Chapter 8 - § 8.9 • CONDEMNATION AND TERMINATION

• Jurisdiction: Colorado

§ 8.9 • CONDEMNATION AND TERMINATION

When property in a common interest community is taken by eminent domain, the association has some limited responsibilities. If a unit is taken, the owner's allocated interests in the common elements are automatically reallocated to the remaining units in proportion to their respective allocated interests before the taking,²¹⁴ unless the decree otherwise provides, and the reallocations must be confirmed by an amendment to the declaration prepared, executed, and recorded by the association.²¹⁵ The board will be responsible, on behalf of the association, for the amendment.²¹⁶ That may mean contacting the association attorney and asking him or her to draft and record the amendment, although in actuality the attorney will probably be aware of the condemnation process from the start and will be the one to initiate the confirming amendment.

If any part of the common elements is acquired by eminent domain, the association must be paid the portion of any condemnation award attributable to common elements.²¹⁷ The CCIOA eminent domain statute does not say what the association is to do with those funds. In contrast, it requires that, unless the declaration provides otherwise, any portion of an award that is attributable to acquisition of a limited common element must be equally divided among the owners of the units to which that limited common element was allocated at the time of acquisition.²¹⁸ When general common elements are taken then, the board has some discretion, although it is circumscribed by the CCIOA statute on surplus funds. Under that statute, unless the declaration provides otherwise, any surplus association funds that remain after payment of or provision for common expenses, and any prepayment of or provision for reserves, must be paid to the unit owners in proportion to their common expense liabilities or credited to them to reduce their future common expense assessments.²¹⁹ However, the board, acting on behalf of the association, can amend the association's annual budget.²²⁰ Whether any amendments are subject to veto by the unit owners, as is the case with a proposed annual budget,²²¹ is unclear. The CCIOA appears to contemplate the possibility when it requires that the notice of a unit owners' meeting must state the items on the agenda, including any budget changes.²²²

The CCIOA states explicitly that the governing board may not act on behalf of the association to terminate the common interest community.²²³ A...