Burton, Bruce W.

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Mitchell Hamline School of Law

William Mitchell Law ReviewVolume 10 | Issue 1 Article 21984Reflections on the Minnesota UniformCondominium ActBruce W. BurtonFollow this and additional works at: http://open.mitchellhamline.edu/wmlrThis Article is brought to you for free and open access by the Law Reviewsand Journals at Mitchell Hamline Open Access. It has been accepted forinclusion in William Mitchell Law Review by an authorized administratorof Mitchell Hamline Open Access. For more information, please contactsean.felhofer@mitchellhamline.edu.© Mitchell Hamline School of LawRecommended CitationBurton, Bruce W. (1984) "Reflections on the Minnesota Uniform Condominium Act," William Mitchell Law Review: Vol. 10: Iss. 1,Article 2.Available at: http://open.mitchellhamline.edu/wmlr/vol10/iss1/2REFLECTIONS ON THE MINNESOTA UNIFORMCONDOMINIUM ACTBRUCE W. BURTONtFine tuning any piece of legislation as complex as the MinnesotaUniform Condominium Act (MUCA) is traditionally a long-rangeprocess. Recent trends in Minnesota real estate development,however, have accelerated this process. Increased use of the con-dominium format for industrial, office, retail, and residential com-plexes has revealed numerous deficiencies in the MUCA,prompting several proposed modifications. The following pagesprovide a thumbnail sketch of present discussions within the Min-nesota legal community. Prior to examining these proposals, briefmention of the status of the Uniform Condominium Act (UCA) isappropriate.There are currently no active proposals to further "gild the lily"under consideration by the authors of the UCA. A draft, presentlybeing circulated, however, attempts to consolidate condominiumlaw with the Uniform Cooperative Act and the Uniform PlannedCommunity Act. The consolidation is entitled the Uniform Com-mon Interest Ownership Act (UCIOA). According to former re-porter Stephen Jahnakin of the National Conference ofCommissioners on Uniform State Laws (NCCUSL), the UCIOAattempts to achieve two objectives. The first is to merge statutorylaw affecting cooperatives and condominiums with laws affectingother forms of planned unit development. The second is to facili-tate adoption of the UCIOA by UCA states without major statu-tory surgery.Adoption of the UCIOA in Minnesota is doubtful. Althoughthe MUCA clearly defines the state's condominium law, statutorylaw addressing cooperatives is not consolidated in a similar act.While enactment of the UCIOA would not alter present condo-minium law, it would clarify state cooperative law. Nevertheless,t Member, Minnesota Bar. Bruce W. Burton received his B.S. degree fromMankato State University in 1961 and his J.D. from the University of Minnesota in 1968.Mr. Burton served as Dean of William Mitchell ,College of Law from 1975 to 1980 and asChairman of the Real Property Law Section of the Minnesota State Bar Association. Heis also a member of the Ramsey County, Hennepin County, and American Bar Associa-tions. Mr. Burton is currently a partner with the law firm of Dorsey & Whitney.1Burton: Reflections on the Minnesota Uniform Condominium ActPublished by Mitchell Hamline Open Access, 1984WILLIAM MITCHELL LAW REVIEWdiscussions attended by this writer fail to indicate a broad base ofsupport for consolidation of cooperative laws which would justifyadoption of the UCIOA.In recent years, the Real Property Section of the MinnesotaState Bar Association has maintained a special legislation subcom-mittee whic4 solicits proposed MUCA modifications from mem-bers of the practicing bar. Unfortunately, except for isolateddiscussions addressing timesharing problems and reforms, materi-als submitted to the subcommittee have been meager. The ab-sence of a significant formal response is due largely to the downcycle in residential condominium development resulting from highunemployment and interest rates. Nevertheless, several problemareas have surfaced through informal discussion.One particularly salient problem concerns the seven-year timelimitation on the reservation to expand the condominium by ad-ding additional real estate.' A potential problem could ariseunder the following scenario: A municipal authority empoweredto issue Industrial Development Revenue Bonds is charged withthe planning and creation of an industrial park. During planningit becomes evident that improvements, including loading docks,parking facilities, railroad sidings, power facilities, and waste dis-posal facilities, could be