Chapter 3 - § 3.5 • SPECIAL DECLARANT RIGHTS
| Jurisdiction | Colorado |
"Special declarant rights" are defined in the CCIOA as rights that are reserved for the benefit of a declarant to:
• Complete improvements indicated on plats and maps filed with the declaration.
• Exercise any development right, which means any right or combination of rights reserved by the declarant in the declaration to add real estate to a common interest community; create units, common elements, or limited common elements; subdivide units or convert units into common elements; or withdraw real estate.90
• Maintain sales offices, management offices, signs advertising the common interest community, and models.
• Use easements through the common elements for the purpose of making improvements within the common interest community or within real estate that may be added to the community.
• Make the community subject to a master association.
• Merge or consolidate a community of the same form of ownership.
• Appoint or remove any officer of the association or any governing board member during any period of declarant control.91
The Uniform Act definition is essentially the same.92 A comment to the Act says the intent is to isolate the rights reserved for the benefit of declarants that are unique to them and not shared in common with other unit owners. It adds that the list, while relatively short, encompasses virtually every significant right that declarants might seek in the course of creating or expanding a common interest community.93
§ 3.5.1—Completion of Improvements
The CCIOA requires a declaration, or an amendment to a declaration, in a common interest community with horizontal unit boundaries94 that creates or adds units to include a certificate of completion executed by an independent licensed or registered engineer, surveyor, or architect.95 The certificate must state that all structural components96 of all buildings containing or comprising any units created by the declaration or an amendment to it are substantially completed.97
A comment to the Uniform Act says that the intent of the provision is that if any buildings are depicted on required plats and plans (maps in the case of the CCIOA) and contain or comprise spaces that become units by virtue of recording the declaration, the structural components of the buildings must be substantially complete before the declaration is recorded, even though the recorded plats and plans depict only the boundaries of the buildings and the units created in those buildings and not the structural components.98 The comment notes that if unit boundaries are not depicted, no units are created. Commentary to the Uniform Act discusses the meaning of "structural components" and the significance of the phrase "substantially completed." The term "structural components," says one comment, generally is understood in the construction field to include the portions of a building required to keep any part of it from collapsing and to maintain it in a weather-tight condition. It includes foundations, bearing walls and columns, exterior walls, roof, and floors, but does not include interior non-bearing partitions, surface finishes, interior doors, or carpeting.99 "Substantial completion" is also a term that is well understood in the construction industry and is frequently used by building officials as well when issuing certificates of occupancy.100 Indeed, another comment suggests that local certificates of occupancy are sufficient evidence that the required levels of construction have been met.101 In order to meet the "substantial completion" requirement, a declarant is not required, according to a Uniform Act comment, to complete all buildings in which all possible units would be located before creating the community. If only some of the buildings in which units may ultimately be located have been "structurally" completed, a declarant could create a common interest community in which particular development rights are reserved.102
§ 3.5.2—Development Rights
If the declarant wishes to reserve any development rights, the reservation must be made in the declaration, which must describe those rights, identify the real estate to which each of them applies, and state the time limit within which each must be exercised.103 "Development rights" are any right or combination of rights reserved in the declaration to:
• Add real estate to a common interest community.
• Create units, common elements, or limited common elements.
• Subdivide or convert units into common elements.
• Withdraw real estate from a common interest community.104
A comment to the Uniform Act notes that reservation and exercise of development rights is usually closely coordinated with the project's financing.105 Thus, it is common for a lender to review and control the process and for the financing documents to reflect the proposed development process.106
One of the development rights is the right to add real estate — "annexable property" — to the common interest community. The right to annex that property becomes a statutory development right reserved in the declaration and cannot be consummated unless and until the declarant complies with the CCIOA provisions controlling the exercise of development rights.107
To exercise a reserved development right, the declarant must prepare, execute, and record an amendment to the declaration and, in a condominium or planned community, comply with the statutory requirements regarding plats and maps.108 The amendment must assign an identifying number to each new unit created and, except in the case of subdivision or conversion of units, reallocate the allocated interests among all units.109 The declarant becomes the owner of any units created. The amendment must describe any common elements and limited common elements created and, in the case of the latter, it generally must designate the unit to which each is allocated.
If an amendment that adds real estate includes all the CCIOA requirements for declaration contents110 — and, in a condominium or planned community, the requirements for plats and maps111 — additional development rights not previously reserved may be reserved within real estate added to the community.112 However, the time limit on exercise of development rights imposed by the declaration is not extended.113
A declarant may exercise a development right to either subdivide or convert a unit previously created into additional units or common elements.114 If a declarant converts a unit entirely to common elements, the declaration amendment must reallocate all the allocated interests of that unit among the other units as if that unit had been taken by eminent domain.115 If a declarant subdivides a unit into two or more units — whether or not any part of the unit is converted into common elements — the declaration amendment must reallocate all the allocated interests of the unit among the units created by the subdivision in any reasonable manner prescribed by the declarant.116
The declaration may provide that all or a portion of the real estate is subject to a right of withdrawal.117 If all of the real estate is subject to withdrawal, and the declaration does not describe separate portions of real estate subject to that right, none of the real estate may be withdrawn after a unit has been conveyed to a purchaser.118 If any portion of the real estate is subject to withdrawal, it may not be withdrawn after a unit in that portion has been conveyed to a purchaser.119 The limitations on withdrawal provide predictability for unit owners as they know that surrounding lots will remain part of the common interest community.120
If a declarant fails to exercise any development right within the time limit and in accordance with any conditions or fixed limitations described in the declaration, or if a declarant records an instrument surrendering a development right, that development right lapses unless the association, on the declarant's request or the request of owner of the real estate subject to the development right, agrees to an extension or a reinstatement of the development right subject to whatever terms, conditions, and limitations the association may impose on...
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