71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1727
House Bill 2793
Sponsored by Representative WILLIAMS (at the request of
Association of Oregon Community Development Organization and
Community Development Network)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Regulates offering, sale, purchase, alteration and termination
of real estate cooperatives and conversion of rental property to
cooperatives. Provides exclusions. Specifies rights, duties and
powers of declarant, purchaser, proprietary lessee, associations,
executive boards, lienholders and other parties relating to real
estate cooperatives.
A BILL FOR AN ACT
Relating to real estate cooperatives.
Be It Enacted by the People of the State of Oregon:
{ +
GENERAL PROVISIONS + }
SECTION 1. { + Sections 1 to 77 of this 2001 Act may be cited
as the Real Estate Cooperative Act. + }
SECTION 2. { + (1) Except as provided in this subsection,
sections 1 to 77 of this 2001 Act apply to all cooperatives
created in this state after the effective date of this 2001 Act.
If a cooperative consists only of units restricted to
nonresidential use, or contains less than 12 units and is not
subject to development rights, the cooperative is subject only to
sections 6 and 7 of this 2001 Act unless the declaration provides
that sections 1 to 77 of this 2001 Act are applicable.
(2) Except as provided in subsection (3) of this section,
sections 6, 7, 15, 32, 34 (1)(a) to (f) and (k) to (q), 43, 47,
49, 60 and 67 of this 2001 Act, and section 3 of this 2001 Act to
the extent necessary to interpret those sections, apply to all
cooperatives created in this state before the effective date of
this 2001 Act with respect to events and circumstances occurring
after the effective date of this 2001 Act, but do not invalidate
existing provisions of the cooperative documents of those
cooperatives.
(3) If a cooperative created within this state before the
effective date of this 2001 Act contains no more than 12 units
and is not subject to development rights, the cooperative is
subject only to sections 6 and 7 of this 2001 Act unless the
declaration is amended in conformity with applicable law and the
procedures and requirements of the declaration to take advantage
of the provisions of subsection (4) of this section, in which
case sections 6, 7, 15, 32, 34 (1)(a) to (f) and (k) to (q), 43,
47, 49, 60 and 67 of this 2001 Act apply to that cooperative.
(4) For amendments to the declaration and bylaws of a
cooperative created prior to the effective date of this 2001 Act:
(a) If the result accomplished by the amendment was permitted
by law prior to the effective date of this 2001 Act, the
amendment may be made either in accordance with that law or may
be made under sections 1 to 77 of this 2001 Act. If made under
the law in effect prior to the effective date of this 2001 Act,
that law shall apply to the amendment.
(b) If the result accomplished by the amendment is permitted by
sections 1 to 77 of this 2001 Act and was not permitted by law
prior to the effective date of this 2001 Act, the amendment may
be made under sections 1 to 77 of this 2001 Act.
(5) An amendment to the declaration or bylaws authorized by
subsection (4) of this section to be made under sections 1 to 77
of this 2001 Act must be adopted in conformity with applicable
law and with the procedures and requirements specified by the
declaration and bylaws prior to being amended. If an amendment
grants a person rights, powers or privileges permitted by
sections 1 to 77 of this 2001 Act, all correlative obligations,
liabilities and restrictions in sections 1 to 77 of this 2001 Act
apply to that person.
(6) Sections 1 to 77 of this 2001 Act do not apply to
cooperatives or cooperative interests located outside this state,
but the public offering statement provisions of sections 51 to 58
of this 2001 Act apply to contracts for the disposition thereof
signed in this state by any party unless the contract is exempt
under section 51 (2) of this 2001 Act. Real Estate Agency
regulation under sections 69 to 77 of this 2001 Act applies to an
offering made in this state. + }
SECTION 3. { + As used in sections 1 to 77 of this 2001 Act, a
declaration or the bylaws of an association, unless the context
requires otherwise:
(1) 'Affiliate of a declarant' means a person who controls, is
controlled by or is under common control with a declarant. For
purposes of this subsection:
(a) A person controls a declarant if the person:
(A) Is a general partner, officer, director or employer of the
declarant;
(B) Directly or indirectly holds the power to vote more than 20
percent of the voting interest in the declarant;
(C) Directly or indirectly controls the election of a majority
of the directors of the declarant; or
(D) Contributed more than 20 percent of the capital of the
declarant.
(b) A declarant controls a person if the declarant:
(A) Is a general partner, officer, director or employer of the
person;
(B) Directly or indirectly holds the power to vote more than 20
percent of the voting interest in the person;
(C) Directly or indirectly controls the election of a majority
of the directors of the person; or
(D) Contributed more than 20 percent of the capital of the
person.
(2) 'Allocable interests' means the common expense liability
and the ownership interest and votes in the association allocated
to each cooperative interest.
(3) 'Common elements' means all parts of a cooperative other
than units.
(4) 'Common expense liability' means the share of common
expenses allocated to each cooperative interest under section 19
of this 2001 Act.
(5) 'Common expenses' means expenditures, financial liabilities
and reserves of an association.
(6) 'Conversion building' means a building that, at any time
prior to creation of the cooperative, was wholly or partially
occupied by purchasers or persons occupying by permission of
purchasers.
(7) 'Cooperative' means real estate owned by an association
composed of members that each own and have a right to exclusive
possession of a unit.
(8) 'Cooperative interest' means the ownership interest of an
association member in a cooperative and the possessory interest
of the member under a possessory lease.
(9) 'Declarant' means a person or group that:
(a) As part of a common promotional plan, offers to dispose of
a cooperative interest not previously disposed of;
(b) Reserves or succeeds to any special right of a declarant;
or
(c) Applies for registration of a cooperative under sections 69
to 77 of this 2001 Act.
(10) 'Declaration' means any instruments, however denominated,
that create a cooperative and amendments to those instruments.
(11) 'Development rights' means one or more rights reserved by
a declarant in a declaration to:
(a) Add real estate to a cooperative;
(b) Create units, common elements or limited common elements
within the cooperative;
(c) Subdivide or convert units into common elements; or
(d) Withdraw real estate from a cooperative.
(12) 'Dispose' or 'disposition' means voluntary transfer to a
purchaser of a legal or equitable interest in a cooperative
interest. 'Dispose' or 'disposition' does not include the
transfer or release of a security interest.
(13) 'Executive board' means the body, regardless of name,
designated in the declaration to act on behalf of the
association.
(14) 'Identifying number' means a symbol or address that
identifies a single unit within a cooperative.
(15) 'Leasehold cooperative' means a cooperative in which all
or part of the real estate is subject to a lease, the expiration
or termination of which will terminate or reduce the size of the
cooperative.
(16) 'Limited common element' means a portion of the common
elements allocated by the declaration or by section 14 (2) or (4)
of this 2001 Act for the use of less than all of the units.
(17) 'Master association' means an organization described in
section 31 of this 2001 Act, whether or not the organization is
also an association described in section 33 of this 2001 Act.
(18) 'Offering' means an advertisement, inducement,
solicitation or attempt to encourage a person to acquire an
interest in a cooperative interest other than as security for an
obligation. 'Offering' does not include an advertisement in a
newspaper, periodical or broadcast medium to the general public
if the advertisement states that an offering may be made only in
compliance with applicable laws.
(19) 'Person' means a natural person, corporation, business
trust, estate trust, partnership, association, joint venture,
government, governmental subdivision or agency or other legal or
commercial entity. For a land trust, 'person' means the
beneficiary of the trust instead of the trust or trustee.
(20) 'Proprietary lease' means an agreement with an association
that gives a possessory lessee a possessory interest in a unit.
(21) 'Proprietary lessee' means a person who owns a cooperative
interest other than as security for an obligation. ' Proprietary
lessee' includes a declarant with respect to cooperative
interests or potential cooperative interests to which an
allocation of interest is made under section 19 of this 2001 Act
prior to the cooperative being created and conveyed to another
person.
(22) 'Proprietary lessees' association' or 'association ' means
the association organized under section 33 of this 2001 Act.
(23) 'Purchaser' means a person that by means of a voluntary
transfer acquires or contracts to acquire a cooperative interest
other than as security for an obligation. 'Purchaser ' does not
include a declarant or a person in the business of selling
cooperative interests for the person's own account.
(24) 'Real estate' means a leasehold or other estate or
interest in, over or under land. 'Real estate' includes
structures, fixtures, improvements and interests that by custom,
usage or law pass with the conveyance of land, whether or not
included or described in the instrument of conveyance. 'Real
estate' also includes parcels with or without upper or lower
boundaries and spaces that may be filled with air or water.
(25) 'Residential purpose' means use for dwelling or
recreational purposes.
(26) 'Security interest' means an interest in real or personal
property, created by contract or conveyance, that secures payment
or performance of an obligation.
(27) 'Special declarant rights' means rights reserved for the
benefit of a declarant to:
(a) Complete improvements described in the public offering
statement;
(b) Exercise a development right;
(c) Maintain sales offices, management offices, signs
advertising the cooperative and models;
(d) Use easements through the common elements for the purpose
of making improvements within the cooperative or to potential
cooperative real estate;
(e) Make the cooperative part of a larger cooperative or a
group of cooperatives;
(f) Make the cooperative subject to a master association; or
(g) Appoint or remove any officer of the association, a master
association or executive board member during any period of
declarant control.
(28) 'Time share' means a right to occupy a unit or any of
several units during five or more separated time periods,
including renewal options, during a period of at least five
years, whether or not in connection with an estate or interest in
a cooperative or a portion of a cooperative.
(29) 'Unit' means a physical portion of the cooperative
designated for separate occupancy under a proprietary lease. + }
SECTION 4. { + Except as otherwise provided in sections 1 to
77 of this 2001 Act, the provisions of sections 1 to 77 of this
2001 Act or rights created under those provisions may not be
varied by agreement or waived. A declarant may not use a power of
attorney or other device to evade the limitations or prohibitions
of sections 1 to 77 of this 2001 Act or the declaration. + }
SECTION 5. { + (1) Unless the declaration provides that
cooperative interests are real estate for all purposes, the
cooperative interests are personal property. A cooperative
interest qualifies under ORS 23.240 whether personal or real
property.
(2) Any portion of the common elements for which the declarant
has reserved a development right must be separately taxed and
assessed against the declarant. The declarant is solely
responsible for assessments described under this subsection. + }
SECTION 6. { + (1) A zoning, subdivision, building code or
other real estate use law, ordinance or rule may not prohibit the
cooperative form of ownership or impose any requirement on a
cooperative that would not apply to the development under a
different form of ownership.
(2) Except as provided in subsection (1) of this section,
sections 1 to 77 of this 2001 Act do not invalidate or modify any
zoning, subdivision, building code or other real estate use law,
ordinance or rule. + }
SECTION 7. { + (1) If a unit is acquired by eminent domain, or
if part of a unit is obtained by eminent domain and the remainder
is not usable for a purpose permitted by the declaration, the
award must include compensation to the proprietary lessee for the
value of the lessee's cooperative interest. Unless the decree
declares otherwise, upon acquisition, the cooperative interest's
allocated interests are automatically reallocated to the
remaining cooperative interests. The reallocation is in
proportion to the respective allocated interests of the remaining
cooperative interests prior to the taking. The association shall
promptly prepare, execute and record an amendment to the
declaration reflecting the reallocation. Any remnant of a unit
remaining after part of a unit is taken is a common element.
(2) Except as provided in subsection (1) of this section, if
part of a unit is acquired by eminent domain, the award must
compensate the proprietary lessee for the reduction in value of
the cooperative interest. Unless the decree declares otherwise,
upon acquisition:
(a) The cooperative interest's allocated interests are reduced
in proportion to the reduction in size of the unit or as provided
in the declaration; and
(b) The portion of the allocated interests divested from the
cooperative interest of which the partially acquired unit was a
part are automatically reallocated to that cooperative interest
and the remaining units in proportion to the respective allocated
interests of those cooperative interests prior to the taking. The
partially acquired cooperative interest shall participate in the
reallocation on the basis of the reduced allocated interests.
(3) If part of the common elements is acquired by eminent
domain, the portion of the award attributable to the common
elements taken must be paid to the association. Unless the
declaration provides otherwise, the portion of the award
attributable to the acquisition of a limited common element must
be equally divided among the proprietary lessees of the units to
which the limited element was allocated at the time of
acquisition.
