Chapter 5 - § 5.15 • TERMINATION OF THE COMMUNITY

• Jurisdiction: Colorado

§ 5.15 • TERMINATION OF THE COMMUNITY

A common interest community may only be terminated with the agreement of the unit owners, with two exceptions: (1) a taking of all the units by eminent domain, or (2) foreclosure against an entire cooperative of a security interest that has priority over the declaration.²⁶⁵ The CCIOA requires that unit owners of units to which at least 67 percent of the votes in the association are allocated, or any larger percentage specified in the declaration, must approve termination.²⁶⁶ The agreement to terminate must be evidenced by execution of a termination agreement or ratifications of it by the requisite number of unit owners in the same manner as a deed.²⁶⁷

Subject to the provisions of a termination agreement, the association, on behalf of the unit owners, may contract for the sale of real estate in a common interest community following termination. The contract is not binding on the unit owners until approved, however.²⁶⁸ When real estate is sold after termination, its title vests on termination in the association as trustee for the holders of all interests in the units.²⁶⁹ Proceeds of the sale must be distributed to unit owners and lienholders as their interests may appear, in accordance with the termination statute. Unless the termination agreement specifies otherwise, as long as the association holds title to the real estate, each unit 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. During that period, each unit owner and his or her successors in interest remain liable for all assessments and other obligations imposed on unit owners by the CCIOA or the declaration.

In the case of a planned community, if all or a portion of the common elements are not to be sold after termination, title to those common elements that are not sold vests in the unit owners on termination as tenants in common in fractional interests.²⁷⁰ In a common interest community containing units having horizontal boundaries described in the declaration, title to the units not sold after termination vests in the unit owners on termination as tenants in common in fractional interests, and while the tenancy in common exists, each unit owner (and his or her successors in interest) has an exclusive right to occupy the portion of the real estate that formerly constituted the unit.²⁷¹

The CCIOA sets out the respective interests of unit owners. Generally, their...