A. The Condominium Act applies to all condominiums created within this state after the effective date of that act.

B. The provisions of the Building Unit Ownership Act do not apply to condominiums created after the effective date of the Condominium Act. Any provisions of the declaration, bylaws, plats or plans of a condominium created before the effective date of the Condominium Act, which provisions are not expressly authorized by the Building Unit Ownership Act [47-7-1 to 47-7-25, 47-7-26 to 47-7-28 NMSA 1978] but which would have been authorized by the Condominium Act, had it been in effect, are hereby ratified. A condominium subject to the provisions of the Building Unit Ownership Act shall become subject to the Condominium Act and not the Building Unit Ownership Act if a resolution to that effect is approved by a majority of the unit owners and is then recorded as are instruments creating interests in real property. The declaration, bylaws, plats or plans of a condominium created before the effective date of the Condominium Act shall be amended in conformity with the procedures and requirements specified by those instruments and by the Building Unit Ownership Act. If the amendment grants to any person any rights, powers or privileges not expressly authorized by the Building Unit Ownership Act but permitted by the Condominium Act, all correlative obligations, liabilities and restrictions in the Condominium Act also apply to that person.

History: Laws 1982, ch. 27, § 69.

Compiler's notes. — This section is similar to § 1-102 of the Uniform Condominium Act, with the following main exceptions: Subsection A of this section does not set forth the detailed three-step approach of subsection (a) of § 1-102 of the Uniform Condominium Act, as to condominiums created before the effective date of the state Condominium Act; Subsection B of this section expands upon the procedure by which unit owners of a pre-existing condominium may elect to subject their association to the provisions of the state Condominium Act; the state Condominium Act does not include subsection (c) of § 1-102 of the Uniform Condominium Act, which deals with out-of-state condominiums.

COMMISSIONERS' COMMENT

1. The question of the extent to which a state statute should apply to particular condominiums involves two problems: first, the extent to which the statute should require or permit different results for condominiums created before and after the statute becomes effective; and second, whether the statute should impose any or all of its substantive requirements on condominiums located outside the state.

Two conflicting policies are proposed when considering the applicability of this act to "old" and "new" condominiums located in the enacting state. On the one hand, it is desirable, for reasons of uniformity, for the act to apply to all condominiums located in a particular state, regardless of whether the condominium was created before or after adoption of the act in that state. To the extent that different laws apply within the same state to different condominiums, confusion results in the minds of both lenders and consumers. Moreover, because of the inadequacies and uncertainties of condominiums created under old law, and because of the requirements placed on declarants and unit owners' associations by this act which might increase the costs of new condominiums, different markets might tend to develop for condominiums created before and after adoption of the act.

On the other hand, to make all provisions of this act automatically apply to "old" condominiums might violate the constitutional prohibition of impairment of contracts. In addition, aside from the constitutional issue, automatic applicability of the entire act almost certainly would unduly alter the legitimate expectations of some present unit owners and declarants.

Accordingly, the philosophy of this section reflects a desire to maximize the uniform applicability of the act to all condominiums in the enacting state, while avoiding the difficulties raised by automatic application of the entire act to pre-existing condominiums.

2. In carrying out this philosophy with respect to "new" condominiums, the act applies to all condominiums "created" within the state after the act's effective date. This is the effect of the first sentence of subsection (a) [Subsection A]. The first sentence of subsection (b) [Subsection B] makes clear that the provisions of old statutes expressly applicable to condominiums do not apply to condominiums created after the effective date of this act.

"Creation" of a condominium pursuant to this act occurs upon recordation of a declaration pursuant to § 2-101 [47-7B-1 NMSA 1978]; however, the definition of "condominium" in § 1-103(7) [47-7A-3G NMSA 1978] contemplates that de facto condominiums may exist, if the nature of the ownership interest fits the definition, and the act would apply to such a condominium. Any real estate project which includes individually owned units and common elements owned by the unit owners as tenants in common is therefore subject to the act if created within the state after the act's effective date. No intent to subject the condominium to the act is required, and an express intention to the contrary would be invalid and ineffective.

3. The section adopts a novel three-step approach to condominiums created before the effective date of the act. First, certain provisions of the act automatically apply to "old" condominiums, but only prospectively, and only in a manner which does not invalidate provisions of condominium declarations and bylaws valid under "old" law. Second, "old" law remains applicable to previously created condominiums where not automatically displaced by the act. Third, owners of "old" condominiums may amend any provisions of their declaration or bylaws, even if the amendment would not be permitted by "old" law, so long as (a) the amendment is adopted in accordance with the procedure required by "old" law and the existing declaration and bylaws, and (b) the substance of the amendment does not violate this act.

4. Elaboration of the principles described in Comment 3 may be helpful.

First, the second sentence of subsection (a) [Subsection A] provides that the enumerated provisions automatically apply to condominiums created under pre-existing law, even though no action is taken by the unit owners. Many of the sections which do apply should measurably increase the ability of the unit owners to effectively manage the association, and should help to encourage the marketability of condominiums created under early condominium statutes. To avoid possible constitutional challenges, these provisions, as applied to "old" condominiums, apply only to "events and circumstances occurring after the effective date of this act"; moreover, the provisions of this act are subject to the provisions of the instruments creating the condominium, and this act does not invalidate those instruments.

EXAMPLE 1:

Under subsection (a) [Subsection A], § 4-109 [47-7D-9 NMSA 1978] (Resale Certificates) automatically applies to "old" condominiums. Accordingly, unit owners in condominiums established prior to adoption of the act would be obligated after the act's effective date to provide resale certificates to future purchasers of units in "old" condominiums. However, the failure of a unit owner to provide such a certificate to a purchaser who acquired the unit before the effective date of the act would not create a cause of action in the purchaser, because the conveyance was an event occurring before the effective date of the act.