(4) The court decree shall be recorded in every county in which
a portion of the cooperative is located. + }
SECTION 8. { + The principles of law and equity, including the
law of corporations and unincorporated associations, the law of
real property and the law relating to capacity to contract,
principal and agent, eminent domain, estoppel, fraud,
misrepresentation, duress, coercion, mistake, receivership,
substantial performance or other validating or invalidating cause
supplement the provisions of sections 1 to 77 of this 2001 Act
except to the extent inconsistent with sections 1 to 77 of this
2001 Act. + }
SECTION 9. { + Sections 1 to 77 of this 2001 Act shall be
applied and construed so as to effectuate the general purpose of
making the law with respect to cooperatives uniform with that of
other states adopting laws similar to sections 1 to 77 of this
2001 Act. + }
SECTION 10. { + (1) Upon finding that a contract or contract
clause was unconscionable at the time the contract was made, the
court may refuse to enforce the contract, enforce the remainder
of the contract without the unconscionable clause or limit the
application of the unconscionable clause to avoid an
unconscionable result.
(2) If it is claimed or appears to the court that a contract or
a contract clause is or may be unconscionable, the parties shall
be afforded a reasonable opportunity to aid the court in making a
determination by presenting evidence regarding:
(a) The commercial setting of the negotiations;
(b) Whether a party has knowingly taken advantage of the
disability of another party due to physical or mental infirmity,
illiteracy or inability to understand the language of the
agreement or other factors;
(c) The effect and purpose of the contract or clause; and
(d) If the contract or clause is for a sale, any gross
disparity at the time of contracting between the amount charged
for the cooperative interest and the value of the cooperative
interest measured by the price at which similar cooperative
interests were readily obtainable in similar transactions. A
disparity between the contract price and the value of the
cooperative interest measured by the price at which similar
cooperative interests were readily obtainable in similar
transactions does not, by itself, render the contract
unconscionable. + }
SECTION 11. { + Every contract or duty governed by sections 1
to 77 of this 2001 Act imposes an obligation of good faith in
performance or enforcement. + }
SECTION 12. { + (1) The remedies provided in sections 1 to 77
of this 2001 Act shall be liberally administered to the end that
the aggrieved party is put in as good a position as if the other
party had fully performed. Economic, noneconomic or punitive
damages may not be awarded except as specifically provided by
law.
(2) A right or obligation declared under sections 1 to 77 of
this 2001 Act is enforceable by judicial proceeding. + }
{ +
CREATION, ALTERATION AND TERMINATION OF COOPERATIVES + }
SECTION 13. { + A cooperative may be created under sections 1
to 77 of this 2001 Act only by recording a declaration executed
in the same manner as a deed and conveying to the association the
real estate subject to the declaration. The declaration must be
recorded in every county in which a part of the cooperative is
located, indexed in the grantee index in the name of the
cooperative and the association and in the grantor index in the
name of the person executing the declaration. + }
SECTION 14. { + Except as otherwise provided in the
declaration:
(1) If walls, floors or ceilings are designated as boundaries
of a unit, all lath, furring, wallboard, plasterboard, plaster,
paneling, tiles, wallpaper, paint, finished flooring or other
materials constituting part of the finished surfaces thereof are
part of the unit and all other portions of the wall, floor or
ceiling are part of the common elements.
(2) If a chute, duct, flue, wire, conduit, bearing wall,
bearing column or other fixture is partially within and partially
outside the designated boundaries of a unit, the portion serving
only the unit is a limited common element allocated solely to the
unit. The portion serving more than one unit or a portion of the
common elements is a part of the common elements.
(3) Subject to subsection (2) of this section, spaces, interior
partitions and other fixtures and improvements within the
boundaries of a unit are a part of the unit.
(4) Shutters, awning, window boxes, doorsteps, stoops, porches,
balconies, patios and exterior doors and windows or other
fixtures designed to serve a single unit but located outside the
boundaries of the unit are limited common elements allocated
exclusively to the unit. + }
SECTION 15. { + (1) The provisions of the declaration and
bylaws are severable.
(2) The rule against perpetuities may not be applied to defeat
a provision of the declaration, bylaws, rules or regulations
adopted under section 34 (1)(a) of this 2001 Act.
(3) If a conflict arises between the provisions of the
declaration and the bylaws, the declaration prevails except to
the extent that the declaration is inconsistent with sections 1
to 77 of this 2001 Act.
(4) Title to a cooperative interest is not rendered
unmarketable or otherwise affected by an insubstantial failure of
the declaration to comply with sections 1 to 77 of this 2001 Act.
Whether a substantial failure impairs marketability is not
affected by sections 1 to 77 of this 2001 Act. + }
SECTION 16. { + A description of a unit that sets forth the
name of the cooperative, recording information for the
declaration, county in which the cooperative is located and
identifying number of the unit is a legally sufficient
description of the unit and of the rights, obligations and
interests appurtenant to the unit that were created by the
declaration or the bylaws. + }
SECTION 17. { + (1) A declaration must contain:
(a) The names of the cooperative, which must include the term '
cooperative' or be followed by the term 'a cooperative,' and the
names of the association;
(b) The name of each county in which a part of the cooperative
is located;
(c) A legally sufficient description of real estate included in
the cooperative;
(d) A statement of the maximum number of units that the
declarant reserves the right to create;
(e) A description by plats, plans or other means for each unit
created by the declaration, including the unit's identifying
number, size or number of rooms and, if in a building containing
more than one unit, location within the building;
(f) A description of any limited common elements other than
elements described in section 14 (2) and (4) of this 2001 Act;
(g) A description of any real estate, other than real estate
subject to development, that may be allocated subsequently as
limited common elements other than elements described in section
14 (2) and (4) of this 2001 Act, and a statement that the real
estate may be so allocated;
(h) A description of development rights and other special
declarant rights reserved by the declarant, with a legally
sufficient description of the real estate to which each right
applies and the time limit for exercising each right;
(i) If a development right may be exercised with respect to
different parcels of real estate at different times, a statement
to that effect with:
(A) A statement fixing the boundaries of the parcels and
regulating the order in which the parcels are subject to the
exercise of a development right; or
(B) A statement that no assurances are made regarding parcel
size or the timing or order for exercising development rights;
(j) A statement whether the exercise of a development right for
a parcel requires the exercise of other development rights for
other parcels in the remainder of the real estate;
(k) Conditions or limitations under which a right described
under paragraph (h) of this subsection may be exercised or will
lapse;
(L) An allocation to each cooperative interest of the allocated
interests as described in section 19 of this 2001 Act;
(m) Restrictions on:
(A) Use or occupancy of the units;
(B) Alienation of the cooperative interests; and
(C) The amounts for which a cooperative interest may be sold or
the amount that may be received by a proprietary lessee upon
sale, condemnation or casualty loss to the unit or cooperative or
upon termination of the cooperative;
(n) The recording information for recorded easements and
licensures appurtenant to or included in the cooperative or that
a part of the cooperative is or may become subject to by virtue
of a reservation in the declaration; and
(o) Matters required by sections 18 to 20, 26, 27 and 35 (4) of
this 2001 Act.
(2) The declaration may contain any other matters the declarant
deems appropriate. + }
SECTION 18. { + (1) If the expiration or termination of a
lease may terminate the cooperative or reduce the size of the
cooperative, the lease or a memorandum of the lease must be
recorded. The declaration must state:
(a) The recording information for the lease or memorandum;
(b) The date that the lease expires;
(c) A legally sufficient description of the real estate subject
to the lease;
(d) Any right of the proprietary lessee to redeem the reversion
and the manner for exercising that right or a statement that no
such right exists;
(e) Any right of the proprietary lessee to remove improvements
within a reasonable time after the expiration or termination of a
lease, or a statement that no such right exists; and
(f) Any right of the proprietary lessee to renew the lease and
the conditions for exercising that right, or a statement that no
such right exists.
(2) Acquisition of the leasehold interest of a proprietary
lessee by the owner of the reversion or remainder does not merge
with the leasehold and fee simple interests unless the leasehold
interests of all proprietary lessees subject to the reversion or
remainder are acquired.
(3) If the expiration or termination of a lease decreases the
number of units in a cooperative, the allocated interests shall
be reallocated in accordance with section 7 (1) of this 2001 Act
as though the units had been taken by eminent domain.
Reallocations shall be confirmed by an amendment to the
declaration prepared and recorded by the association. + }
SECTION 19. { + (1) The declaration shall allocate an
ownership interest in the association, a fraction or percentage
of the common expenses of the association and a portion of the
votes of the association to each cooperative interest in the
cooperative. The declaration shall state the formulas used to
establish the allocations. The allocations may not discriminate
in favor of cooperative interests owned by the declarant or an
affiliate of the declarant.
(2) If units may be added to or withdrawn from the cooperative,
the declaration must state the formulas to be used to reallocate
the allocated interests among the cooperative interests that are
in the cooperative after the addition or withdrawal.
(3) The declaration may provide:
(a) That different allocations of votes shall be made to the
cooperative interests on particular matters specified in the
declaration;
(b) For cumulative voting only for the purpose of electing
members of the executive board; and
(c) For class voting on specified issues affecting the class if
necessary to protect the interests of the class. A declarant may
not use cumulative voting or class voting to evade a limitation
imposed on the declarant under sections 1 to 77 of this 2001 Act.
Ownership of cooperative interests by the declarant does not
constitute a class.
(4) The sum of the common expense liabilities allocated at any
time to all cooperative interests must equal one if stated as a
fraction or 100 if stated as a percentage. Minor variations due
to rounding are permissible. If a discrepancy exists between an
allocated interest and the result derived from application of the
pertinent formula, the allocated interest prevails.
(5) A purported conveyance, encumbrance, judicial sale or other
voluntary or involuntary transfer of an ownership interest in the
association made without the possessory interest in the unit that
is related to the ownership interest is void.
(6) For purposes of sections 1 to 77 of this 2001 Act, a
declarant is treated as the owner of any cooperative interest or
potential cooperative interest to which allocated interests have
been allocated under this section until that cooperative interest
has been created and conveyed to another person. + }
SECTION 20. { + (1) Except for the limited common elements
described in section 14 (2) and (4) of this 2001 Act, the
declaration must specify the unit or units to which the limited
common element is allocated. The allocation may not be altered
without the consent of the proprietary lessees of the affected
units.
(2) Except as otherwise provided in the declaration, a limited
common element may be reallocated by an amendment to the
declaration executed by the proprietary lessees of the affected
units. The persons executing the amendment shall provide a copy
to the association for recording. The association shall record
the amendment in the names of the parties and the cooperative.
(3) A common element not previously allocated as a limited
common element may not be allocated as a limited common element
except as provided in a declaration provision in accordance with
section 17 (1)(g) of this 2001 Act. The allocation must be made
by amendments to the declaration. + }
SECTION 21. { + (1) To exercise a development right reserved
under section 17 (1)(h) of this 2001 Act, the declarant must
prepare, execute and record an amendment to the declaration. The
amendment to the declaration must assign an identifying number to
each new unit created and, except as provided under subsection
(2) of this section, reallocate the allocated interests among all
cooperative interests. The amendment must describe any common
elements or limited common elements being created. If creating
common elements, the declaration must also designate the unit to
which each limited common element is allocated.
(2) Development rights may be reserved within any real estate
added to the cooperative if the amendment adding the real estate
includes all matters required by applicable provisions of section
17 or 18 of this 2001 Act. This subsection does not extend the
time limit on the exercise of development rights imposed by the
declaration.
(3) If a declarant exercises a development right to subdivide
or convert a unit previously created into additional units or
common elements, or both:
(a) If a declarant converts the unit entirely to common
elements, the amendment to the declaration must reallocate all of
the allocated interests of the cooperative interests for that
unit as if the unit had been taken by eminent domain.
(b) If the declarant subdivides the unit into two or more
units, whether or not any part of the unit is converted to common
elements, the amendment to the declaration must reallocate in any
reasonable manner among the units created by the subdivision, all
of the allocated interests of the cooperative interests of which
the unit being subdivided is a part.
(4) If the declarant provides pursuant to section 17 (1)(h) of
this 2001 Act that all or part of the real estate is subject to
the development right of withdrawal:
(a) If the real estate is subject to withdrawal and the
declaration does not describe separate parcels of real estate
subject to the right, none of the real estate may be withdrawn
after a cooperative interest has been conveyed to a purchaser;
and
(b) If one or more parcels are subject to withdrawal, no parcel
may be withdrawn after a cooperative interest in that parcel has
been conveyed to a purchaser. + }
SECTION 22. { + Subject to the provisions of the declaration,
a proprietary lessee:
(1) May make improvements or alterations to the unit permitted
by law that do not impair the structural integrity or mechanical
systems or lessen the support of any part of the cooperative.
