Chapter 4 - § 4.15 • TERMINATION OF COMMON INTEREST COMMUNITY — EFFECT ON UNITS

• Jurisdiction: Colorado

§ 4.15 • TERMINATION OF COMMON INTEREST COMMUNITY — EFFECT ON UNITS

The termination of common interest communities is a rare occurrence, but may become more common as these communities age. Termination may also become necessary after a natural disaster — for example, an earthquake or flood — destroys all or a large part of a community. The CCIOA statute regarding termination of common interest communities is extensive. It addresses the rights of unit owners and many procedural and financial matters. Those issues are discussed elsewhere¹⁴⁴ because they are not relevant to this section, which is only concerned with how termination will affect the units.

Generally, under the CCIOA, termination requires execution of a termination agreement by a stated percentage of the owners.¹⁴⁵ For termination of a condominium or planned community in which all the units have horizontal boundaries — generally a high-rise building — the agreement may provide that all of the common elements and units must be sold following termination, and if any real estate is to be sold following termination, the agreement must set forth the minimum terms of the sale.¹⁴⁶ In any common interest community that has units with horizontal boundaries, title to units not to be sold following termination vests in the owners on termination as tenants in common in fractional interests that maintain — after taking into account the fair market value of property owned and the proceeds of property sold — their respective interests with respect to all appraised property.¹⁴⁷ While that tenancy in common exists, each owner and his or her successors in interest have an exclusive right to occupy the portion of the real estate that formerly constituted the unit.

If a condominium or planned community has any units that do not have horizontal boundaries, the agreement may provide for sale of the common elements, but it 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.¹⁴⁸

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Notes:

^[144] See § 6.17.

^[145] C.R.S. § 38-33.3-218(1). The exceptions are for a taking of all the units by eminent domain or foreclosure against an entire cooperative of a security interest with priority over the declaration. In most respects, the CCIOA statute parallels the comparable provision of the Uniform Act. See Uniform Common Interest Ownership Act § 2-118. That provision draws from three other pieces of model...