A. A declarant of a condominium containing conversion buildings and any person in the business of selling real estate for his own account who intends to offer units in such a condominium shall give each of the residential tenants and residential subtenants in possession of a portion of a conversion building notice of the conversion and provide those persons with the disclosure statement no later than sixty days before the tenants and subtenants in possession are required to vacate. The notice shall set forth generally the rights of tenants and subtenants under this section and shall be hand-delivered to the unit or mailed by prepaid United States mail to the tenant and subtenant at the address of the unit or any other mailing address provided by a tenant. If mailed, the notice will be deemed received on the earlier of actual receipt or thirty days after mailing. No tenant or subtenant shall be required to vacate upon shorter notice than that required by the Uniform Owner-Resident Relations Act, Section 47-8-1 NMSA 1978 et seq. Failure to give notice as required by this section is a defense to an action for possession.

B. For sixty days after receipt of the notice described in Subsection A of this section, the person required to give the notice shall offer to convey each unit or proposed unit occupied for residential use to the tenant who leases that unit. If a tenant fails to purchase the unit during the sixty-day period, the offeror may not offer to dispose of an interest in that unit during the following sixty days at a price more favorable to the offeree than the price offered to the tenant. This subsection does not apply to any unit in a conversion building if that unit will be restricted exclusively to nonresidential use or the boundaries of the converted unit do not substantially conform to the dimensions of the residential unit before conversion.

C. If a seller, in violation of Subsection B of this section, conveys a unit to a purchaser for value who has no knowledge of the violation, recordation of the deed conveying the unit extinguishes any right a tenant may have under Subsection B of this section to purchase that unit but does not affect the right of a tenant to recover damages from the seller for a violation of Subsection B of this section.

D. From the date on which the tenant or subtenant accepts the offer pursuant to Subsection B of this section, there shall be no increase in the rental rate applicable to the portion of the conversion building of which the tenant or subtenant is in possession. If the tenant fails or refuses to consummate the purchase, the rent may thereafter be increased.

E. Nothing in this section permits termination of a lease by a declarant in violation of its terms. Any provision in a lease which would permit termination or cancellation of the lease by a declarant prior to its stated term solely because the declarant seeks to convert the real estate to a condominium is unenforceable.

History: Laws 1982, ch. 27, § 64.

Compiler's notes. — This section is similar to § 4-112 of the Uniform Condominium Act, with the following main exceptions: in Subsection A of this section of the state Condominium Act, "disclosure" is substituted for "public offering" and "sixty" is substituted for "120" in the first sentence, "If mailed, the notice will be deemed received on the earlier of actual receipt or thirty days after mailing" is inserted and "shorter notice than that required by the Uniform Owner-Resident Relations Act, Section 47-8-1 NMSA 1978 et seq." is substituted in the next-to-last sentence for language in subsection (a) of § 4-112 of the Uniform Condominium Act prohibiting enforced vacation upon less than 120 days' notice, except for reasons such as nonpayment of rent, waste or conduct interfering with other tenants' peaceful enjoyment of the premises; in Subsection B of this section of the state Condominium Act, "receipt" is substituted for "delivery or mailing" near the beginning of the first sentence, "sixty" is substituted for "[180]," following "during the following" in the second sentence and "or on terms" is deleted following "price" in two places in the second sentence; "if the deed states that the seller has complied with subsection (b)" is deleted following "to purchase that unit" in Subsection C of this section of the state Condominium Act; subsection (d) of § 4-112 of the Uniform Condominium Act, relating to notice of date of conversion constituting notice to vacate, is deleted and Subsection D of this section of the state Condominium Act is substituted therefor; and Subsection E of this section of the state Condominium Act adds the second sentence.

COMMISSIONERS' COMMENT

1. One of the most controversial issues in the field of condominium development relates to conversion of rental buildings to condominiums. Opponents of conversions point out that the frequent result of conversions, which occur principally in large urban areas, is to displace low- and moderate-income tenants and provide homes for more affluent persons able to afford the higher prices which the converted apartments command. Indeed, studies indicate that the burden of conversion displacement falls most frequently on low- and moderate-income and elderly persons. At the same time, the conversion of a building to condominium ownership can lead to a substantial increase in property value, a result which proponents believe can be an important factor in curtailing the problem of declining urban tax bases. Proponents also point out that the conversion of rental units in inner-city areas to individual ownership frequently results in the stabilization of the buildings concerned, thus providing an important technique for use in neighborhood preservation and revitalization. This section, which seeks to balance these competing interests, is based principally on similar provisions set forth in the condominium statutes of Virginia and the District of Columbia.

2. In an attempt to strike a fair balance between the competing interests of rental tenants and prospective owners, subsection (b) [Subsection B] provides the tenant a right for 60 days to purchase the unit which he leases at a price and on terms offered by the declarant. The subsection discourages unreasonable offers by declarants by providing that, if the tenant fails to accept the terms offered, the declarant may not thereafter sell the unit at a lower price or upon more favorable terms to a third person for at least 180 days. However, the declarant is not required to offer residential tenants the right to purchase commercial units or to offer to sell to tenants if the dimensions of their previous apartments have been substantially altered. The reason for this exception is that, if an apartment is subdivided or if two apartments are merged into a single condominium unit, compliance with the requirements of subsection (b) [Subsection B] would be impossible.

3. Jurisdictions with rent control statutes should consider whether amendments to this section are necessary to conform to the procedures or substantive requirements set out in the rent control laws or whether modifications to the rent control laws may be required as a result of the enactment of this section.

4. Except for the restrictions on permissible evictions stated in subsection (a) [Subsection A], this act does not change the law of summary process in a state. As a result, if a tenant refuses to vacate the premises following the 120-day notice, the usual provisions of the state's summary process statutes would apply, while any defenses available to a tenant would also be available.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments §§ 21 to 23.

Validity and construction of law regulating conversion of rental housing to condominiums, 21 A.L.R.4th 1083.

31 C.J.S. Estates § 153 et seq.