(2) May not change the appearance of the common elements or the
exterior appearance of the unit or of any other part of the
cooperative without permission of the association.
(3) May, after acquiring a cooperative interest in an adjoining
unit or part of an adjoining unit, remove any intervening
partition or create apertures therein, whether or not the
partition is a common element. This subsection does not permit
removals or alterations that are otherwise unlawful or that
impair the structural integrity or mechanical systems or lessen
the support of any part of the cooperative. The removal of
partitions or creation of apertures under this subsection is not
an alteration of boundaries. + }
SECTION 23. { + (1) Subject to the provisions of the
declaration, the boundaries between adjoining units may be
relocated by an amendment to the declaration upon application to
the association by the proprietary lessees of the affected units.
If the proprietary lessees of the adjoining units have specified
a reallocation between their cooperative interests of their
allocated interests, the application must state the proposed
reallocation. Unless the executive board determines within 30
days after the date of application that the reallocations are
unreasonable, the association shall prepare an amendment that:
(a) Identifies the units involved;
(b) States the reallocation;
(c) Is executed by the affected proprietary lessees;
(d) Contains words of conveyance between the affected
proprietary lessees; and
(e) Is, upon recording, indexed in the name of the grantor and
the grantee.
(2) The association shall prepare and record amendments to the
declaration, including any plans necessary to show or describe
the altered boundaries between adjoining units, unit size and
identifying numbers. + }
SECTION 24. { + (1) If the declaration expressly allows, a
unit may be subdivided into two or more units. Subject to the
provisions of the declaration and any applicable codes or other
provisions of law, upon application of the proprietary lessee to
subdivide a unit, the association shall prepare, execute and
record an amendment to the declaration subdividing the unit.
(2) An amendment to the declaration made under this section
must:
(a) Be executed by the proprietary lessee of the unit to be
subdivided;
(b) Assign an identifying number to each unit created; and
(c) Reallocate the allocated interests formerly allocated to
the cooperative interest of which the unit being subdivided is a
part in any reasonable manner prescribed by the proprietary
lessee. + }
SECTION 25. { + If a unit or common element encroaches on
another unit or common element, a valid easement exists for the
encroachment. The easement does not relieve a proprietary lessee
of liability for willful misconduct or relieve a declarant or
other person of liability for failure to adhere to a
representation in the public offering statement. + }
SECTION 26. { + A declarant may maintain sales offices and
models in units or on common elements in the cooperative only if
the declaration provides for that maintenance and specifies the
rights of a declarant with regard to the number, location and
relocation of the model or unit. A sales office, management
office or model not designated a unit by the declaration is a
common element. If a declarant ceases to have an ownership
interest in the association, the declarant also ceases to have
any rights in the office or model unless the office or model is
promptly removed from the cooperative in accordance with a
removal right reserved in the declaration. Subject to the
limitations of the declaration, a declarant may maintain signs on
the common elements advertising the cooperative. The provisions
of this section do not supersede any other state or local
law. + }
SECTION 27. { + Subject to the provisions of the declaration,
a declarant has an easement through the common elements as
reasonably necessary for discharging the declarant's obligations
or exercising special declarant rights, whether created under
sections 1 to 77 of this 2001 Act or the declaration. + }
SECTION 28. { + (1) Except for amendments executed by a
declarant under section 21 of this 2001 Act, by an association
under section 7, 18 (3), 20 (3), 23 (1) or 24 of this 2001 Act or
by certain proprietary lessees under section 20 (2), 23 (1), 24
(2) or 29 (2) of this 2001 Act, or as limited under subsection
(4) of this section, the declaration may be amended only by vote
or agreement of proprietary lessees of cooperative interests that
are allocated at least 67 percent of the votes or a larger
percentage of votes if specified in the declaration. The
declaration may specify a percentage less than 67 percent only if
all units are restricted exclusively to nonresidential use.
(2) An action to challenge the validity of an amendment adopted
by the association pursuant to this section must be brought no
later than one year after the amendment is recorded.
(3) An amendment to a declaration must be recorded in every
county in which a part of the cooperative is located. An
amendment is not effective until recorded. An amendment must be
indexed in the grantee index in the name of the cooperative and
the association and in the grantor index in the name of the
parties executing the agreement.
(4) Except as otherwise expressly provided in sections 1 to 77
of this 2001 Act, an amendment may not create or increase special
declarant rights, increase the number of units, change the
boundaries of a unit, change the allocated interests of a
cooperative interest or change the uses allowed for a unit,
except by unanimous vote of the proprietary lessees.
(5) The president of an association, or an officer of the
association designated for the purpose, shall execute, record and
certify on behalf of the association those amendments to the
declaration that sections 1 to 77 of this 2001 Act require the
association to record. + }
SECTION 29. { + (1) Except for a taking of all units by
eminent domain or for a foreclosure of a security interest
against the entire cooperative that has priority over the
declaration, cooperative ownership may be terminated only by
agreement of the proprietary lessees of cooperative interests
that are allocated at least 80 percent of the votes in the
association or a larger percentage as specified by the
declaration. The declaration may specify a percentage smaller
than 80 percent only if all units in the cooperative are
restricted exclusively to nonresidential uses.
(2) An agreement to terminate must be evidenced by the
execution of a termination agreement, or by the ratification of a
termination agreement in the same manner as a deed by the
required number of proprietary lessees. The termination agreement
must specify a date upon which the agreement shall become void
unless recorded prior to that date. A termination agreement and
ratifications of an agreement must be recorded in every county in
which a part of the cooperative is located. The agreement or
ratification is not effective until recorded.
(3) The association, on behalf of the proprietary lessees, may
contract for the sale of real estate in the cooperative. A sales
contract is not binding until approved under subsections (1) and
(2) of this section. Upon lessee approval of the sale, the
association has all powers necessary and appropriate to carry out
the sale. Until a sale is concluded and the proceeds distributed,
the association continues in existence and retains all powers
held by the association prior to the termination. Except to the
extent that the declaration limits the amount received by a
proprietary lessee upon termination, proceeds of the sale must be
distributed to holders of liens against the association, holders
of liens against the cooperative interests and to proprietary
lessees, to the extent of those interests as provided under
subsections (4) and (5) of this section. Unless otherwise
specified in the termination agreement, so long as the
association holds title to the real estate, each proprietary
lessee and the lessee's successors in interest have the exclusive
right of occupancy in that part of the real estate constituting
the lessee's unit. During the occupancy, the proprietary lessee
and the lessee's successors in interest remain liable for all
assessments or other obligations imposed on proprietary lessees
by sections 1 to 77 of this 2001 Act or by the declaration.
(4) After termination of the cooperative, the assets of the
association and any proceeds from the sale of real estate are
held by the association as trustee for the proprietary lessees
and the holders of liens against the association or against the
cooperative interests, to the extent of those lessee or lien
interests. The declaration may provide that all creditors of the
association have priority over the interest of proprietary
lessees and creditors of proprietary lessees. If the declaration
gives priority to creditors of the association, creditors of the
association holding liens on the cooperative that were perfected
before termination may enforce the liens after termination in the
same manner as other lienholders. Any other creditor of the
association may enforce an interest as if having a lien against
the cooperative perfected immediately prior to termination.
Unless the declaration provided that all creditors of the
association have the same priority:
(a) Upon termination of the cooperative, the lien of a creditor
of the association that was perfected against the association
prior to termination becomes a lien against each cooperative
interest as of the date the lien was perfected;
(b) A creditor of the association other than a creditor under
paragraph (a) of this subsection is treated as though having a
lien against the cooperative interests perfected immediately
before termination;
(c) The amount of a lien described under paragraph (a) or (b)
of this subsection against each cooperative interest is in
proportion to the ratio that the cooperative interest's common
expense liability bears to the common expense liability of all
the cooperative interests;
(d) The lien of each creditor of each proprietary lessee that
was perfected prior to termination continues as a lien against
the proprietary lessee's cooperative interest as of the date the
lien was perfected; and
(e) The assets of the association shall be distributed to all
proprietary lessees and all lienholders against the cooperative
interests in the order described in this section. Creditors of
the association are not entitled to payment from a proprietary
interest in excess of the lien amount against that cooperative
interest.
(5) The respective interests of proprietary lessees referred to
in subsections (3) and (4) of this section are as follows:
(a) Except as provided in paragraph (b) of this subsection, the
respective interests of proprietary lessees are the fair market
value of their cooperative interests immediately before the
termination, as determined by one or more independent appraisers
selected by the association. The decision of the independent
appraisers shall be distributed to the proprietary lessees and
becomes final unless disapproved within 30 days after
distribution by proprietary lessees of cooperative interests
allocated at least 25 percent of the votes in the cooperative.
The proportion of a proprietary lessee's interest to that of all
proprietary lessees is determined by dividing the fair market
value of that proprietary lessee's cooperative interest by the
total fair market value of all of the cooperative interests.
(b) If a unit or limited common element is destroyed to the
extent that an appraisal of the fair market value prior to the
destruction cannot be made, the interest of all proprietary
lessees are their respective ownership interests in the
association immediately prior to termination. + }
SECTION 30. { + The declaration may require that all or a
specified number or percentage of the lenders holding security
interests encumbering the cooperative interests approve specified
actions of the proprietary lessees or the association as a
condition to the effectiveness of those actions. A requirement
for approval may not operate to:
(1) Deny or delegate control over the general administrative
affairs of the association by the proprietary lessees or the
executive board;
(2) Prevent the association or the executive board from
commencing, intervening in or settling a litigation or
proceeding; or
(3) Prevent the association or executive board from receiving
and distributing insurance proceeds except as provided in section
45 of this 2001 Act. + }
SECTION 31. { + (1) Except as otherwise provided in this
section, if the declaration provides that a power described in
section 34 of this 2001 Act is to be exercised by or may be
delegated to a for-profit or nonprofit corporation or an
unincorporated association that exercises those powers on behalf
of one or more cooperatives or for the benefit of proprietary
lessees of one or more cooperatives, the provisions of sections 1
to 77 of this 2001 Act applicable to associations apply to that
corporation or unincorporated association.
(2) Unless a master association is acting in the capacity of an
association described in section 33 of this 2001 Act, the master
association may exercise the powers set forth in section 34
(1)(b) of this 2001 Act only to the extent expressly permitted in
the declarations of the cooperatives that are a part of the
master association or to the extent expressly described in the
delegation of power from the cooperatives to the master
association.
(3) If the declaration of a cooperative provides that the
executive board may delegate certain powers to a master
association, the members of the executive board have no liability
for the acts or omissions of the master association with respect
to the exercise of the powers after the delegation.
(4) The rights and responsibilities of proprietary lessees
regarding the association under sections 35, 40 to 42 and 44 of
this 2001 Act apply in the conduct of the affairs of a master
association only to those persons that elect the board of the
master association, whether or not the persons are otherwise
proprietary lessees.
(5) Notwithstanding the provisions of section 35 (6) of this
2001 Act regarding the election of the executive board of an
association by all proprietary lessees after the period of
declarant control ends, regardless whether the master association
is also an association described in section 33 of this 2001 Act,
the certificate of incorporation or other instrument creating the
master association and the declaration of each cooperative having
powers assigned by the declaration or delegated to the master
association, may provide that the executive board of the master
association must be elected after the period of declarant control
in any of the following ways:
(a) All proprietary lessees of all cooperatives subject to the
master association may elect all members of that executive board.
(b) All members of the executive boards of all cooperatives
subject to the master association may elect all members of that
executive board.
(c) All proprietary lessees of the executive board of each
cooperative subject to the master association may elect specified
members of that executive board. + }
SECTION 32. { + (1) Upon agreement of the proprietary lessees
as provided under subsection (2) of this section, any two or more
cooperatives may be merged or consolidated into a single
cooperative. Unless the merger or consolidation agreement
provides otherwise, the resulting cooperative is, for all
purposes, the legal successor of the preexisting cooperatives and
the operations and activities of all associations of the
preexisting cooperatives shall merge or be consolidated into a
single association holding all powers, rights, obligations,
assets and liabilities of the preexisting cooperatives.
(2) An agreement of two or more cooperatives to merge or
consolidate pursuant to subsection (1) of this section must be
evidenced by an agreement prepared, executed, recorded and
certified by the president of the association of each preexisting
cooperative after approval by proprietary lessees of cooperative
interests that are allocated the percentage of votes in each
cooperative required to terminate that cooperative. The agreement
must be recorded in each county in which a part of the
cooperative is located. An agreement is not effective until
recorded.
