2006 Code of Virginia § 55-461 - Transfer of special declarant rights

55-461. Transfer of special declarant rights.

A. No special declarant rights created or reserved under this chapter may betransferred except by an instrument evidencing the transfer recorded in everycity or county in which any portion of the cooperative is located. Theinstrument is not effective unless executed by the transferee.

B. Upon transfer of any special declarant right, the liability of atransferor declarant is as follows:

1. A transferor is not relieved of any obligation or liability arising beforethe transfer and remains liable for warranty obligations imposed upon him bythis chapter. Lack of privity does not deprive any proprietary lessee ofstanding to maintain an action to enforce any obligation of the transferor.

2. If a successor to any special declarant right is an affiliate of adeclarant, the transferor is jointly and severally liable with the successorfor any obligations or liabilities of the successor relating to thecooperative.

3. If a transferor retains any special declarant rights, but transfers otherspecial declarant rights to a successor who is not an affiliate of thedeclarant, the transferor is liable for any obligations or liabilitiesimposed on a declarant by this chapter or by the declaration relating to theretained special declarant rights and arising after the transfer.

4. A transferor has no liability for any act or omission or any breach of acontractual or warranty obligation arising from the exercise of a specialdeclarant right by a successor declarant who is not an affiliate of thetransferor.

C. Unless otherwise provided in a security agreement, in case of foreclosureof a security agreement, tax sale, judicial sale, sale by a trustee under asecurity agreement or sale under receivership proceedings or the BankruptcyCode as codified in Title 11 of the United States Code, of any cooperativeinterests owned by a declarant or of real estate in a cooperative subject todevelopment rights:

1. A person acquiring all the cooperative interests or real estate beingforeclosed or sold shall succeed, but only upon his request, to all specialdeclarant rights related to that property held by that declarant or only toany rights reserved in the declaration pursuant to 55-451 and held by thatdeclarant to maintain models, sales offices and signs.

2. The judgment or instrument conveying title shall provide for transfer ofonly the special declarant rights requested.

D. Upon foreclosure, tax sale, judicial sale, sale by a trustee under asecurity agreement or sale under receivership proceedings or the BankruptcyCode as codified in Title 11 of the United States Code, of all cooperativeinterests or real estate in a cooperative owned by a declarant:

1. The declarant ceases to have any special declarant rights, and

2. The period of declarant control as provided in subsection D of 55-460terminates unless the judgment or instrument conveying title provides fortransfer of all special declarant rights held by that declarant to asuccessor declarant.

E. The liabilities and obligations of a person who succeeds to specialdeclarant rights are as follows:

1. A successor to any special declarant right who is an affiliate of adeclarant is subject to all obligations and liabilities imposed on thetransferor by this chapter or by the declaration.

2. A successor to any special declarant right, other than a successordescribed in paragraphs 3 or 4, who is not an affiliate of a declarant, issubject to all obligations and liabilities imposed by this chapter or thedeclaration:

a. On a declarant which relate to his exercise or non-exercise of specialdeclarant rights; or

b. On his transferor, other than:

(1) Misrepresentations by any previous declarant;

(2) Warranty obligations on improvements made by any previous declarant, ormade before the cooperative was created;

(3) Breach of any fiduciary obligation by any previous declarant or hisappointees to the executive board; or

(4) Any liability or obligation imposed on the transferor as a result of thetransferor's acts or omissions after the transfer.

3. A successor to only a right reserved in the declaration to maintainmodels, sales offices and signs pursuant to 55-451, if he is not anaffiliate of a declarant, may not exercise any other special declarant rightand is not subject to any liability or obligation as a declarant, except theobligation to provide a current public offering statement, any liabilityarising as a result thereof and obligations under Article 5 ( 55-496 etseq.) of this chapter.

4. A successor to all special declarant rights held by his transferor who isnot an affiliate of that declarant and who succeeded to those rights pursuantto a deed or other instrument of conveyance in lieu of foreclosure or ajudgment or instrument conveying title to cooperative interests or realestate subject to development rights under subsection C, may declare hisintention in a recorded instrument to hold those rights solely for transferto another person. Thereafter, until transferring all special declarantrights to any person acquiring title to any cooperative interest or realestate subject to development rights owned by the successor, or untilrecording an instrument permitting exercise of all those rights, thatsuccessor may not exercise any of those rights other than any right held byhis transferor to control the executive board in accordance with theprovisions of subsection D of 55-460 for the duration of any period ofdeclarant control, and any attempted exercise of those rights is void. Solong as a successor declarant may not exercise special declarant rights underthis subsection, he is not subject to any liability or obligation as adeclarant other than liability for his acts and omissions under subsection Dof 55-460.

F. Nothing in this section subjects any successor to a special declarantright to any claims against or other obligations of a transferor declarant,other than claims and obligations arising under this chapter or thedeclaration.

(1982, c. 277.)