EXAMPLE 2:

Under subsection (a) [Subsection A], § 3-118 [47-7C-18 NMSA 1978] (Association Records) automatically applies to "old" condominiums. As a result, a unit owners' association of an "old" condominium must maintain certain financial records, and all the records of the association "shall be made reasonably available for examination by any unit owner and his authorized agents", even if the "old" law did not require that records be kept, or access provided. If the declaration or bylaws, however, provided that unit owners could not inspect the records of the association without permission of the president of the association, the restriction in the declaration would continue to be valid and enforceable.

Second, the prior laws of the state relating to condominiums are not repealed by this act because those laws will still apply to previously-created condominiums, except when displaced. Some states, such as Connecticut and Florida, have made certain provisions of their condominium statutes automatically applicable to pre-existing condominiums. In certain instances, this attempted retroactive application has raised serious constitutional questions, has caused doubts to arise as to the continued validity of those condominiums, and has created general confusion as to what statutory rules should be applied.

Third, the act seeks to alleviate any undesirable consequences of "old" law, by a limited "opt-in" provision. More specifically, subsection (b) [Subsection B] permits the owners of a pre-existing condominium to take advantage of the salutary provisions of this statute to the extent that can be accomplished consistent with the procedures for amending the condominium instruments as specified in those instruments and in the pre-existing statute.

EXAMPLE 3:

Under most "first generation" condominium statutes, unit owners have no power to relocate boundaries between adjoining units. Under § 2-112 [47-7B-12 NMSA 1978] of this act, unit owners have such power, unless limited by the declaration. While § 2-112 [47-7B-12 NMSA 1978] does not automatically apply to "old" condominiums, if the unit owners of a pre-existing condominium amend their condominium instruments in the manner permitted by the old statute and their existing instruments to permit unit owners to relocate boundaries, this section would validate that amendment, even if it were invalid under old law.

5. In considering the permissible amendments under subsection (b) [Subsection B], it is important to distinguish between the law governing the procedure for amending declarations, and the substance of the amendments themselves. An amendment to the declaration of the condominium created under "old" law, even if permissible under this act, must nevertheless be adopted "in conformity with the procedures and requirements specified" by the original condominium instruments, and in compliance with the old law.

EXAMPLE:

Suppose an "old" condominium declaration and "old" state law both provide that approval by 100% of the unit owners is required to amend the declaration, but the unit owners wish to amend the declaration to provide for only 67% of the unit owners' approval of future amendments, as permitted by § 2-117 [47-7B-17 NMSA 1978] of this act. The amendment would not be valid unless 100% of the unit owners approved it, because of the procedural requirement of the declaration and "old" law. Once approved, however, only 67% would be required for subsequent amendments.

6. The last sentence of subsection (b) [Subsection B] addresses the potential problem of a declarant seeking to take undue advantage of the amendment provisions to assume a power granted by the act without being subject to the act's limitations on the power. The last sentence insures that, if declarants or other persons assume any of the powers and rights which the act grants, the correlative obligations, liabilities, and restrictions of the act also apply to that person, even if the amendment itself does not require that result.

EXAMPLE:

Assume that, pursuant to the provisions of the "old" law, the declarant may exercise control over the association for only three years from the date the condominium is created, but the control may be maintained during that period for so long as declarant owns any units. In the absence of any amendment, a provision in the declaration taking full advantage of the "old" law would be valid and enforceable. Assume further that, in the second year following creation of the condominium in question, this act is adopted. The declarant then properly amends the declaration pursuant to subsection (b) [Subsection B] to extend the period of declarant control for five years from the date of creation. The amendment would effectively extend control for two additional years, because § 3-103(d) [47-7C-3D NMSA 1978] does not limit the number of the years the declarant may specify as a control period.

Nevertheless, if the declarant, before that extended time limit has expired, conveys 75 percent of the units that may ever be a part of the condominium, or fails for two years to exercise development rights or offer units for sale in the ordinary course of business, the period of declarant control would terminate by virtue of the limitations in § 3-103(d) [47-7C-3D NMSA 1978]. That limitation is imposed on the declarant even if the amendment called for retaining control for so long as any units were owned by declarant, and despite the provision in the "old" law permitting such a restriction.

7. The reference in subsection (b) [Subsection B] to "all present statutes expressly applicable to condominiums or horizontal property regimes" is intended to distinguish between a state's condominium enabling statutes and those statutes which apply not only to condominiums but to other forms of real estate, such as taxation statutes or subdivision statutes. Thus, reference to the state's condominium or horizontal property regime enabling statutes should be included here, while references to taxation, subdivision or other statutes which are not restricted solely to condominiums should not be included.

8. In place of the words "declaration, bylaws, and plats and plans", each state should insert the appropriate terminology for those documents under the present state law, e.g., "master deed, rules and regulations", etc.

9. This section does not permit a pre-existing condominium to elect to come entirely within the provisions of the act, disregarding old law. However, the owners of a pre-existing condominium may elect to terminate the condominium under pre-existing law and create a new condominium which would be subject to all the provisions of this act.

10. Subsection (c) reflects the fact that there are practical as well as constitutional limits regarding the extent to which a state should or may extend its jurisdiction to out-of-state transactions. A state may, of course, properly exercise its authority to protect its citizens from false or misleading information relating to condominiums located in other states but sold in that state. However, where sales contracts are executed wholly outside the enacting state and relate to condominiums located outside the state, it seems more appropriate for the courts of the jurisdiction(s) in which the condominium is located and where the transaction occurs to have jurisdiction over the transaction.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments §§ 9, 10, 12, 14 to 17.

31 C.J.S. Estates § 153 et seq.