(3) A merger or consolidation agreement must provide for the
reallocation of the allocated interests in the new association
among the cooperative interests of the resultant cooperative:
(a) By stating the reallocations or the formulas for the
reallocations; or
(b)(A) By stating the percentage of overall allocated interests
of the new cooperative that are allocated to all the cooperative
interests comprising each of the preexisting cooperatives; and
(B) Providing that the portion of the percentages allocated to
each cooperative interest formerly comprising a part of the
preexisting cooperative must be equal to the percentage of
allocated interests allocated to that cooperative interest by the
declaration of the preexisting cooperative. + }
{ +
MANAGEMENT OF COOPERATIVES + }
SECTION 33. { + The membership of the association shall at all
times consist exclusively of all proprietary lessees, or after
termination of the cooperative, all former proprietary lessees,
entitled to distributions of proceeds under section 29 of this
2001 Act or their heirs, successors or assigns of those lessees.
The association shall be organized as a for-profit or nonprofit
corporation, trust, trustee, unincorporated association or
partnership. + }
SECTION 34. { + (1) Except as provided in subsection (2) of
this section, subject to the provisions of the declaration, an
association may:
(a) Adopt and amend bylaws, rules and regulations;
(b) Adopt and amend budgets for revenues, expenditures and
reserves and collect assessments for common expenses from
proprietary lessees;
(c) Hire and discharge managing agents and other employees,
agents and independent contractors;
(d) Institute, defend or intervene in litigation or
administrative proceedings in the name of the association on
behalf of the association or two or more proprietary lessees on
matters affecting the cooperative;
(e) Make contracts and incur liabilities;
(f) Regulate the use, maintenance, repair, replacement and
modification of common elements;
(g) Cause additional improvements to be made as part of the
common elements;
(h) Acquire, hold, encumber and convey in the name of the
association any right, title or interest to real or personal
property. A part of the cooperative may be conveyed or all or
part of the cooperative subjected to a security interest only
pursuant to section 44 of this 2001 Act;
(i) Grant easements, leases, licenses and concessions through
or over the common interests;
(j) Impose and receive payments, fees or charges for the use,
rental or operation of common elements, other than limited common
elements, and for services provided to proprietary lessees;
(k) Impose charges for late payment of assessments and, after
notice and opportunity for hearing, levy reasonable monetary
penalties for violations of the declaration, bylaws, rules or
regulations of the association;
(L) Impose reasonable charges for the preparation and recording
of amendments to the declaration, resale certificates required
under section 59 of this 2001 Act or statements of unpaid
assessments;
(m) Provide for the indemnification of association officers and
the executive board and maintain directors' and officers'
liability insurance;
(n) Assign association rights to future income, including the
right to receive common expense assessments, to the extent
expressly allowed by the declaration;
(o) Exercise any powers conferred by the declaration or bylaws;
(p) Exercise powers granted by state law to entities having the
form of the association; and
(q) Exercise other powers necessary and proper for the
governance and operation of the association.
(2) The declarant may not impose limitations on the power of
the association to deal with the declarant that are more
restrictive than the limitations imposed on the power of the
association to deal with persons other than the declarant. + }
SECTION 35. { + (1) Except as provided in the declaration, the
bylaws, subsection (2) of this section or other provisions of
sections 1 to 77 of this 2001 Act, the executive board may act in
all instances on behalf of the association. In the performance of
executive board duties, the officers and members are:
(a) If appointed by the declarant, required to exercise the
care required of fiduciaries of the proprietary lessees; or
(b) If elected by the proprietary lessees, required to exercise
ordinary and reasonable care.
(2) The executive board may not act on behalf of the
association to amend the declaration, to terminate the
cooperative, to elect members to the executive board or to
determine the qualifications, powers, duties or terms of office
of executive board members. The executive board may fill
vacancies in the membership of the board for an unexpired term.
(3) No later than 30 days after the adoption of a proposed
budget for the cooperative, the executive board shall provide a
summary of the budget to each proprietary lessee and set the date
for a meeting of the proprietary lessees to consider ratifying
the budget. The board shall set the meeting not less than 14 or
more than 30 days after mailing the summary. Unless the budget is
rejected by a majority of the proprietary lessees, or a larger
percentage if required by the declaration, the budget is ratified
regardless of whether a quorum is present. If the proposed budget
is rejected, the periodic budget last ratified by the proprietary
lessees continues in effect until the proprietary lessees approve
a subsequent budget proposed by the executive board.
(4) Subject to subsection (5) of this section, the declaration
may provide for a period of declarant control of the association.
During the period of declarant control, a declarant or a designee
may appoint and remove the officers and members of the executive
board. Regardless of the period provided in the declaration, a
period of declarant control terminates no later than the earlier
of:
(a) Sixty days after 75 percent of the cooperative interests
that may be created are conveyed to proprietary lessees other
than the declarant;
(b) Two years after all declarants have ceased to offer
cooperative interests for sale in the ordinary course of
business; or
(c) Two years after any development right to add new units was
last exercised. A declarant may voluntarily surrender the right
to appoint and remove officers and members of the executive board
before termination of that period. If the declarant surrenders
the right, the declarant may require, for the duration of the
period of declarant control, that specified actions of the
association or executive board, as described in a recorded
instrument executed by the declarant, be approved by the
declarant prior to becoming effective.
(5) No later than 60 days after conveyance of 25 percent of the
cooperative interests that may be created to proprietary lessees
other than the declarant, at least one board member and not less
than 25 percent of the members of the executive board must be
elected by proprietary lessees other than the declarant. No
later than 60 days after conveyance of 50 percent of the
cooperative interests that may be created to proprietary lessees
other than the declarant, not less than one-third of the members
of the executive board must be elected by proprietary lessees
other than the declarant.
(6) No later than the termination of any period of declarant
control, the proprietary lessees shall elect an executive board
of at least three members, at least a majority of whom must be
proprietary lessees. The executive board shall elect the
officers. The executive board members and officers shall take
office upon election.
(7) Notwithstanding any contrary provision in the declaration
or bylaws, the proprietary lessees may remove a member of the
executive board other than a member appointed by the declarant.
Removal may be with or without cause. A removal requires a
two-thirds vote of all persons present and entitled to vote at a
meeting of the proprietary lessees at which a quorum is
present. + }
SECTION 36. { + (1) A special declarant right created or
reserved under sections 1 to 77 of this 2001 Act may not be
transferred except by an instrument evidencing the transfer and
recorded in every county in which a part of the cooperative is
located. The instrument is not effective unless executed by the
transferee.
(2) Upon transfer of a special declarant right, the liability
of the transferor declarant is as follows:
(a) The transferor is not relieved of an obligation or
liability arising before the transfer. The transferor remains
liable for warranty obligations imposed on the transferor by
sections 1 to 77 of this 2001 Act. Lack of privity does not
deprive a proprietary lessee of standing to maintain an action to
enforce an obligation of the transferor.
(b) If a successor to a special declarant right is an affiliate
of a declarant, the transferor is jointly and severally liable
with the successor for obligations or liabilities of the
successor relating to the cooperative.
(c) If a transferor retains a special declarant right, and
transfers another special declarant right to a successor who is
not an affiliate of the declarant, the transferor is liable for
obligations or liabilities imposed on a declarant by sections 1
to 77 of this 2001 Act or by the declaration relating to the
retained special declarant right and arising after transfer.
(d) A transferor has no liability for an act or omission or a
breach of a contractual or warranty obligation arising from the
exercise of a special declarant interest by a successor declarant
who is not an affiliate of the transferor.
(3) Unless otherwise provided in a security agreement, if there
is a foreclosure of a security agreement, tax sale, judicial
sale, sale by a trustee under a security agreement or sale under
bankruptcy laws of, or receivership proceedings involving, a
cooperative interest owned by a declarant or real estate in a
cooperative subject to development rights, a person acquiring all
of the cooperative interests or real estate being foreclosed or
sold may, upon request of that person, succeed to all special
declarant rights relating to the property held by that declarant,
or only to one or more rights reserved on the declaration and
held by the declarant, to maintain models, sale offices and
signs. The judgment or instrument conveying title must provide
for transfer of only the special declarant rights requested by
the person.
(4) Upon foreclosure, tax sale, judicial sale, sale by a
trustee under a security agreement or sale under bankruptcy laws
of, or receivership proceedings against, all cooperative
interests or real estate in a cooperative owned by the declarant:
(a) The declarant ceases to have special declarant rights; and
(b) The period of declarant control terminates unless the
judgment or instrument conveying title provides for transfer of
all special declarant rights held by the declarant to a successor
declarant.
(5) The liabilities and obligations of a person succeeding to
special declarant rights are as follows:
(a) A successor to a special declarant right that is an
affiliate of a declarant is subject to the obligations or
liabilities imposed on the transferor by sections 1 to 77 of this
2001 Act or by the declaration.
(b) A successor to a special declarant right, other than a
successor described in paragraph (c) or (d) of this subsection,
who is not an affiliate of a declarant is subject to all
obligations and liabilities imposed by sections 1 to 77 of this
2001 Act or by the declaration:
(A) On a declarant that relate to the declarant's exercise or
nonexercise of special declarant rights; or
(B) On the successor's transferor, other than:
(i) Misrepresentation by a previous declarant;
(ii) Warranty obligations or improvements made by a previous
declarant or by the appointees of a previous declarant to the
executive board;
(iii) Breach of a fiduciary obligation by a previous declarant
or by the appointees of a previous declarant to the executive
board; or
(iv) A liability or obligation imposed on the transferor as a
result of the transferor's acts or omissions after the transfer.
(c) A successor to only a right reserved in the declaration to
maintain models, sales offices and signs, if the successor is not
an affiliate of a declarant, may not exercise any other special
declarant right and is not subject to any liability or obligation
as a declarant, other than the obligation to prepare a public
offering statement and any liability arising as a result of that
preparation.
(d) A successor to all special declarant rights held by the
transferor who is not an affiliate of that declarant and who
succeeded to those rights pursuant to a deed or other instrument
of conveyance in lieu of a foreclosure or a judgment or
instrument conveying title to cooperative interests or real
estate subject to development rights under subsection (3) of this
section may declare in a recorded instrument the intention to
hold the rights solely for transfer to another person. After
making that declaration, until transferring all special declarant
rights to a person acquiring title to a cooperative interest or
real estate subject to development rights owned by the successor
or until recording an instrument permitting exercise of all those
rights, the successor may not exercise any of the rights other
than the right held by the transferor of the successor to control
the executive board for the duration of the period of declarant
control. Any attempt by the successor to exercise rights
identified in the recorded declaration of the successor as held
solely for transfer is void. During the time that the successor
may not exercise special declarant control under this section,
the successor is not subject to a liability or obligation as a
declarant, other than liability for acts or omissions of the
successor.
(6) This section does not subject a successor to a special
declarant right to any claim against or other obligations of a
transferor declarant, other than claims and obligations arising
under sections 1 to 77 of this 2001 Act or under the
declaration. + }
SECTION 37. { + The association may terminate without penalty
the following, if entered into before the executive board elected
by the proprietary lessees takes office, upon 90 days notice to
the other party at any time after the executive board elected by
the proprietary lessees takes office:
(1) A management contract, employment contract or lease of
recreational or parking areas or facilities.
(2) A contract or lease between the association and a declarant
or an affiliate of a declarant.
(3) A contract or lease that is not bona fide or that was
unconscionable to the proprietary lessees at the time entered
into under the circumstances then prevailing. This section does
not apply to a proprietary lease or any lease, the termination of
which would terminate or reduce the size of the cooperative,
unless the real estate subject to that lease was included in the
cooperative for the purpose of avoiding the right of the
association to terminate a lease under this section. + }
SECTION 38. { + (1) The bylaws of an association must provide
for:
(a) The number of members of the executive board and the titles
of the officers of the association;
(b) Election by the executive board of a president, treasurer,
secretary and any other officers specified by the bylaws;
(c) The qualifications, powers and duties, terms of office and
manner of electing and removing executive board members and
officers and for filling vacancies;
(d) The powers, if any, the executive board or officers may
delegate to other persons or to a managing agent;
(e) The officers that may prepare, execute, certify and record
amendments to the declaration on behalf of the association; and
(f) The method of amending the bylaws.
(2) Subject to the provisions of the declaration, the bylaws
may provide for any other matters the association deems necessary
and appropriate. + }
SECTION 39. { + (1) Except to the extent provided by the
declaration, subsection (2) of this section or section 45 (7) of
this 2001 Act, the association is responsible for the
maintenance, repair and replacement of the common elements, and
each proprietary lessee is responsible for the maintenance,
repair and replacement of the lessee's unit. Each proprietary
lessee shall allow the association and other proprietary lessees,
and the agents or employes thereof, access through the lessee's
unit as reasonably necessary for the purpose of maintenance,
repair or replacement. If damage is inflicted on the common
elements or on a unit through which access is allowed, the
proprietary lessee responsible for the damage, or the association
if the association is responsible, is liable for prompt repair of
the damage.
