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381.9157 Termination of condominium.
(1)
(2)
(3)
(4)
(5)
(6)
Except in the case of a taking of all the units by eminent domain, a
condominium may be terminated only by agreement of unit owners of units to
which at least eighty percent (80%) of the votes in the association are
allocated, or any larger percentage the declaration specifies. The declaration
may specify a smaller percentage only if all of the units in the condominium are
restricted exclusively to nonresidential uses.
An agreement to terminate a condominium shall be evidenced by the execution
of a termination agreement, or ratification thereof, in the same manner as a
deed, by the requisite number of unit owners. The termination agreement shall
specify a date after which the agreement will be void unless it is recorded
before that date. A termination agreement and all ratifications thereof shall be
recorded in every county in which a portion of the condominium is situated, and
is effective only upon recordation.
In the case of a condominium containing only units having horizontal
boundaries described in the declaration, a termination agreement may provide
that all the common elements and units of the condominium shall be sold
following termination. If, pursuant to the agreement, any real estate in the
condominium is to be sold following termination, the termination agreement
shall set forth the minimum terms of the sale.
In the case of a condominium containing any units not having horizontal
boundaries described in the declaration, a termination agreement may provide
for sale of the common elements, but shall not require that the units be sold
following termination, unless the declaration as originally recorded provided
otherwise or unless all the unit owners consent to the sale.
The association, on behalf of the unit owners, may contract for the sale of real
estate in the condominium, but the contract is not binding on the unit owners
until approved pursuant to subsections (1) and (2) of this section. If any real
estate in the condominium is to be sold following termination, title to that real
estate, upon termination, vests in the association as trustee for the holders of
all interests in the units. Thereafter, the association has all powers necessary
and appropriate to effect the sale. Until the sale has been concluded and the
proceeds thereof distributed, the association continues in existence with all
powers it had before termination. Proceeds of the sale shall be distributed to
unit owners and lienholders as their interests may appear, in proportion to the
respective interests of unit owners as provided in subsection (8) of this section.
Unless otherwise specified in the termination agreement, as long as the
association holds title to the real estate, each unit owner and his or her
successors in interest have an exclusive right to occupancy of the portion of
the real estate that formerly constituted his or her unit. During the period of that
occupancy, each unit owner and his or her successors in interest remain liable
for all assessments and other obligations imposed on unit owners by KRS
381.9101 to 381.9207 or the declaration.
If the real estate constituting the condominium is not to be sold following
termination, title to the common elements and, in a condominium containing
only units having horizontal boundaries described in the declaration, title to all
the real estate in the condominium, vests in the unit owners upon termination
as tenants in common in proportion to their respective interests as provided in
subsection (8) of this section, and liens on the units shift accordingly. While the
tenancy in common exists, each unit owner and his or her successors in
interest have an exclusive right to occupancy of the portion of the real estate
that formerly constituted his or her unit.
(7) Following termination of the condominium, the proceeds of any sale of real
estate, together with the assets of the association, are held by the association
as trustee for unit owners and holders of liens on the units as their interests
may appear. Following termination, creditors of the association holding liens on
the units, which were recorded before termination, may enforce those liens in
the same manner as any lienholder. All other creditors of the association are to
be treated as if they had perfected liens on the units immediately before
termination.
(8) The respective interests of unit owners referred to in subsections (5), (6), and
(7) of this section are as follows:
(a) Except as provided in paragraph (b) of this subsection, the respective
interests of unit owners are the fair market values of their units, limited
common elements, and common element interests immediately before
the termination, as determined by one (1) or more independent appraisers
selected by the association. The decision of the independent appraisers
shall be distributed to the unit owners and becomes final unless
disapproved within thirty (30) days after distribution by unit owners of
units to which twenty-five percent (25%) of the votes in the association
are allocated. The proportion of any unit owner's interest to that of all unit
owners is determined by dividing the fair market value of that unit owner's
unit and common element interest by the total fair market values of all the
units and common elements; and
(b) If any unit or any limited common element is destroyed to the extent that
an appraisal of the fair market value thereof before destruction cannot be
made, the interests of all unit owners are their respective common
element interests immediately before the termination.
(9) Except as provided in subsection (10) of this section, foreclosure or
enforcement of a lien or encumbrance against the entire condominium does
not of itself terminate the condominium, and foreclosure or enforcement of a
lien or encumbrance against a portion of the condominium, other than
withdrawable real estate, does not withdraw that portion from the
condominium. Foreclosure or enforcement of a lien or encumbrance against
withdrawable real estate does not of itself withdraw that real estate from the
condominium, but the person taking title thereto has the right to require from
the association, upon request, an amendment excluding the real estate from
the condominium.
(10) If a lien or encumbrance against a portion of the real estate comprising the
condominium has priority over the declaration, the parties foreclosing the lien
or encumbrance may, upon foreclosure, record an instrument excluding the
real estate subject to that lien or encumbrance from the condominium. The
provisions of this subsection shall not apply to any common elements
constituting a portion of the real estate to the extent the common elements as
described in and subject to the declaration have been developed.
Effective:January 1, 2011
History: Created 2010 Ky. Acts ch. 97, sec. 29, effective January 1, 2011.
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