include those standards and procedures.177 The CCIOA also contemplates that declarants may reserve in the declaration a right to remove property — specifically referring to real estate used as a sales office, management office, or model — from the common interest community.178 For time share estates, a statute provides that a plaintiff may commence a single judicial foreclosure action under the applicable CCIOA statute,179 joining as defendants multiple obligors with separate time share estates and junior lienors, if the declaration that gives rise to the right of the association to collect assessments creates default and remedy obligations substantially the same for each obligor named as a defendant in the action.180
Finally, the CCIOA requires associations to maintain certain prescribed records in addition to any specifically defined in the association's declaration or bylaws,181 but does not require the declaration to define those records.
§ 2.4.2—"Unless Otherwise Provided"
In a large number of instances, the CCIOA governs unless the declaration provides otherwise. This clearly requires counsel to draft language limiting the effect of the CCIOA, or to be bound by the Act.182 Attorneys need to carefully check the language of the specific statute. Most simply use the phrases: "unless the declaration provides otherwise" or "unless the declaration provides." The first would require language contradicting that of the CCIOA183 — and may put the burden on the party relying on it to show it is contradictory — while the second phrase requires the drafter to provide language that effectuates the statutory alternative, probably placing the burden on the party relying on it to show it has that effect. In at least one case, the statute uses the words "unless the declaration as originally recorded provided otherwise."184 Three statutes provide emphasis by using the phrases "unless specifically provided otherwise" and "unless the declaration expressly provides otherwise."185 That wording suggests the declaration must explicitly and unambiguously counter the relevant statutory language, and it insinuates that in other cases the declaration may "provide otherwise" by implication. Finally, it is important to take note of statutes that allow documents in addition to the declaration — usually the bylaws — to "provide otherwise." In those cases, the drafter has a choice of where to place the language that will allow the association to deviate from a CCIOA statute.
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• The CCIOA defines a long list of terms, and when those terms are used in the declaration, the CCIOA definitions govern unless specifically provided otherwise.186
• In a cooperative, a unit owner's interest is real estate for all purposes unless the declaration provides that an interest in a unit and its allocated interests is personal property.187
• Notwithstanding any provision in the declaration, bylaws, or rules and regulations of the association to the contrary, an association may not prohibit the right of a unit owner to restrict or specify by deed, covenant, or other document the permissible sale price, rental rate, or lease rate of the unit or occupancy or other requirements designed to promote affordable or workforce housing as defined by a local housing authority. Except as otherwise provided in the declaration of a common interest community, any unit subject to that provision may only be occupied by the owner of the unit.188
• Unless the declaration provides otherwise, any portion of an eminent domain award attributable to acquisition of a limited common element must be equally divided among the owners of the units to which that limited common element was allocated at the time of acquisition.189
• Certain "new" small cooperatives and planned communities are governed by only three CCIOA statutes unless the declaration provides that the entire CCIOA is applicable.190
• The CCIOA does not apply to a planned community in which all units are restricted exclusively to nonresidential use unless the declaration provides that the CCIOA does apply to that planned community.191
• A termination agreement for a condominium or planned community containing any units not having horizontal boundaries described in the declaration may provide for sale of the common elements, but may not require that the units be sold following termination unless the declaration as originally recorded provided otherwise or all the unit owners consent to the sale.192
• When a cooperative is terminated, the CCIOA establishes the priority for creditors unless the declaration provides that all creditors of the association have priority over any interests of unit owners and creditors of unit owners.193
• A budget proposed by a governing board does not require approval from unit owners, and it will be deemed approved by unit owners absent a veto at a noticed meeting by a majority of all unit owners unless the declaration requires otherwise.194
• Unless the declaration provides otherwise, any income or proceeds from real estate subject to development rights inure to the declarant.195
• In planned communities, if all development rights concerning any real estate have expired, the declarant remains liable for all expenses of that real estate unless, on expiration, the declaration provides
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