Neither the association nor any unit owner except the declarant is liable for that declarant's torts in connection with any part of the condominium which that declarant has the responsibility to maintain. Otherwise, any action alleging a wrong done by the association shall be brought against the association and not against any unit owner. If the wrong occurred during any period of declarant control and the association gives the declarant reasonable notice of and an opportunity to defend against the action, the declarant who then controlled the association shall indemnify the association or any unit owner other than an affiliate of the declarant for all judgments paid which are not covered by insurance, which judgments resulted from a breach of control or other wrongful act or omission on the part of the declarant. Whenever the declarant is liable under this section, the declarant is also liable for all litigation expenses, including reasonable attorney's fees. Any statute of limitation affecting the association's right of indemnification under this section is tolled until the period of declarant control terminates. A unit owner is not precluded from bringing an action contemplated by this section because he is a unit owner or a member or officer of the association. Liens resulting from judgments against the association are governed by Section 50 [47-7C-17 NMSA 1978] of the Condominium Act.

History: Laws 1982, ch. 27, § 44.

Compiler's notes. — This section is similar to § 3-111 of the Uniform Condominium Act, with the following main exceptions: in the third sentence of this section of the state Condominium Act "shall indemnify" is substituted for "is liable to," "other than an affiliate of the declarant" is inserted and "judgments" is substituted for "tort losses"; with minor changes the third sentence of this section of the state Condominium Act encompasses the substance of items (i) and (ii) of the third sentence of § 3-111 of the Uniform Condominium Act; and "incurred by the association" has been deleted at the end of the fourth sentence of this section of the state Condominium Act. Note that this section of the state Condominium Act speaks of "breach of control" near the end of the third sentence; the drafters probably intended to state "breach of contract," as set forth in the comparable provision of § 3-111 of the Uniform Condominium Act.

COMMISSIONERS' COMMENT

1. This section provides that any action in tort or contract arising out of acts or omissions of the association shall be brought against the association and not against the individual unit owners. This changes the law in states where plaintiffs are forced to name individual unit owners as the real parties in interest to any action brought against the association. The subsection also provides that a unit owner is not precluded from bringing an action in tort or contract against the association solely because he is a unit owner or a member or officer of the association.

2. In recognition of the practical control that can (and in most cases will) be exercised by a declarant over the affairs of the association during any period of declarant control permitted pursuant to § 3-103 [47-7C-3 NMSA 1978], subsection (a) [this section] provides that the association or any unit owner shall have a right of action against the declarant for any losses (including both payment of damages and attorneys' fees) suffered by the association or any unit owner as a result of an action based upon a tort or breach of contract arising during any period of declarant control. To assure that the decision to bring such an action can be made by an executive board free from the influence of the declarant, the subsection also provides that any statute of limitations affecting such a right of action by the association shall be tolled until the expiration of any period of declarant control.

3. If a suit based on a claim which accrued during the period of developer control is brought against the association after control of the association has passed from the developer, reasonable notice to, and grant of an opportunity to the developer to defend, are conditions to developer liability. If, however, suit is brought against the association while the developer is still in control, obviously the developer cannot later resist a suit by the association for reimbursement on the grounds of failure to notify.

Compiler's notes. — The reference to subsection (a) of § 3-111 of the uniform act in the first sentence in Comment 2 is obviously incorrect, as § 3-111 has no subsection (a).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments §§ 26, 43, 57, 58.

Liability of condominium association or corporation for injury allegedly caused by condition of premises, 45 A.L.R.3d 1171.

Personal liability of owner of condominium unit to one sustaining personal injuries or property damage by condition of common areas, 39 A.L.R.4th 98.

Condominium association's liability to unit owner for injuries caused by third person's criminal conduct, 59 A.L.R.4th 489.

31 C.J.S. Estates § 153 et seq.