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7D. Condominium Act - Protection of Condominium Purchasers, 47-7D-1 through 47-7D-20
Index
47-7D-1. Requirement for disclosure statement.
47-7D-2. Liability for disclosure statement requirements.
47-7D-3. Disclosure statement; general provisions.
47-7D-4. Condominiums subject to development rights.
47-7D-5. Time shares.
47-7D-6. Condominiums containing conversion buildings.
47-7D-7. Condominium securities.
47-7D-8. Purchaser's right to cancel.
47-7D-9. Resales of units.
47-7D-10. Escrow of deposits.
47-7D-11. Release of liens.
47-7D-12. Conversion buildings.
47-7D-13 to 47-7D-16. Reserved.
47-7D-17. Effect of violations on rights of action; attorney's fees.
47-7D-18. Labeling of promotional material.
47-7D-19. Declarant's obligation to complete and restore.
47-7D-20. Substantial completion of units.
47-7D-1. Requirement for disclosure statement.
A. Except as provided in Subsection B of this section, Sections 53 through 72 of the Condominium Act apply to all units restricted to residential use subject to that act [47-7A-1 to 47-7D-20 NMSA 1978].
B. Neither a disclosure statement nor a resale certificate need be prepared or delivered in the case of:
(1) a gratuitous disposition of a unit;
(2) a disposition pursuant to court order;
(3) a disposition by a government or governmental agency;
(4) a disposition by foreclosure or deed in lieu of foreclosure;
(5) a disposition to a person in the business of selling real estate who intends to offer those units to purchasers;
(6) a disposition that may be canceled at any time and for any reason by the purchaser without penalty;
(7) a disposition to a nonresident alien; or
(8) a disposition of a unit restricted to nonresidential use.
47-7D-2. Liability for disclosure statement requirements.
A. Except as provided in Subsection B of this section, prior to the offering of any interest in a unit to the public, a declarant shall prepare a disclosure statement conforming to the requirements of Sections 55 through 58 [47-7D-3 to 47-7D-6 NMSA 1978] of the Condominium Act.
B. A declarant may transfer responsibility for preparation of all or part of the disclosure statement to a successor declarant or to a person in the business of selling real estate who intends to offer units in the condominium for his own account. In the event of any such transfer, the transferor shall provide the transferee with any information necessary to enable the transferee to fulfill the requirements of Subsection A of this section. The transferor is not liable for insuring that the transferee complies with the requirements of Sections 55 through 58 [47-7D-3 to 47-7D-6 NMSA 1978] of the Condominium Act.
C. Any declarant or other person in the business of selling real estate who offers a unit for his own account to a purchaser shall deliver a disclosure statement in the manner prescribed in Subsection A of Section 60 [47-7D-8 NMSA 1978] of the Condominium Act. The declarant or any other person specified in Subsection B of this section who prepared all or part of the disclosure statement is liable under Sections 60 and 69 [65] [47-7D-8 and 47-7D-17 NMSA 1978] of that act for any false or misleading statement set forth therein or for any omission of material fact therefrom with respect to that portion of the disclosure statement which he prepared. If a declarant did not prepare any part of a disclosure statement that he delivers, he is not liable for any false or misleading statement set forth therein or for any omission of material fact therefrom unless he had actual knowledge of the statement or omission or, in the exercise of reasonable care, should have known of the statement or omission.
D. If a unit is part of a condominium and is part of any other real estate regime in connection with the sale of which the delivery of a disclosure statement is required under the laws of this state, a single disclosure statement conforming to the requirements of Sections 55 through 58 [47-7D-3 to 47-7D-6 NMSA 1978] of the Condominium Act as those requirements relate to all real estate regimes in which the unit is located, and to any other requirements imposed under the laws of this state, may be prepared and delivered in lieu of providing two or more disclosure statements.
47-7D-3. Disclosure statement; general provisions.
