Chapter 2 - § 2.2 • REQUIRED DECLARATION CONTENTS — BASIC REQUIREMENTS
| Jurisdiction | Colorado |
The CCIOA prescribes the basic contents of any declaration. The statute on the contents of a declaration lists 17 items that a declaration must contain.72 Some of them are essential — either legally73 or practically — for creation of a functioning common interest community, but others have an element of discretion. The essential contents are:
• The names of the common interest community and association and a statement that the community is a condominium, cooperative, or planned community.74
• The name of every county in which any part of the community is located.75
• A legally sufficient description of the real estate included in the community76 and, to protect the association's priority status in liens for assessments, the current address of the association.77
• A statement of the maximum number of units the declarant reserves the right to create.78
• A description of each unit, including its identifying number,79 and, in a condominium or planned community, its boundaries.80
• An allocation to each unit of the allocated interests.81
• The recording data for recorded easements and licenses appurtenant to, or included in, the community or to which any portion of the community is or may become subject by virtue of a reservation in the declaration.82
• Reasonable provisions regarding the way notice of matters affecting the community may be given to unit owners by the association or other unit owners.83
Additionally, there is an "omnibus" clause in the statute listing the prescribed declaration contents.84 It requires the declaration to include all matters mandated by eight statutes, the specifics of which are discussed elsewhere, as noted below. The statutes are those concerning:
1) Creation of common interest communities and generally addressing recording requirements for declarations and certificates of completion;85
2) Leasehold common interest communities;86
3) Allocation of allocated interests;87
4) Limited common elements;88
5) Plats and maps;89
6) Sales offices, management offices, and models;90
7) Easement rights; and91
8) Powers and duties of the governing board concerning proposed budgets.92
Many of the "omnibus clause" statutes, as well as the "non-essential" contents listed in the statute on declaration contents,93 include some measure of discretion for the drafter so that they may not be found — and need not necessarily be included — in all declarations. The attorney will need to review each of these items with his or her client to determine whether, and how, each item should be addressed.94
§ 2.2.1—Limited Common Elements
A "limited common element" is a portion of the common elements allocated by the declaration, or by operation of statute,95 for the exclusive use of one or more units, but fewer than all of them.96 Any limited common elements, other than those designated by operation of statute or shown on a map included as a part of the declaration,97 must be described in the declaration,98 which also must specify to which unit or units each limited common element is allocated.99
If there are no limited common elements, the description and specification can be omitted. The description and specification apparently may also be omitted when there are no limited common elements other than those designated by operation of statute or shown on a map.
When would there be no limited common elements at all? Virtually never in a condominium. By definition, a common interest community "is not a condominium unless the undivided interests in the common elements are vested in the unit owners."100 The common elements are "all portions of the condominium . . . other than the units,"101 and it would be practically impossible for there not to be something — building entrances, common hallways, a lobby — other than units. It would be rare for some of those common elements not to be reserved for the exclusive use of one or more units, meaning limited common elements. Typically, in a condominium, doorsteps, stoops, porches, balconies, patios, and exterior doors serving a single unit, but located outside its boundaries, are limited common elements. Those are among the elements specifically listed "by operation of statute" as limited common elements, unless the declaration provides otherwise.102 Thus, counsel drafting a declaration for a condominium need not describe as limited common elements any of the items listed in the statute, but must specifically identify any items to be excepted from that designation.103 Whether the declaration must specify to which unit or units each limited common element is allocated if the only limited common elements are those listed in the statute is less clear. The language of the CCIOA does not appear to specify any allocation; therefore, a specification of all limited common elements, whether listed in the statute or not, is best made.
In theory, there are no common elements in cooperatives. In a cooperative, all of the real property is owned by the association and each member is entitled, by virtue of his or her ownership interest in the association, to exclusive possession of a unit.104 Apparently, a planned community may or may not have common elements.105 A comment to the Uniform Act says that the common elements in a planned community are owned by the association.106 Traditionally — at least in the law of condominiums and homeowners associations — common elements were owned directly by the unit owners as tenants in common, and they had an indirect ownership as members of the association in any property owned by the association. And in the historical formulation of cooperative ownership, the "unit owners" were actually "shareholder/tenants" who had no direct fee interest in any real property and whose right to exclusive use of any real property — including what in a condominium would usually be a limited common element, for instance a balcony — would be governed by a proprietary lease. Nonetheless, the CCIOA, following the approach of the Uniform Act, provides that the term "common elements" means, in a cooperative, all portions of the cooperative other than the units,107 and in a planned community, any real estate within the community owned or leased by the association, other than a unit.108 Thus, it would appear that in cooperatives and planned communities if the declarant does not want there to be limited common elements, the declaration must explicitly except from the designation of limited common elements the items that are so designated by operation of statute.109
The CCIOA also requires the declaration to describe any real estate110 — other than real estate subject to development rights — that may subsequently be allocated as limited common elements and to state that the allocation may occur.111 A comment to the nearly identical Uniform Act provision notes that either the declarant or the association may, at some future time, allocate common elements as limited common elements.112 Interestingly, the CCIOA only contemplates that the allocation will be made by the declarant, since another statute limits allocations to the real estate described in the declaration. The CCIOA adds that any allocation must be made by an amendment to the declaration prepared, executed, and recorded by the declarant.113 The requirement that the declarant prepare, execute, and record the amendment is not found in the Uniform Act.114 By adding the language concerning the declarant, did the CCIOA intend to preclude the association from allocating limited common elements or was it simply recognizing that, as a comment to the Uniform Act suggests, many allocations will occur in the phasing of a development?115 It would appear that the purpose of the language was to make the statute congruent with the statute concerning amendments to the declaration, which requires amendments to be by a vote of the unit owners, but makes an exception for, inter alia, an amendment executed by a developer to allocate limited common elements.116
Practice Pointer
The idea that property can be owned in common and yet reserved for the use of only some of the owners is more subtle to laypersons than attorneys. Do not assume the client understands it. When there is a choice to designate property as a limited common element or leave it as a general common element, explain carefully the practical effect of the choice.
§ 2.2.2—Use Restrictions
The declaration must include any restrictions on the use, occupancy, and alienation of units; it also must include any restrictions on the amount for which a unit may be sold or that may be received by a unit owner on sale, condemnation, or casualty loss to the unit or to the community or on termination of the community.117 These are particularly critical requirements considering that the use and occupancy restrictions often define the very nature of a common interest community. The CCIOA statute departs from the Uniform Act on this matter. Like the CCIOA, the Uniform Act requires restrictions on the alienation of units and on the amount for which they may be sold, or that may be received for them, to be stated in the declaration;118 however, under the Uniform Act, restrictions on the uses of a unit or the number or other qualifications of those who may occupy them may be included in the declaration.119 A comment to the Uniform Act notes that this was a 1994 amendment to the original Act — as a result of the amendment, the use or occupancy restrictions, other than leasing restrictions, are no longer required to appear in the declaration.120
If restrictions on the use, occupancy, and alienation must be stated in the declaration, counsel drafting it should urge the declarant to give these matters careful attention for at least two reasons. First, these restrictions or their absence may have significant marketing implications. For example, in a depressed housing market, a project that has no restrictions whatsoever...
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