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Minnesota Community Living 2013-05-06 Ask the Attorney
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Ask the Attorney

By Nigel H. Mendez, Esq., Carlson & Associates, Ltd.

Nigel MendezThis column is comprised of questions that have been posed to me by homeowners, property managers and related professionals regarding legal issues that they have encountered with respect to their associations.

I have been told that even though my association is not governed by MCIOA, we still have to follow certain provisions. Is that correct?

The Minnesota Common Interest Ownership Act (MCIOA) is located in section 515B of the Minnesota Statutes. Minn. Stat. §515B-1.102 provides the gritty details on which associations are governed by the Act, which ones are not and if only certain sections of the Act apply. Although there are exceptions, the easiest way to determine if your association is governed/not governed by MCIOA is with these simple rules:

    1. If the association was created on or after June 1, 1994, it is, by default, governed under MCIOA;

    2. If the association is a condominium, and not a townhome or a single family association, it is, by default, governed under MCIOA regardless of when it was created;

    3. If the association is a single family or a townhome association and it was created before June 1, 1994, it is not governed by MCIOA unless the association votes to amend its declaration and "opt-in” to MCIOA.

Even if your association is not governed by MCIOA, there are indeed some provisions of the Act that would still apply. Minn. Stat. §515B.3-1-102(3) states that even if an association is not governed by MCIOA, three sections must be adhered to. The three sections are:

    1) §515B.1-116, subsections (a),(c),(d), and (e). This section, and the stated subsections, provide the process to record a declaration or bylaws, and any subsequent amendments, with the county.

    2) §515B.4-107. This section pertains to the resale of a unit in an association, by a party other than a declarant. The seller must provide any potential buyer with a copy of the declaration, articles of incorporation, bylaws, rules and regulations (if any) as well as any amendments or supplemental declarations. If the association is part of a master association, the master association documents must also be provided. Finally, a Resale Disclosure Certificate must also be provided. The information that must be contained in and the layout of the Certificate is set forth in §515B.4-107(b). The Certificate provides details on the assessments, maintenance obligations, reserve balances, insurance coverage, etc.

    Although the Certificate is provided to the potential purchaser by the seller, it is the association that is required to complete and sign the Certificate. Within ten days of a request, the association must provide an owner with the completed Certificate. The association may charge a reasonable fee for providing the Certificate, as well as charge for other documents that are requested (declaration, bylaws, etc.). It is important that the association accurately complete the Certificate. §515B.4-107(e) states that the purchaser is not liable for any unpaid assessment that was not set forth in the Certificate. In addition, should the incorrect assessment amount be listed on the Certificate, the purchaser is not required to pay more than the listed amount for the remainder of the year in which the Certificate was issued. Once completed, the Certificate is given to the owner who then provides it to the potential purchaser.

    3) §515B.4-108. This section does not directly apply to associations, but to the potential purchaser of a unit. This section ensures that a potential purchaser has a minimum of ten days to review the association documents and Certificate required to be provided to them under §515B.4-107. If the documents and Certificate are not provided until after the execution of the purchase agreement, the potential purchaser would be able to cancel the agreement within ten days of receiving the information. 

Only these three provisions of MCIOA apply to non-MCIOA associations. I have heard some non-MCIOA associations state that they believed they had to follow the reserve provisions. That is incorrect. The MCIOA reserve provisions (found in §515B.3-1141), while many find them to be great guidelines, are not required to be followed by non-MCIOA associations.

Published by Community Associations Institute — Minnesota Chapter, copyright 2013. All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Minnesota Community Living or CAI–Minnesota Chapter. The information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting, or other professional services by the CAI–Minnesota Chapter, or by Minnesota Community Living, or its authors. Articles, letters to the editor, and advertising may be sent to Chapter Staff Editor Joe Flannigan at joef@cai-mn.com, or at CAI–Minnesota Chapter, 1000 Westgate Dr., Suite 252, St. Paul, MN 55114.

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