A. Except as provided in Subsection B of this section, a disclosure statement must contain or fully and accurately disclose:
(1) the name and principal address of the declarant and of the condominium;
(2) a general description of the condominium, including to the extent possible the types, number and declarant's schedule of commencement and completion of construction of buildings and amenities that the declarant anticipates including in the condominium;
(3) the number of units in the condominium;
(4) copies of the declaration, other than the plats and plans, and any other recorded covenants, conditions, restrictions and reservations affecting the condominium; the bylaws and any rules or regulations of the association; copies of any contracts and leases to be signed by purchasers at closing; and a brief narrative description of any contracts or leases that will or may be subject to cancellation by the association under Section 38 [47-7C-5 NMSA 1978] of the Condominium Act;
(5) any current balance sheet and a projected budget for the association, either within or as an exhibit to the disclosure statement, for one year after the date of the first conveyance to a purchaser, and thereafter the current budget of the association, a statement of who prepared the budget and a statement of the budget's assumptions concerning occupancy and inflation factors. The budget shall include without limitation:
(a) a statement of the amount or a statement that there is no amount included in the budget as a reserve for repairs and replacement;
(b) a statement of any other reserves;
(c) the projected common expense assessment by category of expenditures for the association; and
(d) the projected monthly common expense assessment for each type of unit;
(6) any services not reflected in the budget that the declarant provides, or expenses that he pays, and that he expects may become at any subsequent time a common expense of the association and the projected common expense assessment attributable to each of those services or expenses for the association and for each type of unit;
(7) any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee;
(8) a description of any liens, defects or encumbrances on or affecting the title to the condominium;
(9) a description of any financing offered or arranged by the declarant;
(10) the terms and significant limitations of any warranties provided by the declarant and limitations on the enforcement thereof or on damages;
(11) a statement that:
(a) within seven days after receipt of a disclosure statement a purchaser, before conveyance, may cancel any contract for purchase of a unit from a declarant;
(b) if a declarant fails to provide a disclosure statement to a purchaser before conveying a unit, that purchaser may rescind the purchase within six months from the date of conveyance;
(c) shall set forth the procedures set forth in Subsection C of Section 60 [47-7D-8 NMSA 1978] of the Condominium Act; and
(d) if a purchaser receives the disclosure statement more than seven days before signing a contract to purchase a unit, he cannot cancel the contract;
(12) a statement of any unsatisfied judgments or pending suits against the association and the status of any pending suits material to the condominium of which a declarant has actual knowledge;
(13) a statement that any deposit made in connection with the purchase of a unit shall be held in an escrow account until closing and shall be returned to the purchaser if the purchaser cancels the contract pursuant to Section 60 [47-7D-8 NMSA 1978] of the Condominium Act, together with the name and address of the escrow agent;
(14) any restraints on alienation of any portion of the condominium;
(15) a description of the insurance coverage provided for the benefit of unit owners;
(16) any current or expected fees or charges to be paid by unit owners for the use of the common elements and other facilities related to the condominium; and
(17) the extent to which financial arrangements have been provided for completion of all improvements labeled "MUST BE BUILT" pursuant to Section 21 [47-7B-9 NMSA 1978] of the Condominium Act.
B. If a condominium composed of not more than twenty-five units is not subject to any development rights and no power is reserved to a declarant to make the condominium part of a larger condominium, group of condominiums or other real estate, a public offering statement may but need not include the information otherwise required by Paragraphs (9), (10) and (15) through (17) of Subsection A of this section.
C. A declarant promptly shall amend the disclosure statement to report any material change in the information required by this section.
47-7D-4. Condominiums subject to development rights.
