381.9157 Termination of condominium.
(1) Except in the case of a taking of all the units by eminent domain, a condominium
may be terminated only by agreement of unit owners of units to which at least
eighty percent (80%) of the votes in the association are allocated, or any larger
percentage the declaration specifies. The declaration may specify a smaller
percentage only if all of the units in the condominium are restricted exclusively to
nonresidential uses.
(2) An agreement to terminate a condominium shall be evidenced by the execution of a
termination agreement, or ratification thereof, in the same manner as a deed, by the
requisite number of unit owners. The termination agreement shall specify a date
after which the agreement will be void unless it is recorded before that date. A
termination agreement and all ratifications thereof shall be recorded in every county
in which a portion of the condominium is situated, and is effective only upon
recordation.
(3) In the case of a condominium containing only units having horizontal boundaries
described in the declaration, a termination agreement may provide that all the
common elements and units of the condominium shall be sold following
termination. If, pursuant to the agreement, any real estate in the condominium is to
be sold following termination, the termination agreement shall set forth the
minimum terms of the sale.
(4) In the case of a condominium containing any units not having horizontal boundaries
described in the declaration, a termination agreement may provide for sale of the
common elements, but shall not require that the units be sold following termination,
unless the declaration as originally recorded provided otherwise or unless all the
unit owners consent to the sale.
(5) The association, on behalf of the unit owners, may contract for the sale of real estate
in the condominium, but the contract is not binding on the unit owners until
approved pursuant to subsections (1) and (2) of this section. If any real estate in the
condominium is to be sold following termination, title to that real estate, upon
termination, vests in the association as trustee for the holders of all interests in the
units. Thereafter, the association has all powers necessary and appropriate to effect
the sale. Until the sale has been concluded and the proceeds thereof distributed, the
association continues in existence with all powers it had before termination.
Proceeds of the sale shall be distributed to unit owners and lienholders as their
interests may appear, in proportion to the respective interests of unit owners as
provided in subsection (8) 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 his or her successors in interest have an exclusive right to occupancy
of the portion of the real estate that formerly constituted his or her unit. During the
period of that occupancy, each unit owner and his or her successors in interest
remain liable for all assessments and other obligations imposed on unit owners by
KRS 381.9101 to 381.9207 or the declaration.
(6) If the real estate constituting the condominium is not to be sold following
termination, title to the common elements and, in a condominium containing only
units having horizontal boundaries described in the declaration, title to all the real
estate in the condominium, vests in the unit owners upon termination as tenants in
common in proportion to their respective interests as provided in subsection (8) of
this section, and liens on the units shift accordingly. While the tenancy in common
exists, each unit owner and his or her successors in interest have an exclusive right
to occupancy of the portion of the real estate that formerly constituted his or her
unit.
(7) Following termination of the condominium, 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.
Following termination, creditors of the association holding liens on the units, which
were recorded before termination, may enforce those liens in the same manner as
any lienholder. All other creditors of the association are to be treated as if they had
perfected liens on the units immediately before termination.
(8) The respective interests of unit owners referred to in subsections (5), (6), and (7) of
this section are as follows:
(a) Except as provided in paragraph (b) of this subsection, the respective interests
of unit owners are the fair market values of their units, limited common
elements, and common element interests immediately before the termination,
as determined by one (1) or more independent appraisers selected by the
association. The decision of the independent appraisers shall be distributed to
the unit owners and becomes final unless disapproved within thirty (30) days
after distribution by unit owners of units to which twenty-five percent (25%)
of the votes in the association are allocated. The proportion of any unit
owner's interest to that of all unit owners is determined by dividing the fair
market value of that unit owner's unit and common element interest by the
total fair market values of all the units and common elements; and
(b) If any unit or any limited common element is destroyed to the extent that an
appraisal of the fair market value thereof before destruction cannot be made,
the interests of all unit owners are their respective common element interests
immediately before the termination.
(9) Except as provided in subsection (10) of this section, foreclosure or enforcement of
a lien or encumbrance against the entire condominium does not of itself terminate
the condominium, and foreclosure or enforcement of a lien or encumbrance against
a portion of the condominium, other than withdrawable real estate, does not
withdraw that portion from the condominium. Foreclosure or enforcement of a lien
or encumbrance against withdrawable real estate does not of itself withdraw that
real estate from the condominium, but the person taking title thereto has the right to
require from the association, upon request, an amendment excluding the real estate
from the condominium.
(10) If a lien or encumbrance against a portion of the real estate comprising the
condominium has priority over the declaration, the parties foreclosing the lien or
encumbrance may, upon foreclosure, record an instrument excluding the real estate
subject to that lien or encumbrance from the condominium. The provisions of this
subsection shall not apply to any common elements constituting a portion of the real
estate to the extent the common elements as described in and subject to the
declaration have been developed.
Effective: January 1, 2011
History: Created 2010 Ky. Acts ch. 97, sec. 29, effective January 1, 2011.