(2) In addition to the liability that a declarant or
proprietary lessee has under sections 1 to 77 of this 2001 Act,
the declarant alone is liable for all expenses in connection with
real estate subject to development rights. No other proprietary
lessee and no other part of the cooperative is subject to a claim
for expenses in connection with real estate subject to
development rights. Unless the declaration provides otherwise,
income or proceeds from real estate subject to development rights
inures to the declarant. + }
SECTION 40. { + A meeting of the association must be held at
least once each year. Special meetings of the association may be
called by the president, a majority of the executive board or by
20 percent of the proprietary lessees or a lesser percentage of
the proprietary lessees specified in the bylaws. No less than 10
or more than 60 days in advance of a meeting, the secretary or
other officer specified in the bylaws shall cause notice to be
hand-delivered or sent prepaid by United States mail to the
mailing address of each unit or any other address designated in
writing by the proprietary lessee. The notice of the meeting must
state the time and place of the meeting and the items on the
agenda, including the general nature of any proposed amendment to
the declaration or bylaws, any budget changes and any proposal to
remove a director or officer. + }
SECTION 41. { + Unless the bylaws specify a larger percentage,
a quorum is deemed present throughout any meeting of the
executive board if persons entitled to cast 50 percent of the
votes on that board are present at the beginning of the
meeting. + }
SECTION 42. { + (1) If only one of the multiple proprietary
lessees of a unit is present at a meeting of the association, the
lessee present is entitled to cast all the votes allocated to the
cooperative interest of which the unit is a part. If more than
one of the multiple proprietary lessees are present, the votes
allocated to that cooperative interest may be cast only in
accordance with the agreement of a majority in interest of the
multiple proprietary lessees, unless the declaration expressly
provides otherwise. There is majority agreement if any one of the
multiple proprietary lessees casts the votes allocated to that
cooperative interest without protest being made promptly to the
person presiding over the meeting by any of the other proprietary
lessees of the cooperative interest.
(2) Votes allocated to a cooperative interest may be cast
pursuant to a proxy duly executed by a proprietary lessee. If
there is more than one proprietary lessee of a unit, each
proprietary lessee of the unit may vote or register protest to
the casting of votes by the other proprietary lessees of the unit
through a duly executed proxy. A proprietary lessee may not
revoke a proxy given pursuant to this section except by actual
notice of revocation to the person presiding over a meeting of
the association. A proxy is void if not dated or purporting to be
revocable without notice. A proxy terminates after one year
unless a shorter term is specified on the proxy.
(3) If the declaration requires that votes on specified matters
affecting the cooperative be cast by lessees other than
proprietary lessees of leased units:
(a) The provisions of subsections (1) and (2) of this section
apply to lessees in the same manner as to proprietary lessees;
(b) Proprietary lessees that have leased units to other persons
may not cast votes on the specified matters; and
(c) Lessees are entitled to notice of meetings, access to
records and other rights respecting the specified matters as if
the lessees were proprietary lessees. Proprietary lessees must
also be given notice in the manner provided under section 40 of
this 2001 Act of all meetings at which lessees are entitled to
vote.
(4) Votes allocated to a cooperative interest owned by the
association may not be cast. + }
SECTION 43. { + The association or a proprietary lessee other
than the declarant is not liable for the declarant's torts in
connection with any part of the cooperative that the declarant
has the responsibility to maintain. An action alleging a wrong
done by the association must be brought against the association
and not against a proprietary lessee. If the wrong occurred
during a period of declarant control and the association gives
the declarant reasonable notice of and an opportunity to defend
against the action, the declarant that controlled the association
at the time the wrong occurred is liable to the association or to
a proprietary lessee:
(1) For all tort losses suffered by the association or
proprietary lessee that are not covered by insurance; and
(2) For all costs that the association would not have incurred
but for a breach of contract or other wrongful act or omission. A
declarant liable to an association under this section is also
liable for all litigation expenses, including reasonable attorney
fees, incurred by the association. A statute of limitation
affecting the association's right of action under this section is
tolled until the period of declarant control terminates. A
proprietary lessee is not precluded from bringing an action under
this section by virtue of being a proprietary lessee or a member
or officer of the association. Liens resulting from judgments
against the association are governed by section 49 of this 2001
Act. + }
SECTION 44. { + (1) Part of the cooperative may be conveyed
and all or part of the cooperative may be subjected to a security
interest by the association if agreed to by persons entitled to
cast at least 80 percent of the votes in the association,
including 80 percent of the votes allocated to cooperative
interests not owned by a declarant, or by a larger percentage if
specified in the declaration. If, however, fewer than all the
units or limited common elements are to be conveyed or made
subject to a security interest, all of the proprietary lessees of
those units or the units to which the limited common elements are
allocated must agree in order to convey those units or limited
common elements or to make those units or limited common elements
subject to a security interest. The declaration may specify a
smaller percentage of agreement than specified in this section
only if all of the units are restricted exclusively to
nonresidential uses. Proceeds of a sale are an asset of the
association.
(2) An agreement to convey a part of the cooperative or subject
the cooperative to a security interest must be evidenced by the
execution of an agreement, or ratifications thereof, in the same
manner as a deed, by the requisite number of proprietary lessees.
The agreement must specify a date after which the agreement is
void unless recorded before that date. The agreement and all
ratifications must be recorded in each county where a part of the
cooperative is located. An agreement and ratifications are
effective only when recorded.
(3) A contract by the association, on behalf of the proprietary
lessees, to convey a part of the cooperative or subject the
cooperative to a security interest is not enforceable until
approved as required under subsections (1) and (2) of this
section. After approval, the association has all powers necessary
and appropriate to effect the conveyance or encumbrance,
including the power to execute deeds or other instruments.
(4) A purported conveyance, encumbrance or other voluntary
transfer of the cooperative is void unless made pursuant to this
section or section 29 (3) of this 2001 Act.
(5) A conveyance or encumbrance of the cooperative made
pursuant to this section does not deprive a unit of the unit's
right to access or support. + }
SECTION 45. { + (1) Commencing no later than the date of the
first conveyance of a cooperative interest to a person other than
a declarant, the association shall maintain, to the extent
reasonably available:
(a) Property insurance on the common elements and units
insuring against all risks of direct physical loss commonly
insured against or, for a conversion building, against fire and
extended coverage perils. The total amount of insurance after
application of deductibles shall not be less than 80 percent of
the actual cash value of the insured property on the date the
insurance is purchased and on each renewal date, exclusive of
land, excavations, foundations and other items normally excluded
from property insurance policies; and
(b) Liability insurance, excluding medical payments insurance,
in an amount determined by the executive board, but not less than
any amount specified in the declaration, covering all occurrences
commonly insured against for death, bodily injury and property
damage arising out of or in connection with the use, ownership or
maintenance of the common elements and units.
(2) If the insurance described in subsection (1) of this
section is not reasonably available, the association shall
promptly cause notice of the unavailability to be hand-delivered
or sent prepaid by United States mail to all proprietary lessees.
The declaration may require the association to carry any other
insurance. Whether or not required, the association may carry any
other insurance the association deems appropriate to protect the
association or the proprietary lessees.
(3) Insurance policies carried pursuant to subsection (1) of
this section must provide that:
(a) Each proprietary lessee is an insured person under the
policy with respect to liability arising out of the lessee's
interest in the common elements or membership in the association;
(b) The insurer waives the right to subrogate under the policy
against a proprietary lessee or a member of a proprietary
lessee's household;
(c) An act or omission by a proprietary lessee, unless acting
within the scope of authority on behalf of the association, does
not void the policy and is not a condition of recovery under the
policy; and
(d) If, at the time of a loss under the policy, there is other
insurance in the name of a proprietary lessee covering the same
risk, the association's policy provides the primary insurance.
(4) A loss covered by the property policy under subsection
(1)(a) of this section must be adjusted with the association, but
the insurance proceeds for the loss are payable to any insurance
trustee designated for that purpose or to the association and not
to a mortgagee or a beneficiary under a deed of trust. The
insurance trustee or the association shall hold any insurance
proceeds in trust for the association, proprietary lessees and
lien holders as their interests may appear. Subject to the
provisions of subsections (7) and (8) of this section, the
proceeds must be disbursed first for the repair or restoration of
the damaged property. The association, proprietary lessees and
lien holders may not receive payment of any part of the insurance
proceeds unless there is a surplus of proceeds after the property
has been completely repaired or restored or the cooperative is
terminated.
(5) An insurance policy issued to the association does not
prevent the proprietary lessee from obtaining insurance for the
lessee's own benefit.
(6) An insurer that has issued an insurance policy under this
section shall issue certificates or memoranda of insurance to the
association and, upon written request, to a proprietary lessee or
holder of a security interest. The insurer issuing the policy
under this section may not cancel or refuse to renew the policy
until 30 days after notice of the proposed cancellation or
nonrenewal has been mailed to the last known addresses of the
association, each proprietary lessee and each holder of a
security interest to whom a certificate or memorandum of
insurance has been issued.
(7) The association shall promptly repair a part of the
cooperative for which insurance is required under this section
that is damaged or destroyed unless:
(a) The cooperative is terminated;
(b) Repair or replacement would be illegal under a state or
local law or rule; or
(c) Eighty percent of the proprietary lessees, including every
proprietary lessee of a unit or assigned limited common element
that will not be rebuilt, vote not to rebuild.
(8) The cost of repair or replacement in excess of insurance
proceeds and reserves is a common expense. If the entire
cooperative is not repaired or replaced:
(a) The insurance proceeds attributable to the damaged common
elements must be used to restore the damaged area to a condition
compatible with the remainder of the cooperative; and
(b) Except to the extent that other persons will be
distributees:
(A) The insurance proceeds attributable to units and limited
common elements that are not rebuilt must be distributed to the
proprietary lessees of those units and the proprietary lessees of
units to which those limited common elements were allocated, or
to lienholders, as those interests may appear; and
(B) The remainder of the proceeds must be distributed to all
the proprietary lessees or lienholders, as those interests may
appear, in proportion to the common expense liabilities of all
the cooperative interests. If the proprietary lessees vote not to
rebuild any unit, the allocated interests of the cooperative
interest of which that unit is a part are automatically
reallocated upon the vote as if the unit had been condemned under
section 7 (1) of this 2001 Act. The association shall prepare,
execute and record an amendment to the declaration reflecting the
reallocation. Notwithstanding the provisions of this subsection
and subsection (7) of this section, section 29 of this 2001 Act
governs the distribution of insurance proceeds if the cooperative
is terminated.
(9) The provisions of this section may be varied or waived by a
cooperative if all of the units are restricted to nonresidential
use. + }
SECTION 46. { + (1) Until the association makes a common
expense assessment, the declarant shall pay all common expenses.
After the association first makes an assessment, the association
must make assessments at least annually, based on a budget
adopted at least annually by the association.
(2) Except for assessments under subsections (3) to (5) of this
section, all common expenses must be assessed against all
cooperative interests in accordance with the allocations set
forth in the declaration pursuant to section 19 (1) of this 2001
Act. Any past due common expense assessment or installment
thereof bears interest at a rate established by the association,
not to exceed 18 percent per year.
(3) To the extent required by the declaration:
(a) A common expense associated with the maintenance, repair or
replacement of a limited common element must be assessed against
the cooperative interests for the units to which that limited
common element is assigned, equally or in any other proportion
that the declaration provides;
(b) A common expense or portion thereof benefitting fewer than
all of the units must be assessed exclusively against the
cooperative interests for the units benefitted; and
(c) The costs of insurance must be assessed in proportion to
risk and the costs of utilities must be assessed in proportion to
usage.
(4) Assessments to pay a judgment against the association may
be made only against the cooperative interests in the cooperative
at the time the judgment was entered, in proportion to the common
expense liabilities.
(5) If a common expense is caused by the misconduct of a
proprietary lessee, the association may assess that expense
exclusively against the cooperative interest of that lessee.
(6) If common expense liabilities are reallocated, common
expense assessments and any installment thereof not yet due shall
be recalculated in accordance with the reallocated common expense
liabilities. + }
SECTION 47. { + (1) The association has a lien on a
cooperative interest for any assessment levied against the
cooperative interest or fines imposed against the owner of the
interest from the time the assessment or fine becomes due. Unless
the declaration provides otherwise, fees, charges, late charges,
fines and interest charged under section 34 (1)(k) and (L) of
this 2001 Act are enforceable as assessments under this section.