If the declaration provides that a condominium is subject to any development rights, the disclosure statement shall disclose, in addition to the information required by Section 55 [47-7D-3 NMSA 1978] of the Condominium Act:
A. the maximum number of units and the maximum number of units per acre that may be created;
B. a statement of how many or what percentage of the units which may be created shall be restricted exclusively to residential use, or a statement that no representations are made regarding use restrictions;
C. if any of the units that may be built within real estate subject to development rights are not to be restricted exclusively to residential use, a statement, with respect to each portion of that real estate, of the maximum percentage of the real estate areas and the maximum percentage of the floor areas of all units that may be created therein, that are not restricted exclusively to residential use;
D. a brief narrative description of any development rights reserved by a declarant and of any conditions relating to or limitations upon the exercise of development rights;
E. a statement of the maximum extent to which each unit's allocated interests may be changed by the exercise of any development right described in Subsection C of this section;
F. a statement of the extent to which any buildings or other improvements that may be erected pursuant to any development right in any part of the condominium shall be compatible with existing buildings and improvements in the condominium in terms of architectural style, quality of construction and size, or a statement that no assurances are made in that regard;
G. general descriptions of all other improvements that may be made and limited common elements that may be created within any part of the condominium pursuant to any development right reserved by the declarant, or a statement that no assurances are made in that regard;
H. a statement of any limitations as to the locations of any building or other improvement that may be made within any part of the condominium pursuant to any development right reserved by the declarant, or a statement that no assurances are made in that regard;
I. a statement that any limited common elements created pursuant to any development right reserved by the declarant shall be of the same general types and sizes as the limited common elements within other parts of the condominium, or a statement of the types and sizes planned, or a statement that no assurances are made in that regard;
J. a statement that all restrictions in the declaration affecting use, occupancy and alienation of units shall apply to any units created pursuant to any development right reserved by the declarant, or a statement of any differentiations that may be made as to those units, or a statement that no assurances are made in that regard; and
K. a statement of the extent to which any assurances made pursuant to this section apply or do not apply in the event that any development right is not exercised by the declarant.
If the declaration provides that ownership or occupancy of any units is or may be in time shares, the disclosure statement shall disclose, in addition to the information required by Section 55 [47-7D-3 NMSA 1978] of the Condominium Act:
A. a description of the time share interest that may be created;
B. the number and identity of units in which time shares may be created;
C. the total number of time shares that may be created;
D. the minimum duration of any time shares that may be created; and
E. the extent to which the creation of time shares will or may affect the enforceability of the association's lien for assessments provided in Section 49 [47-7C-16 NMSA 1978] of the Condominium Act.
47-7D-6. Condominiums containing conversion buildings.
A. The disclosure statement of a condominium containing any conversion building shall contain, in addition to the information required by Section 54 [55] [47-7D-3 NMSA 1978] of the Condominium Act:
(1) a statement by the declarant, based on a report prepared by a licensed architect or engineer, describing the present condition of all structural components and mechanical and electrical installations material to the use and enjoyment of the building; and
(2) a list of any outstanding notices of uncured violations of building codes or other municipal regulations, together with the estimated cost of curing those violations.
B. Paragraph (1) of Subsection A of this section applies only to buildings containing more than fifteen units that shall be occupied for residential use.
47-7D-7. Condominium securities.
If an interest in a condominium is currently registered with the securities and exchange commission of the United States, a declarant satisfies all requirements relating to the preparation of a disclosure statement of the Condominium Act if he delivers to the purchaser a copy of the prospectus approved by the securities and exchange commission.
47-7D-8. Purchaser's right to cancel.
A. A person required to deliver a disclosure statement pursuant to Subsection C of Section 54 [47-7D-2
NMSA 1978] of the Condominium Act shall provide a purchaser of a unit with a copy of the disclosure statement and all amendments thereto before conveyance of that unit and not later than the date of any contract of sale. Unless a purchaser is given the disclosure statement more than seven days before execution of a contract for the purchase of a unit, the purchaser, before conveyance, may cancel the contract within seven days after first receiving the disclosure statement.
B. If a purchaser elects to cancel a contract pursuant to Subsection A of this section, he may do so by hand- delivering notice thereof to the offerer or by mailing notice thereof by prepaid United States mail to the offerer or to his agent for service of process. Cancellation is without penalty, and all payments made by the purchaser before cancellation shall be refunded promptly.
C. If a person required to deliver a disclosure statement pursuant to Subsection C of Section 54 of the Condominium Act fails to provide a purchaser to whom a unit is conveyed with that disclosure statement and all amendments thereto as required by Subsection A of this section, the purchaser is entitled to rescind the purchase within six months from the date of conveyance upon delivery to the seller of a deed subject to no encumbrance attaching to the property suffered or caused by the purchaser.
