2006 Code of Virginia § 55-79.74:3 - Transfer of special declarant rights

55-79.74:3. Transfer of special declarant rights.

A. No special declarant right may be transferred except by a documentevidencing the transfer recorded in every city and county wherein any portionof the condominium is located. The instrument shall not be effective unlessexecuted by the transferee.

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

1. The transferor shall not be relieved of any obligation or liabilityarising before the transfer and shall remain liable for warranty obligationsimposed upon him by subsection B of 55-79.79. Lack of privity shall notdeprive any unit owner of standing to bring an action to enforce anyobligation of the transferor.

2. If the successor to any special declarant right is an affiliate of adeclarant, the transferor shall also be jointly and severally liable with thesuccessor for any obligation or liability of the successor which relates tothe condominium.

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 shall also be liable for all obligations andliabilities relating to the retained special declarant rights and imposed ona declarant by this chapter or by the condominium instruments.

4. A transferor shall have no liability for any breach of a contractual orwarranty obligation or for any other act or omission, arising from theexercise of a special declarant right by a successor declarant who is not anaffiliate of the transferor.

C. Except as otherwise provided by the mortgage or deed of trust, in case offoreclosure of a mortgage, sale by a trustee under a deed of trust, tax sale,judicial sale or sale under receivership proceedings or the Bankruptcy Codeas codified in Title 11 of the United States Code, of any unit owned by adeclarant or land subject to development rights:

1. A person acquiring title to all the land being foreclosed or sold shall,but only upon his request, succeed to all special declarant rights related tothat land reserved by that declarant, or only to any rights reserved in thedeclaration pursuant to 55-79.66 and held by that declarant to maintainsales offices, management offices, model units and/or signs.

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

For the purposes of this subsection, "development rights" means any rightor combination of rights to expand an expandable condominium, contract acontractable condominium, convert convertible land or convert convertiblespace.

D. Upon foreclosure, sale by a trustee under a deed of trust, tax sale,judicial sale or sale under receivership proceedings or the Bankruptcy Codeas codified in Title 11 of the United States Code of all units and other landin the condominium owned by a declarant (i) that declarant ceases to have anyspecial declarant rights, and (ii) any period of declarant control reservedunder subsection A of 55-79.74 shall terminate, unless the judgment orinstrument conveying title provides for transfer of all special declarantrights held by that declarant to a successor declarant.

E. The liabilities and obligations of any person or persons who succeed toany special declarant right shall be 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 condominium instruments.

2. A successor to any special declarant right, other than a successordescribed in subdivisions 3 and 4 of this subsection, who is not an affiliateof a declarant shall be subject to all obligations and liabilities imposed bythis chapter or the condominium instruments on a declarant, which relate tohis exercise or nonexercise of special declarant rights, or on histransferor, except for (i) misrepresentations by any prior declarant, (ii)warranty obligations as provided in subsection B of 55-79.79 onimprovements made by any previous declarant or made before the condominiumwas created, (iii) breach of any fiduciary obligation by any previousdeclarant or his appointees to the executive organ, or (iv) any liability orobligation imposed on the transferor as a result of the transferor's acts oromissions after the transfer.

3. Unless he is an affiliate of a declarant, a successor to only a rightreserved in the declaration to maintain sales offices, management offices,model units and/or signs shall not exercise any other special declarant rightand shall not be subject to any liability or obligation as a declarant,except the liabilities and obligations arising under Article 4 ( 55-79.86 etseq.) of this chapter as to disposition by that successor.

4. A successor to all special declarant rights held by his transferor who isnot an affiliate of that transferor and who succeeded to those rightspursuant to a deed in lieu of foreclosure or a judgment or instrumentconveying title to units under subsection C hereof may declare his intentionin a recorded instrument to hold those rights solely for transfer to anotherperson. Thereafter, until transferring all special declarant rights to anyperson acquiring title to any unit owned by the successor, or until recordingan instrument permitting exercise of all those rights, that successor may notexercise any of those rights other than any right reserved by his transferorpursuant to subsection A of 55-79.74. Any attempted exercise of thoserights is void. So long as a successor declarant may not exercise specialdeclarant rights under this subsection, he shall not be subject to anyliability or obligation as a declarant other than liability for his acts andomissions relating to the exercise of rights reserved under subsection A of 55-79.74.

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 thecondominium instruments.

G. For the purposes of this section, "affiliate of a declarant" means anyperson who controls, is controlled by, or is under common control with adeclarant. A person controls a declarant if the person (i) is generalpartner, officer, director or employer of the declarant, (ii) directly orindirectly or acting in concert with one or more persons or through one ormore subsidiaries, owns, controls, holds with power to vote, or holds proxiesrepresenting more than twenty percent of the voting interests in thedeclarant, (iii) controls in any manner the election of a majority of thedirectors of the declarant, or (iv) has contributed more than twenty percentof the capital of the declarant. A person is controlled by a declarant if thedeclarant (i) is a general partner, officer, director or employer of theperson, (ii) directly or indirectly or acting in concert with one or moreother persons or through one or more subsidiaries, owns, controls, holds withpower to vote or holds proxies representing more than twenty percent of thevoting interest in the person, (iii) controls in any manner the election of amajority of the directors of the person, or (iv) has contributed more thantwenty percent of the capital of the person. Control does not exist if thepowers described in this paragraph are held solely as security for anobligation and are not exercised.

(1982, c. 545; 1991, c. 497; 1996, c. 977; 2006, c. 646.)