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Alaska Statutes.

Title 34. Property

Chapter 8. Common Interest Ownership

Section 260. Termination of Common Interest Community.

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AS 34.08.260. Termination of Common Interest Community.

(a) Unless all units are taken by eminent domain, or unless there has been a foreclosure of a security interest that has priority over the declaration against an entire cooperative, a common interest community may be terminated only by agreement of unit owners of units comprising either at least 80 percent of the votes in the association or any larger percentage specified in the declaration. The declaration may specify a smaller percentage only if all of the units are restricted exclusively to nonresidential uses.

(b) An agreement to terminate must be evidenced by the execution of a termination agreement or ratification of an agreement to terminate, in the same manner as a deed is executed by the required number of unit owners. The termination agreement must specify a date after which the agreement will be void unless it is recorded before that date. A termination agreement and each ratification of the termination agreement must be recorded in each recording district in which a portion of the common interest community is situated. A termination agreement is effective only upon recording.

(c) If a condominium or planned community contains only units having horizontal boundaries described in the declaration, a termination agreement may provide that all of the common elements and units of the common interest community must be sold following termination. If, under the agreement, any real estate in the common interest community is to be sold following termination, the termination agreement must set out the minimum terms of the sale.

(d) If a condominium or planned community contains a unit not having horizontal boundaries described in the declaration, a termination agreement may provide for sale of the common elements, but it may not require that the unit be sold following termination unless the declaration as originally recorded provided otherwise or unless all unit owners consent to the sale.

(e) The association, on behalf of the unit owners, may contract for the sale of real estate in a common interest community, but the contract is not binding on the unit owners until approved under (a) and (b) of this section. If real estate is to be sold following termination, title to the real estate, upon termination, vests in the association as trustee for the holders of all interests in the units. The association has at that time all powers necessary and appropriate to effect the sale. Until the sale has been concluded and the proceeds of the sale distributed, the association continues in existence with all powers it had before termination. Proceeds of the sale must be distributed to unit owners and lien holders as their interests may appear under (h), (i), and (j) of this section. Unless otherwise specified in the termination agreement, as long as the association holds title to the real estate, each unit owner and the successor in interest of each unit owner has an exclusive right to occupancy of the portion of the real estate that formerly constituted the unit. During the period of that occupancy, each unit owner and the successors in interest of each unit owner remain liable for all assessments and other obligations imposed on unit owners by this chapter or the declaration.

(f) In a condominium or planned community, if the real estate constituting the common interest community is not to be sold following termination, title to the common elements and, in a common interest community containing only units having horizontal boundaries described in the declaration, title to all the real estate in the common interest community, vests in the unit owners upon termination as tenants in common in proportion to their respective interests under (j) of this section, and liens on the units shift accordingly. While the tenancy in common exists, each unit owner and the successors in interest of each unit owner have an exclusive right to occupancy of the portion of the real estate that formerly constituted the unit.

(g) Following termination of the common interest community, the proceeds of any sale of real estate, together with the assets of the association, are held by the association as trustee for unit owners and holders of liens on the units as their interests may appear.

(h) Following termination of a condominium or planned community, a creditor of the association holding a lien on the units that was reduced to judgment and recorded before termination, may enforce the lien in the same manner as any other lien holder. Each other creditor of the association shall be treated as if the creditor had perfected a lien on the units immediately before termination.

(i) In a cooperative, the declaration may provide that each creditor of the association has priority over the interests of unit owners and creditors of unit owners. In that event, following termination, a creditor of the association holding a lien on the cooperative that was reduced to judgment and recorded before termination may enforce the lien in the same manner as a lien holder, and each other creditor of the association shall be treated as if the creditor had perfected a lien against the cooperative immediately before termination. Unless the declaration provides that all creditors of the association have that priority (1) the lien of each creditor of the association that was perfected against the association before termination becomes, upon termination, a lien against the interest of each unit owner in the unit as of the date the lien was perfected; (2) any other creditor of the association shall be treated upon termination as if the creditor had perfected a lien against the interest of each unit owner immediately before termination; (3) the amount of the lien of an association's creditor described in (1) and (2) of this subsection against the interest of each unit owner must be proportionate to the ratio which the common expense liability of each unit bears to the common expense liability of all of the units; (4) the lien of each creditor of each unit owner that was perfected before termination continues as a lien against the unit as of the date the lien was perfected; and (5) the assets of the association must be distributed to each unit owner and each lien holder as their interests may appear in the order described in this section. Creditors of the association are not entitled to payment from a unit owner in excess of the amount of the creditor's lien against the interest of the unit owner.

(j) The respective interests of each unit owner referred to in (e) - (i) of this section are as follows:

(1) except as provided in (2) of this subsection, the respective interest of each unit owner is the fair market value of the unit, allocated interests, and any limited common elements immediately before the termination, as determined by one or more independent appraisers selected by the association; the decision of the independent appraisers must be distributed to the unit owners and becomes final unless disapproved within 30 days after distribution by unit owners of units comprising 25 percent of the allocated interests in the association; the proportion of each unit owner's interest to that of all unit owners is determined by dividing the fair market value of the unit and its allocated interests by the total fair market value of all units and their allocated interests;

(2) if a unit or a limited common element is destroyed to the extent that an appraisal of the fair market value of the unit or the limited common interest before destruction cannot be made, the interests of all unit owners are,

(A) in a condominium, their respective common element interests immediately before the termination;

(B) in a cooperative, their respective ownership interests immediately before the termination; and

(C) in a planned community, their respective common expense liabilities immediately before the termination.

(k) In a condominium or planned community, except as provided in ( l ) of this section, foreclosure or enforcement of a lien or encumbrance against the entire common interest community does not, of itself, terminate the common interest community, and foreclosure or enforcement of a lien or encumbrance against a portion of the common interest community, other than withdrawable real estate, does not withdraw the portion from the common interest community. Foreclosure or enforcement of a lien or encumbrance against withdrawable real estate does not withdraw, of itself, the real estate from the common interest community, but the person taking title to the real estate may require from the association, upon request, an amendment excluding the real estate from the common interest community.

(l) In a condominium or planned community, if a lien or encumbrance against a portion of the real estate comprising the common interest community has priority over the declaration and the lien or encumbrance has not been partially released, the parties foreclosing the lien or encumbrance, upon foreclosure, may record an instrument excluding the real estate subject to the lien or encumbrance from the common interest community.

(m) A declaration that specifies a termination date but that does not contain a provision for the extension of the termination date may be extended

(1) by the approval of the unit owners having more than 50 percent of the votes in the association;

(2) by the approval of the unit owners having the percentage of votes as specified in the declaration for an amendment to the declaration; or

(3) if the approval of unit owners having more than 50 percent of the votes in the association is required to amend the declaration, under AS 34.08.255.

(n) An amendment to a declaration under (m) of this section becomes effective when it has been recorded in each recording district in which a portion of the common interest community is located.

(o) A single extension of the terms of a declaration made under this section may not exceed the initial term of the declaration or 20 years, whichever is less. More than one extension of the term may occur under this section.