If an assessment is payable in installments, the full amount of
the assessment is a lien from the time the first installment
becomes due. Upon nonpayment of an assessment, the proprietary
lessee may be evicted in the same manner as provided by law for
an unlawful holdover by a commercial tenant and the lien
foreclosed as provided under this section. If the cooperative
interest is personal property, the association's lien may be
foreclosed in the same manner as a security interest under ORS
chapter 79. If the cooperative interest is real estate, the
association's lien may be foreclosed by judicial sale in the same
manner as a mortgage on real estate or by power of sale as
provided under subsection (9) of this section.
(2) A lien under this section is prior to all other liens and
encumbrances on the cooperative interest except:
(a) Liens and encumbrances on the cooperative that the
association creates, assumes or takes subject to;
(b) The first security interest encumbering only the
cooperative interest and perfected before the date the assessment
being enforced becomes delinquent; and
(c) Liens for real estate taxes and other government
assessments or charges against the cooperative or the cooperative
interest. The lien is also prior to the assessment described in
paragraph (b) of this subsection to the extent of the common
expense assessments based on the periodic budget adopted by the
association that would have become due in the absence of
acceleration during the six months immediately preceding
institution of an action to enforce the lien. This subsection
does not affect the priority of a mechanic's lien, a lien for
construction materials, supplies and labor or a lien for other
assessments made by the association. The lien under this section
is not subject to the provisions of ORS 23.240.
(3) Unless the declaration provides otherwise, if two or more
associations have liens for assessments created at any time on
the same property, the liens have equal priority.
(4) Recording of the declaration constitutes record notice and
perfection of a lien for assessment. No additional recording or
filing of a lien for assessment is required.
(5) A lien for unpaid assessments is extinguished unless
proceedings to enforce the lien are commenced within three years
after the full amount of the assessment becomes due.
(6) This section does not prohibit actions to recover sums for
which subsection (1) of this section creates a lien or prohibit
an association from taking a transfer instead of foreclosure.
(7) A judgment of decree in an action brought under this
section must include an award of costs and reasonable attorney
fees to the prevailing party.
(8) Upon written request, the association shall furnish to a
proprietary lessee a statement setting forth the amount of unpaid
assessments against the lessee's cooperative interest. If the
cooperative interest is real estate, the statement must be in
recordable form. The association must furnish the statement
within 10 business days after receipt of the request. The
statement is binding on the association, the executive board and
every proprietary lessee.
(9) If the cooperative interest is real estate, upon nonpayment
of assessments and association compliance with this section, the
association may sell the cooperative interest. Sale may be at a
public sale or by private negotiation, at any time and place, but
all aspects of the sale, including the method, advertising, time,
place and terms, must be reasonable. The association shall give
to the proprietary lessee and any sublessees of the proprietary
lessee reasonable written notice of the time and place of a
public sale or, if a private sale is intended, notice of the
intention to enter into a contract to sell and the time after
which a private disposition may be made. The association must
send the same notice to any other person who has a recorded
interest in the cooperative interest that would be extinguished
by the sale, but only if the interest was on record seven weeks
before the date specified in the notice as the date of any public
sale or the date after which a private sale may be made. The
notices required by this subsection may be sent to any address
reasonable under the circumstances. Sale may not be held until
five weeks after the sending of the notice. The association may
buy at any public sale and, if the sale is conducted by a
fiduciary or other person not related to the association, at a
private sale.
(10) The proceeds of a sale under subsection (9) of this
section must be applied in the following order:
(a) The reasonable expenses of the sale;
(b) The reasonable expenses of securing possession prior to
sale, holding, maintaining and preparing the cooperative interest
for sale, including the payment of taxes and other government
charges, premiums on hazard and liability insurance and, to the
extent provided for by an agreement between the association and
the proprietary lessee, reasonable attorney fees and other legal
expenses incurred by the association;
(c) Satisfaction of the association's lien;
(d) Satisfaction in the order of priority of any subordinate
claim of record; and
(e) Remittance of any excess to the proprietary lessee.
(11) Unless otherwise agreed, the proprietary lessee is liable
for any deficiency.
(12) If a cooperative interest is sold under subsection (9) of
this section, a good faith purchaser for value acquires the
proprietary lessee's interest in the cooperative interest free of
the association's debt that gave rise to the lien under which the
sale occurred and any subordinate interests, whether or not the
association or other person conducting the sale complied with the
requirements of this section. The person conducting the sale
under subsection (9) of this section shall execute a conveyance
to the purchaser sufficient to convey that cooperative interest,
that states the conveyance is executed by the person after a
foreclosure by power of sale of the association's lien and that
the person has the power to make the sale. Signature and title or
authority of the person signing the conveyance as grantor and a
recital of the facts of nonpayment of the assessment and of the
giving of notices required by subsection (9) of this section are
sufficient proof of the facts recited and the authority of the
person to sign. Further proof of authority is not required even
though the association is named as grantee in the conveyance.
(13) At any time before the association has disposed of the
cooperative interest or entered into a contract for disposition
of the interest under a power of sale, the proprietary lessee or
the holder of any subordinate security interest may cure the
proprietary lessee's default and prevent sale or other
disposition by tendering the performance due under the security
agreement, including any amounts due because of exercise of a
right to accelerate and the reasonable expenses of proceeding to
foreclosure incurred to the time of tender, including reasonable
attorney fees of the creditor. + }
SECTION 48. { + (1) Property of a proprietary lessee other
than the lessee's cooperative interest is not subject to claims
of the association's creditors, whether or not the lessee's
cooperative interest is subject to those claims.
(2) If the association receives notice of an impending
foreclosure on all or part of the association's real estate, the
association shall promptly transmit a copy of the notice to each
proprietary lessee of a unit located within the real estate to be
foreclosed. Failure of the association to transmit the notice
does not affect the validity of the foreclosure. + }
SECTION 49. { + The association shall keep financial records
sufficiently detailed to enable the association to comply with
section 59 of this 2001 Act. The association shall make all
financial and other records readily available for examination by
any proprietary lessee or the lessee's authorized agent. + }
SECTION 50. { + A third party dealing with the association in
the association's capacity as a trustee may assume without
inquiry the existence of the association's trust powers and the
proper exercise of those powers. A third party without actual
knowledge that the association is exceeding or improperly
exercising trustee powers is fully protected in dealing with the
association as if the association properly possessed and
exercised the powers the association claims to exercise. A third
party is not required to ensure the proper application of trust
assets paid or delivered to an association acting in the
association's capacity as trustee. + }
{ +
PROTECTION OF COOPERATIVE PURCHASERS + }
SECTION 51. { + (1) Sections 51 to 68 of this 2001 Act apply
to cooperative interests subject to sections 1 to 77 of this 2001
Act except as provided in this section or as modified or waived
by the purchasers of cooperative interests in a cooperative in
which all units are restricted to nonresidential use.
(2) Preparation or delivery of a public offering statement or
resale certificate is not required for:
(a) A gratuitous disposition of a cooperative interest;
(b) A disposition pursuant to court order;
(c) A disposition by a government or government agency;
(d) A disposition by foreclosure or transfer in lieu of
foreclosure;
(e) A disposition to a person in the business of selling
cooperative interests who intends to offer those cooperative
interests to purchasers; or
(f) A disposition that the purchaser may cancel at any time and
for any reason without penalty. + }
SECTION 52. { + (1) Except as provided in subsection (2) of
this section, prior to the offering of any cooperative interest
to the public, the declarant shall prepare a public offering
statement conforming to the requirements of sections 53 to 56 of
this 2001 Act.
(2) A declarant may transfer responsibility for preparation of
all or part of the public offering statement to a successor
declarant or to a person in the business of selling cooperative
interests that intends to offer cooperative interests in the
cooperative for the person's own account. In the event of a
transfer described in this subsection, the transferor shall
provide the transferee with the information necessary to enable
the transferee to comply with subsection (1) of this section.
(3) A declarant or other person in the business of selling
cooperative interests that offers a cooperative interest for the
person's own account to a purchaser shall deliver a public
offering statement as provided in section 58 (1) of this 2001
Act. The person who prepared all or a part of the public
offering statement is liable under sections 58, 65, 72 and 73 of
this 2001 Act for any false or misleading statement or omission
of material fact with regard to the part of the offering
statement the person prepared. If a declarant did not prepare any
part of a public offering statement that the declarant delivers,
the declarant is not liable for any false or misleading statement
or omission of material fact from the offering statement unless
the declarant had actual knowledge of the statement or omission
or in the exercise of reasonable care should have known of the
statement or omission.
(4) If a unit is part of a cooperative and is part of any other
real estate regime in connection with which delivery of a public
offering statement is required, instead of providing two or more
public offering statements, the declarant or other person may
prepare a single public offering statement that conforms to the
requirements of sections 53 to 56 of this 2001 Act relating to
each regime in which the unit is located and that otherwise
conforms to state requirements. + }
SECTION 53. { + (1) Except as provided in subsection (2) of
this section, a public offering statement must contain or fully
and accurately disclose:
(a) The name and principal address of the declarant and of the
cooperative;
(b) A general description of the cooperative, including to the
extent practicable the types and number of buildings and
amenities that the declarant anticipates including in the
cooperative and the declarant's schedule of commencement and
completion of construction;
(c) The number of units in the cooperative;
(d) Copies and a brief narrative description of the significant
features of the declaration and other recorded covenants,
conditions, restrictions and reservations affecting the
cooperative, the bylaws and any rules or regulations of the
association, copies of contracts and leases to be signed by
purchasers at closing and a brief narrative description of
contracts or leases that will or may be subject to cancellation
by the association under section 37 of this 2001 Act;
(e) Any current balance sheet and, either within or as an
exhibit to the public offering statement, for one year after the
date of the first conveyance to a purchaser, a projected budget
for the association and thereafter the current budget for the
association, a statement of who prepared the budget and a
statement of budget assumptions and inflation factors. The budget
must include:
(A) A statement of the amount or a statement that there is no
amount included in the budget as a reserve for repairs and
replacement;
(B) A statement of reserves other than for repair or
replacement;
(C) The projected common expense assessment by category of
expenditures for the association; and
(D) The projected monthly common expense assessment for each
type of unit;
(f) Any services not reflected on the budget that the declarant
provides or for which the declarant pays the expenses, that the
declarant expects may at a subsequent time become a common
expense of the association and the projected common expense
assessment attributable to each of those services or expenses for
the association and for each type of unit;
(g) Any initial or special fee due from the purchaser at
closing and a description of the purpose and method of
calculating the fee;
(h) A description of liens, defects or encumbrances on or
affecting the title to the cooperative;
(i) A description of financing offered or arranged by the
declarant;
(j) The terms and significant limitations of warranties
provided by the declarant, including statutory warranties and
limitations on the enforcement thereof or on damages;
(k) A statement that:
(A) Within 15 days after receipt of a public offering
statement, a purchaser, before conveyance, may cancel a contract
for purchase of a cooperative interest from the declarant;
(B) If the declarant fails to provide a public offering
statement to a purchaser before conveying a cooperative interest,
the purchaser may recover from the declarant 10 percent of the
sales price of the cooperative interest and 10 percent of the
share, proportionate to the purchaser's common expense liability,
of the indebtedness of the association secured by mortgages or
deeds of trust encumbering the cooperative; and
(C) If a purchaser receives the public offering statement more
than 15 days before signing a contract, the purchaser may not
cancel the contract;
(L) A statement of unsatisfied judgments or pending suits
against the association and the status of pending suits that are
material to the cooperative and of which the declarant has actual
knowledge;
(m) A statement that a deposit made in connection with the
purchase of a cooperative interest will be held in an escrow
account until closing and will be returned to the purchaser if
the purchaser cancels the contract pursuant to section 58 of this
2001 Act, and a statement of the name and address of the escrow
agent;
(n) Restrictions on:
(A) Use and occupancy of the units;
(B) Alienation of the cooperative interests; or
(C) The amount for which a cooperative interest may be sold or
on the amount the proprietary lessee may receive upon sale,
condemnation or casualty loss to the unit or the cooperative or
upon termination of the cooperative;
(o) A description of the insurance coverage provided for the
benefit of the proprietary lessee;
(p) Current or expected fees or charges to be paid by
proprietary lessees for the use of common elements and other
facilities related to the cooperative;
(q) The extent to which financial arrangements have been
provided for completion of all improvements that the declarant is
obligated to build pursuant to section 67 of this 2001 Act;
(r) A brief narrative description of zoning or other land use
requirements affecting the cooperative;
(s) Unusual and material circumstances, features and
characteristics of the cooperative and the units; and
(t) Whether the proprietary lessees are entitled, for federal,
state and local income tax purposes, to a pass-through of
deductions for payments made by the association for real estate
taxes and interest paid to the holder of a security interest
encumbering the cooperative.
