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Updating an interest ownership act

Published (4/22/2010)
By Mike Cook
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Rep. Gail Kulick Jackson (DFL-Milaca) said a new law is not an overhaul of the Minnesota Common Interest Ownership Act; rather, it is “a 50,000-mile tune-up.”

The act governs condominiums, cooperatives and planned communities, including townhomes. It also mandates certain warranties and disclosure for the benefit of buyers.

The new law, signed April 22 by Gov. Tim Pawlenty, is the culmination of two years of work by the real estate section of the Minnesota State Bar Association, owners, realtors, lenders, county surveyors and developers. It takes effect Aug. 1, 2010.

It clarifies some things and makes changes to address unforeseen situations that came about because of the recent real estate market crisis.

Among its provisions:

• a clearer mandate for the developer to responsibly operate the owners’ association;

• stronger requirements for funding association replacement reserves;

• increased requirement for disclosures to prospective buyers with respect to developer obligations;

• a penalty increase from $1,000 to $5,000 for developers who fail to deliver a disclosure statement to the buyer prior to the closing of a unit;

• removal of the obligation of a developer to turn over to an association the plans, records and warranties that are not under the developer’s control or that will prevent a developer from enforcing the warranties against third parties;

• authorizes declarants to universally license garage stalls and storage lockers to unit owners when units are sold; and

• an owners’ association can obtain lenders’ consent to amendments to the association’s governing documents in a manner consistent with current Fannie Mae and Freddie Mac regulations.

Jackson, who sponsors the law with Sen. Ron Latz (DFL-St. Louis Park), said there have been some problems getting consent of lenders that hold mortgages because they receive the amendment but never respond. Under the law, the lender’s consent will be automatic if no response is given within 60 days.

HF3393*/ SF2985/CH267

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