A. Except in the case of a sale where delivery of a disclosure statement is required, or unless exempt under Subsection B of Section 53 [47-7D-1 NMSA 1978] of the Condominium Act, a unit owner shall furnish to a purchaser before conveyance a copy of the declaration, other than the plats and plans, the bylaws, the rules or regulations of the association and a resale certificate from the association containing:
(1) a statement disclosing the existence and terms of any right of first refusal or other restraint on the free alienability of the unit;
(2) a statement setting forth the amount of the monthly common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner;
(3) a statement of any other fees payable by unit owners;
(4) a statement of any capital expenditures anticipated by the association for the current and two next succeeding fiscal years;
(5) a statement of the amount of any reserves for capital expenditures and of any portions of those reserves designated by the association for any specified projects;
(6) the most recent regularly prepared balance sheet and income and expense statement, if any, of the association;
(7) the current operating budget of the association;
(8) a statement of any unsatisfied judgments against the association;
(9) a statement describing any insurance coverage provided for the benefit of unit owners; and
(10) a statement of the remaining term of any leasehold estate affecting the condominium and the provisions governing any extension or renewal thereof.
B. The association, within ten working days after receipt of a request by a unit owner, shall furnish a certificate containing the information necessary to enable the unit owner to comply with this section. A unit owner providing a certificate pursuant to Subsection A of this section is not liable to the purchaser for any erroneous information provided by the association and included in the certificate.
C. A purchaser is not liable for any unpaid assessment or fee greater than the amount set forth in the certificate prepared by the association. A unit owner is not liable to a purchaser for the failure or delay of the association to provide the certificate in a timely manner, but the purchase contract is voidable by the purchaser until the certificate has been provided and for seven days thereafter or until conveyance, whichever first occurs.
Any deposit made in connection with the purchase or reservation of a unit from a person required to deliver a disclosure statement pursuant to Subsection C of Section 54 [47-7D-2 NMSA 1978] of the Condominium Act shall be placed in escrow and held either in this state or in the state where the unit is located in an account designated solely for that purpose until:
A. delivered to the declarant at closing;
B. delivered to the declarant because of the purchaser's default under a contract to purchase the unit; or
C. refunded to the purchaser.
A. In the case of a sale of a unit where delivery of a disclosure statement is required pursuant to Subsection C of Section 54 [47-7D-2 NMSA 1978] of the Condominium Act, a seller shall, before conveying a unit, record or furnish to the purchaser releases of all liens affecting that unit and its common element interest which the purchaser does not expressly agree to take subject to or assume. This subsection does not apply to any real estate which a declarant has the right to withdraw.
B. Before conveying real estate to the association, the declarant shall have that real estate released from all liens the foreclosure of which would deprive unit owners of any right of access to or easement of support of their units, and all other liens on that real estate unless the disclosure statement describes certain real estate which may be conveyed subject to liens in specified amounts.
47-7D-12. Conversion buildings.
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.
47-7D-13 to 47-7D-16. Reserved.
47-7D-17. Effect of violations on rights of action; attorney's fees.
If a declarant or any other person subject to the Condominium Act fails to comply with any provision of that act or any provision of the declaration or bylaws, any person or class of persons adversely affected by the failure to comply has a claim for appropriate relief. The court, in an appropriate case, may award reasonable attorney's fees.
47-7D-18. Labeling of promotional material.
If any improvement contemplated in a condominium is labeled "NEED NOT BE BUILT" on a plat or plan or is to be located within a portion of the condominium with respect to which the declarant has reserved a development right, no promotional material shall be displayed or delivered to prospective purchasers which describes or portrays that improvement unless the description or portrayal of the improvement in the promotional material is conspicuously labeled or identified as "NEED NOT BE BUILT."
47-7D-19. Declarant's obligation to complete and restore.
A. The declarant shall complete all improvements labeled "MUST BE BUILT" on plats or plans prepared pursuant to Section 21 [47-7B-9 NMSA 1978] of the Condominium Act.
B. The declarant is subject to liability for the prompt repair and restoration, to a condition compatible with the remainder of the condominium, of any portion of the condominium affected by the exercise of rights reserved pursuant to or created by Sections 22, 23, 24, 25, 27 and 28 [47-7B-10 to 47-7B-13, 47-7B-15, 47-
7B-16 NMSA 1978] of the Condominium Act.
47-7D-20. Substantial completion of units.
In case of a sale of a unit where delivery of a disclosure statement is required, a contract of sale may be executed, but no interest in that unit may be conveyed until the declaration is recorded and the unit is substantially completed, as evidenced by a recorded certificate of substantial completion pursuant to Section
13 [47-7B-1 NMSA 1978] of the Condominium Act.