(2) If a cooperative composed of not more than 12 units is not
subject to any development rights, and no power is reserved to a
declarant to make the cooperative part of a larger cooperative,
group of cooperatives or other real estate, a public offering
statement is not required to include the information otherwise
required by subsection (1)(i), (j) and (o) to (s) of this section
or the narrative description required under subsection (1)(d) of
this section.
(3) A declarant shall promptly amend the public offering
statement to report any material change in the information
required by this section.
(4) The declarant shall provide a copy of the public offering
statement and all amendments thereto to the association. The
association shall maintain the statement and amendments in the
association records. + }
SECTION 54. { + If the declaration provides that a cooperative
is subject to development rights, the public offering statement
must disclose, in addition to the information required by section
53 of this 2001 Act:
(1) The maximum number of units and the maximum number of units
on an acre that may be created;
(2) A statement of how many, or what percentage of, units that
may be created will be restricted exclusively to residential use
or a statement that no representation is made regarding use
restrictions;
(3) If any of the units that may be built within real estate
subject to development rights are not to be restricted
exclusively to residential use, a statement for each part of the
real estate of the maximum percentage of the real estate area and
the maximum percentage of the floor area of all units that may be
created in that part of the real estate area that is not
restricted exclusively to residential use;
(4) A brief narrative description of development rights
reserved by a declarant, conditions relating to development
rights and limitations on the exercise of the rights;
(5) A statement of the maximum extent to which each cooperative
interest's allocated interests may be changed by the exercise of
a development right described under subsection (4) of this
section;
(6) A statement of the extent to which a building or
improvements that may be erected pursuant to a development right
in any part of the cooperative will be compatible with existing
buildings and improvements in the cooperative in terms of
architectural style, quality of construction and size, or a
statement that no assurances are made in those regards;
(7) General descriptions of all other improvements that may be
made and limited common elements that may be created in any part
of the cooperative pursuant to a development right reserved by
the declarant, or a statement that no assurance is made in that
regard;
(8) A statement of any limitation as to the location of any
building or other improvement that may be made within any part of
the cooperative pursuant to a development right reserved by the
declarant, or a statement that no assurances are made in that
regard;
(9) A statement that any limited common elements created
pursuant to a development right reserved by the declarant will be
of the same general types and sizes as the limited common
elements within other parts of the cooperative or a statement of
the types and sizes planned, or a statement that no assurances
are made in that regard;
(10) A statement that all restrictions in the declaration
affecting use and occupancy of units, and alienation of
cooperative interests, will apply to to any units and cooperative
interests created pursuant to any development right reserved by
the declarant or a statement of differentiations that may be made
as to those units or cooperative interests, or a statement that
no assurances are made in that regard; and
(11) A statement of the extent to which an assurance made
pursuant to this section applies or does not apply if the
development right is not exercised by the declarant. + }
SECTION 55. { + If the declaration provides that ownership of
cooperative interests or occupancy of any unit is or may be in
time shares, the public offering statement shall disclose, in
addition to the information required by section 53 of this 2001
Act:
(1) The number and identity of units in which time shares may
be created;
(2) The total number of time shares that may be created;
(3) The minimum duration of any time shares that may be
created; and
(4) The extent to which the creation of time shares will or may
affect the enforceability of the association's lien for
assessments provided in section 48 of this 2001 Act. + }
SECTION 56. { + (1) In addition to the information required
under section 52 of this 2001 Act, the public offering statement
of a cooperative containing any conversion building must contain:
(a) A statement by the declarant based on a report prepared by
an independent registered architect or registered professional
engineer describing the present condition of all structural
components and mechanical and electrical installations material
to the use and enjoyment of the building;
(b) A statement by the declarant of the expected useful life of
each item reported on in paragraph (a) of this subsection or a
statement that no representation is made in that regard; and
(c) A list of outstanding notices of uncured violations of
building codes or other regulations and the estimated cost of
curing the violations.
(2) This section applies only to buildings containing units
that may be occupied for residential use. + }
SECTION 57. { + If an interest in a cooperative is currently
registered with the Securities and Exchange Commission of the
United States, a declarant satisfies all requirements of sections
1 to 77 of this 2001 Act relating to the preparation of a public
offering statement if the declarant delivers to the purchaser and
files with the Real Estate Agency copies of the public offering
statement filed with the commission. A cooperative interest is
not a security under the provisions of ORS chapter 59. + }
SECTION 58. { + (1) A person required to deliver a public
offering statement pursuant to section 52 (3) of this 2001 Act
shall provide a purchaser with a copy of the public offering
statement and all amendments thereto before conveyance of that
cooperative interest and not later than the date of the contract
of sale. Unless a purchaser is given the public offering
statement more than 15 days before execution of a contract for
the purchase of a cooperative interest, the purchaser, before
conveyance, may cancel the contract within 15 days after first
receiving the public offering statement.
(2) If a purchaser elects to cancel a contract pursuant to
subsection (1) of this section, the purchaser may do so by
hand-delivering notice thereof to the offeror or by mailing
notice thereof by prepaid United States mail to the offeror or
the offeror's agent for service of process. Cancellation is
without penalty. All payments made by the purchaser before
cancellation shall be refunded promptly.
(3) If a person required to deliver a public offering statement
pursuant to section 52 (3) of this 2001 Act fails to provide a
purchaser to whom a cooperative interest is conveyed with the
statement and all amendments thereto, the purchaser, in addition
to any right to damages or other relief, is entitled to receive
from the person an amount equal to 10 percent of the sale price
of the cooperative interest and 10 percent of the share,
proportionate to common expense liability, of the indebtedness of
the association secured by mortgages or deeds of trust
encumbering the cooperative. + }
SECTION 59. { + (1) Except for a sale requiring delivery of a
public offering statement, or exempt under section 51 (2) of this
2001 Act, a proprietary lessee shall furnish to a purchaser
before execution of a contract for sale of a cooperative
interest, or otherwise before a conveyance, a copy of the
declaration, bylaws, rules or regulations of the association and
a certificate that contains:
(a) A statement disclosing the effect on the proposed
disposition of any right of first refusal or other restraint on
the free alienability of the cooperative interest;
(b) A statement setting forth the amount of the monthly common
expense assessment and unpaid common expense or special
assessment currently due and payable from the selling proprietary
lessee;
(c) A statement of any other fees payable by the proprietary
lessee;
(d) A statement of capital expenditures anticipated by the
association for the current and next two succeeding fiscal years;
(e) A statement of the amount of reserves for capital
expenditures and of any part of those reserves designated by the
association for specified projects;
(f) The most recent regularly prepared balance sheet and income
and expense statement, if any, for the association;
(g) The current operating budget of the association;
(h) A statement of any unsatisfied judgments against the
association and the status of any pending suits in which the
association is a defendant;
(i) A statement describing any insurance coverage provided for
the benefit of proprietary lessees;
(j) A statement of whether the executive board has knowledge of
violations of the health or building codes with respect to the
unit, the limited common elements assigned to the unit or a part
of the cooperative; and
(k) Unless no public offering statement was prepared, a
statement that the public offering statement and any amendments
to the statement are records of the association available for
inspection by the purchaser.
(2) Within 10 days after a request by a proprietary lessee, the
association shall furnish a certificate containing the
information necessary to enable the proprietary lessee to comply
with this section. A proprietary lessee providing a certificate
pursuant to subsection (1) of this section is not liable to the
purchaser for any erroneous information provided by the
association and included in the certificate.
(3) A purchaser is not liable for any unpaid assessment or fee
greater than the amount set forth in the certificate prepared by
the association. A proprietary lessee is not liable to a
purchaser for the failure or delay of the association to provide
the certificate in a timely manner, but the purchase contract is
voidable by the purchaser until the earlier of five days after
the certificate has been provided or conveyance. + }
SECTION 60. { + A deposit made in connection with the purchase
or reservation of a cooperative interest from a person required
to deliver a public offering statement pursuant to section 52 (3)
of this 2001 Act shall be placed in escrow and held either in
this state or in the state where the unit that is a part of the
cooperative interest is located. The deposit shall be in an
account designated solely for that purpose by a licensed title
company, attorney, licensed real estate broker, independent
bonded escrow company or an institution whose accounts are
insured by a government agency or instrumentality until:
(1) Delivered to the declarant at closing;
(2) Delivered to the declarant because of the purchaser's
default under a contract to purchase the cooperative interest; or
(3) Refunded to the purchaser. + }
SECTION 61. { + (1) For a sale of a cooperative interest
requiring delivery of a public offering statement pursuant to
section 52 (3) of this 2001 Act, a seller shall:
(a) Before conveying a cooperative interest, record or furnish
to the purchaser releases of all liens affecting the unit that is
a part of that cooperative interest and any limited common
elements assigned to the unit that the purchaser does not
expressly agree to take subject to or assume; or
(b) Provide a surety bond or substitute collateral for, or
insurance against, the lien.
(2) Subsection (1) of this section does not apply to any real
estate that the declarant has a right to withdraw.
(3) Before conveying real estate to the association, the
declarant shall have the real estate released from:
(a) All liens, the foreclosure of which would deprive
proprietary lessees of any right of access to or easement of
support for units; and
(b) All liens on that real estate not described under paragraph
(a) of this subsection unless the public offering statement
describes certain real estate that may by conveyed subject to
liens in specified amounts. + }
SECTION 62. { + (1) A declarant of a cooperative containing
conversion buildings, and any person in the business of selling
cooperative interests for the person's own account that intends
to offer cooperative interests in a cooperative containing
conversion buildings, shall give each of the residential tenants
and any residential subtenant in possession of a part of the
conversion building notice of the conversion and a copy of the
public offering statement no later than 120 days before the
tenants and any subtenants in possession are required to vacate.
The notice must set forth generally the rights of tenants and
subtenants under this section and must be hand-delivered to the
unit or be mailed by prepaid United States mail to the tenant or
subtenant at the address of the unit or any other mailing address
provided by the tenant or subtenant. A tenant or subtenant may
not be required to vacate on less than 120 days' notice, except
by reason of nonpayment of rent, waste or conduct that disturbs
other tenants' peaceful enjoyment of the premises. The terms of
the tenancy may not be altered during the notice period. Failure
to give notice as required by this section is a defense to an
action for possession.
(2) During the 60-day period following delivery or mailing of
the notice described in subsection (1) of this section, the
person required to give notice shall offer to convey the
cooperative interest for each unit or proposed unit occupied for
residential use to the tenant who leases the unit that is part of
that cooperative interest. If a tenant fails to purchase the
cooperative interest during the 60-day period, the offeror may
not offer to dispose of an interest in that cooperative interest
during the following 180 days at a price or on terms more
favorable to the offeree than the price or terms offered to the
tenant. This subsection does not apply to any cooperative
interest in a conversion building if the unit that is part of the
cooperative interest will be restricted exclusively to
nonresidential use or if the boundaries of the converted unit do
not substantially conform to the dimensions of the residential
unit before conversion.
(3) If a seller, in violation of subsection (2) of this
section, conveys a cooperative interest to a purchaser for value
who has no knowledge of the violation, the conveyance
extinguishes the right of the tenant under subsection (2) of this
section to purchase that cooperative interest if the deed states
that the seller has complied with subsection (2) of this section.
The conveyance does not affect the right of a tenant to recover
damages from the seller for violation of subsection (2) of this
section.
(4) If a notice of conversion specifies a date by which a unit
or proposed unit must be vacated and otherwise complies with the
provisions of ORS 105.075, the notice also constitutes a notice
to quit specified by that statute.
(5) This section does not permit a declarant to terminate a
lease in violation of the terms of the lease. + }
SECTION 63. { + (1) Express warranties made by a seller to a
purchaser of a cooperative interest, if relied upon by the
purchaser, are created as follows:
(a) An affirmation of fact or promise that relates to the unit,
unit use or rights appurtenant to a unit, area improvements to
the cooperative that would directly benefit the unit or the right
to use or have the benefit of facilities not located in the
cooperative, creates an express warranty that the unit and
related rights and uses will conform to the affirmation or
promise;
(b) A model or description of the physical characteristics of
the cooperative, including plans and specifications of or for
improvements, creates an express warranty that the cooperative
will conform to the model or description;
(c) A description of the quantity or extent of the real estate
comprising the cooperative, including plats or surveys, creates
an express warranty that the cooperative will conform to the
description, subject to customary tolerances; and
(d) A provision that a buyer of a cooperative interest may put
a unit that is part of that cooperative interest only to a
specified use is an express warranty that the specified use is
lawful.
