Chapter 6 - § 6.15 • MERGER OR CONSOLIDATION

• Jurisdiction: Colorado

§ 6.15 • MERGER OR CONSOLIDATION

The CCIOA provides for the merger or consolidation of common interest communities. The authority to merge or consolidate communities is one of the "special declarant rights" that may be reserved for the benefit of a declarant.⁴⁶¹

Two or more common interest communities that are of the same form of ownership may be merged or consolidated into a single common interest community by an agreement of the unit owners.⁴⁶² Unless the agreement provides otherwise, the new common interest community is the legal successor, for all purposes, of all of the pre-existing communities, and the operations and activities of all associations of those pre-existing communities are merged or consolidated into a single association that holds all powers, rights, obligations, assets, and liabilities of all the pre-existing associations. The merger or consolidation agreement must provide for reallocation of the allocated interests in the new association among the units of the new community by stating either the reallocations or the formulas on which they are based.⁴⁶³ It must be approved by owners of units to which are allocated the percentage of votes in each community required to terminate that community, and it must be prepared, executed, recorded, and certified by the president of the association of each of the pre-existing communities.⁴⁶⁴ The agreement is not effective until it is recorded.

A common interest community that was merged or consolidated with another community, or that is a party to an agreement to do so, may withdraw from the new community or terminate the agreement to merge or consolidate, without the consent of any of the other communities involved in that merger or consolidation.⁴⁶⁵ To withdraw, a community must meet six criteria:

1) It is a separate, platted subdivision.
2) Its unit owners are required to pay into two common interest communities or separate unit owners' associations.
3) It is or has been a self-operating community or association continuously for at least 25 years.
4) The total number of unit owners comprising it is 15 percent or less of the total number of unit owners in the new community or association.
5) Its unit owners have approved the withdrawal by a majority vote and the owners of units representing at least 75 percent of the allocated interests in the community wishing to withdraw participated in that vote.
6) Withdrawal would not substantially impair the ability of the remainder of the merged community

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