(2) Neither formal words, such as 'warranty' or ' guarantee,'
or the intention to make a warranty is necessary to create an
express warranty of quality. A statement purporting to be merely
an opinion or commendation of the real estate or the value of the
real estate does not create a warranty.
(3) A conveyance of a cooperative interest transfers to the
purchaser all express warranties of quality made by previous
sellers. + }
SECTION 64. { + (1) A declarant and any person in the business
of selling cooperative interests for the person's own account
warrant that a unit will be in at least as good condition at the
earlier of the time of the conveyance of a cooperative interest
or delivery of possession as the unit was at the time of
contracting, reasonable wear and tear excepted.
(2) A declarant and any person in the business of selling
cooperative interests for the person's own account impliedly
warrant that a unit and the common elements in the cooperative
are suitable for the ordinary uses of real estate of that type
and that any improvements made or contracted for by the declarant
or person, or made by any person before creation of the
cooperative, will be:
(a) Free from defective materials; and
(b) Constructed in accordance with applicable law, according to
sound engineering and construction standards and in a
professional manner.
(3) A declarant and any person selling cooperative interests
for the person's own account warrant to a purchaser of a
cooperative interest for a unit that may be used for residential
use that an existing use, continuation of which is contemplated
by the parties, does not violate applicable law at the earlier of
the time of conveyance or delivery of possession.
(4) Warranties imposed by this section may be excluded or
modified.
(5) For purposes of this section, improvements made or
contracted for by an affiliate of a declarant are made or
contracted for by the declarant.
(6) A conveyance of a cooperative interest transfers to the
purchaser all of the declarant's implied warranties of
quality. + }
SECTION 65. { + If a declarant or other person subject to
sections 1 to 77 of this 2001 Act fails to comply with any
provision in sections 1 to 77 of this 2001 Act or a provision of
the declaration or bylaws, a person or class of persons adversely
affected by the failure to comply has a claim for appropriate
relief. Punitive damages may be awarded for willful failure to
comply with sections 1 to 77 of this 2001 Act. The court may
award reasonable attorney fees. + }
SECTION 66. { + Promotional material may not be displayed or
delivered to prospective purchasers that describes or portrays
improvements that are not in existence unless the description or
portrayal of the improvements in the promotional material is
conspicuously labeled or identified either as 'must be built' or
' need not be built.' + }
SECTION 67. { + (1) The declarant shall complete all
improvements depicted on any site plan or other graphic
representation included in the public offering statement or in
any promotional material distributed by or for the declarant
unless that improvement is labeled 'need not be built. '
(2) The declarant is subject to liability for the prompt repair
and restoration to a condition compatible with the remainder of
the cooperative, of any part of the cooperative affected by the
exercise of rights reserved pursuant to or created by sections 21
to 24, 26 and 27 of this 2001 Act. + }
SECTION 68. { + For a sale of a cooperative interest requiring
delivery of a public offering statement, a contract of sale may
be executed, but no interest in that cooperative interest may be
conveyed except pursuant to section 70 (2) and (3) of this 2001
Act, until the declaration is recorded and the unit that is a
part of that cooperative interest is substantially completed as
evidenced by a recorded certificate of substantial completion
executed by an independent registered architect, registered
professional land surveyor or registered professional engineer or
by issuance of a certificate of occupancy authorized by law. + }
{ +
ADMINISTRATION AND REGISTRATION OF COOPERATIVES + }
SECTION 69. { + A declarant may not offer or dispose of a
cooperative interest intended for residential use unless the
cooperative and the cooperative interest are registered with the
Real Estate Agency. A cooperative consisting of no more than 12
units and that is not subject to development rights is exempt
from this section and section 70 (1) of this 2001 Act. + }
SECTION 70. { + (1) An application for registration must
contain the information required by rule of the Real Estate
Agency. The agency, by rule, may require that the application be
accompanied by a reasonable fee. A declarant shall promptly file
amendments to report a factual or expected material change in a
document or information contained in an application.
(2) If a declarant files with the agency a declaration or
proposed declaration or an amendment or proposed amendment to a
declaration creating units for which the declarant proposes to
convey cooperative interests before the units are substantially
completed in the manner described in section 68 of this 2001 Act,
the declarant shall file with the agency:
(a) A verified statement showing all costs involved in
completing the buildings containing those units;
(b) A verified estimate of the time of completion of
construction of the buildings containing those units;
(c) Satisfactory evidence of sufficient funds to cover all
costs to complete the buildings containing those units;
(d) A copy of the executed construction contract and any other
contracts for the completion of the buildings containing those
units;
(e) A 100 percent payment and performance bond covering the
entire cost of construction of the buildings containing those
units;
(f) Plans for the units;
(g) If purchasers' funds are to be utilized for the
construction of the cooperative, an executed copy of the escrow
agreement with an escrow company or financial institution
authorized to do business within the state that provides that:
(A) Disbursements of purchasers' funds may be made from time to
time to pay for construction of the cooperative, architectural,
engineering, finance and legal fees and other costs for the
completion of the cooperative in proportion to the value of the
work completed by the contractor, as certified by an independent
registered architect or registered professional engineer, on
bills submitted to and approved by the lender of construction
funds or the escrow agent;
(B) Disbursement of the balance of purchasers' funds remaining
after completion of the cooperative shall be made only when the
escrow agent or lender receives satisfactory evidence that:
(i) The period for filing mechanics liens and construction
liens has expired;
(ii) The right to claim mechanics liens and construction liens
has been waived; or
(iii) Adequate provision has been made for satisfaction of any
claimed mechanic's lien or construction lien; and
(C) Any other restriction relating to the retention and
disbursement of purchasers' funds required by the agency applies;
and
(h) Any other materials or information the agency requires by
rule.
(3) The agency may not register the units described in the
declaration or the amendment unless the agency determines, on the
basis of the material submitted by the declarant and any other
information available to the agency, that there is a reasonable
basis to expect that the cooperative interests to be conveyed
will be completed by the declarant following conveyance. + }
SECTION 71. { + (1) The Real Estate Agency shall acknowledge
receipt of an application for registration within five business
days after receipt. Within 60 days after receiving the
application, the agency shall determine whether:
(a) The application and the proposed public offering statement
satisfy the requirements of sections 1 to 77 of this 2001 Act;
(b) The declarations and bylaws comply with sections 1 to 77 of
this 2001 Act; and
(c) The improvements the declarant has undertaken are likely to
be completed as represented.
(2) If the agency makes a favorable determination, the agency
shall promptly issue an order registering the cooperative. If the
agency does not make a favorable decision, unless the declarant
has consented to a delay, the agency shall promptly issue an
order rejecting registration. + }
SECTION 72. { + If the Real Estate Agency determines, after
notice and opportunity for hearing, that a person has
disseminated or caused to be disseminated oral or written false
or misleading promotional materials in connection with a
cooperative, or that a person has otherwise violated a provision
of sections 1 to 77 of this 2001 Act, agency rules or an agency
order, the agency may issue an order to:
(1) Cease and desist from the conduct;
(2) Comply with the provisions of sections 1 to 77 of this 2001
Act, agency rules or an agency order; or
(3) Take affirmative actions to correct conditions resulting
from the conduct or failure to comply. + }
SECTION 73. { + (1) The Real Estate Agency, after notice and
opportunity for hearing, may issue an order revoking the
registration of a cooperative upon determination that a declarant
or an officer or principal of a declarant has:
(a) Failed to comply with a cease and desist order issued by
the agency affecting that cooperative;
(b) Concealed, diverted or disposed of any funds or assets of a
person in a manner impairing rights of purchasers of cooperative
interests in that cooperative;
(c) Failed to perform a stipulation or agreement made to induce
the agency to issue an order relating to that cooperative;
(d) Misrepresented or failed to disclose a material fact in the
application for registration; or
(e) Failed to meet any of the conditions described in sections
70 and 71 of this 2001 Act necessary to qualify for registration.
(2) Except upon consent of the agency, a declarant shall not
convey, cause to be conveyed or contract for the conveyance of a
cooperative interest while an order revoking the registration of
the cooperative is in effect.
(3) The agency may issue a cease and desist order instead of an
order revoking registration of a cooperative. + }
SECTION 74. { + (1) The Real Estate Agency may adopt, amend
and repeal rules and issue orders consistent with sections 1 to
77 of this 2001 Act. The agency may not intervene in the internal
activities of an association except to the extent necessary to
prevent or cure violations of sections 1 to 77 of this 2001 Act.
The agency may prescribe forms and procedures for submitting
information to the agency.
(2) If it appears that a person has engaged in, is engaging in
or is about to engage in an act or practice in violation of
sections 1 to 77 of this 2001 Act or an agency rule or order, the
agency may bring suit in an appropriate circuit court to enjoin
the act or practice or for other appropriate relief. The agency
is not required to post a bond or prove the lack of an adequate
remedy at law.
(3) The agency may intervene in an action or suit involving the
powers or responsibilities of a declarant in connection with a
cooperative for which an application for registration is on file.
(4) The agency may accept grants in aid from any governmental
source and may contract with agencies charged with similar
functions in this state or in other jurisdictions in furtherance
of the objectives of sections 1 to 77 of this 2001 Act.
(5) The agency may cooperate with agencies performing similar
functions in this state or in other jurisdictions to develop
uniform filing procedures, forms, disclosure standards and agency
practices and may develop information that may be useful in the
discharge of agency duties.
(6) In issuing a cease and desist order or an order rejecting
or revoking registration of a cooperative, the agency shall state
the basis for the adverse determination and the underlying facts.
(7) The agency may require bonding, escrow of portions of sale
proceeds or other safeguards prescribed by rule to guarantee
completion of all improvements that a declarant is obligated to
complete pursuant to section 67 of this 2001 Act. + }
SECTION 75. { + (1) The Real Estate Agency may initiate public
or private investigation within or outside this state to
determine whether a representation in a document of information
filed with the agency is false or misleading or whether a person
has engaged in, is engaging in or is about to engage in an
unlawful act or practice.
(2) In the course of an investigation, the agency may subpoena
witnesses and documents, administer oaths and affirmations and
develop evidence. If a person fails to comply with a subpoena or
to answer questions during an investigation, the agency may apply
to an appropriate circuit court for an order, injunction or other
appropriate relief to ensure compliance. The powers described in
this section are in addition to powers granted to administrative
agencies under ORS 183.310 to 183.550. + }
SECTION 76. { + (1) Within 30 days after the annual
anniversary date of an order of registration, the declarant shall
file a report with the Real Estate Agency to update the material
contained in the application for registration and the public
offering statement. This subsection does not relieve the
declarant of the obligation to file amendments under subsection
(2) of this section.
(2) A declarant shall promptly file amendments to the public
offering statement with the agency.
(3) If an annual report reveals that a declarant owns or
controls cooperative interests representing less than 25 percent
of the voting power in an association and that a declarant has no
power to increase the number of units in a cooperative or to
cause a merger or confederation of the cooperative with other
cooperatives, the agency shall issue an order relieving the
declarant of further obligation to file annual reports. After
issuance of an agency order, if the declarant is offering
cooperative interests for sale, the agency has jurisdiction over
the declarant's activities, but has no authority to regulate the
cooperative. + }
SECTION 77. { + (1) The Real Estate Agency may, at any time,
require a declarant to alter or supplement the form or substance
of a public offering statement to ensure adequate and accurate
disclosure to prospective purchasers.
(2) The public offering statement may not be used for a
promotional purpose prior to registration. After registration,
the statement may be used for promotional purposes only if the
entire statement is used. A person may not advertise or represent
that the agency has approved or recommended the cooperative, the
disclosure statement or any documents contained in the
application for registration.
(3) For a cooperative situated entirely outside this state,
notwithstanding minor noncompliance with state law requirements
or rules of the Real Estate Agency, the agency may not reject an
application for registration or a proposed public offering
statement filed with the agency that has been approved by a
regulatory agency in the state where the cooperative is located
and that substantially complies with the provisions of sections 1
to 77 of this 2001 Act. The Real Estate Agency may require
additional documents or information to ensure adequate and
accurate disclosure to prospective purchasers. + }
SECTION 78. { + The unit captions used in this 2001 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2001 Act. + }
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