most readily built, operated, and main-tained as common elements. The seven-year limitations period isinsufficient for such developments. Rather, development of thisindustrial park probably would require an expandable approachto the condominium structure, permitting completion after theseven-year limitation period.Indeed, the seven-year limitation serves little purpose, indicat-ing the need for a statutory exception. The goal of adding users tothese common elements can be achieved by other approaches, in-cluding leasing, reservation of cross-easements upon the commonelements, and creation of operating and maintenance agreements.These approaches could be designed to allow the growing numberof participants, in a series of separate industrial condominiumsbuilt over a lengthy period of time, to participate fully in the oper-ation, use, and maintenance of the common elements.Another issue currently under discussion concerns the allocationof common expense liabilities for commercial office condominiumsin a manner inconsistent with the present requirements. Under1. See MINN. STAT. § 515A.2-106 (1982).[Vol. 102William Mitchell Law Review, Vol. 10, Iss. 1 [1984], Art. 2http://open.mitchellhamline.edu/wmlr/vol10/iss1/2FOREWORDthe MUCA,2 expenses are allocated either equally between unitsor in proportion to the unit's area or volume. Not all circum-stances, however, economically justify allocation of expenses onthese bases. Rather, common expense costs often should be appor-tioned on the basis of percentage use. Where use is disproportion-ate, inequities currently are remedied by specialized agreementsand maintenance arrangements.Laws requiring substantial completion of the "building" prior torecordation of the declaration have further complicated presentcondominium law. Under the MUCA, substantial completionmust occur prior to recording the declaration whenever a "build-ing" is involved. 3 In other words, "as built" plans are required.This requirement is problematic where numerous lenders are in-volved in the total financing of the "building." In order to specifi-cally define the lenders' property rights upon foreclosure,mortgage liens must be perfected prior to the commencement ofconstruction. The need for perfection places urgent pressuresupon the developer, lenders, recording officers, and title insurers tofile the declaration and other documents prior to construction.Although the protection afforded by the "as built" requirementis justified in residential construction, logic militates against simi-lar treatment for nonresidential projects. Consumer protectionpolicies implicit in the MUCA clearly attempt to safeguard theresidential condominium purchaser. These protections, however,can still be guaranteed by the enactment of a statutory exceptionfor nonresidential projects, thus avoiding "Rube Goldberg" de-vices currently utilized.Debate also continues over the use of timeshare condominiumsin Minnesota. Documented abuses have prompted critics to sug-gest statutory abolition of timesharing in Minnesota. Foremost ofthese critics is former State Senator Jack Davies, longtime commis-sioner of the NCCUSL and chief sponsor of Minnesota Chapter515A. Others, including Minneapolis attorney Fred Rosenblatt,strongly favor the use of timesharing.Finally, problems arise when preexisting low interest mortgagesare preserved during the conversion of a nonresidential condomin-ium. The MUCA provides that a purchaser may agree to con-tinue the existing mortgage where a title insurance policy insuring2. See id § 515A.2-108.3. Seeid. §§515A.2-101,.2-110,.4-115.198413Burton: Reflections on the Minnesota Uniform Condominium ActPublished by Mitchell Hamline Open Access, 1984WILLIAM MITCHELL LAW REVIEWagainst loss or damage is issued to the purchaser.4 The UCA, how-ever, provides that other forms of insurance, including suretybonds and other collateral substitutes, may be used. 5 Since sometype of security is needed to protect the title insurer, the MUCAshould be broadened to permit the developer and the purchaser toobtain any form of insurance. This approach is especially attrac-tive for commercial and industrial conversions in which the devel-oper and purchaser have equal bargaining power.The above comments are a brief attempt to inform the reader ofproblems and solutions currently under discussion within Minne-sota's legal community. Although the MUCA has proven invalua-ble, further modifications are necessary. It is hoped that thisArticle will encourage further discussion leading to constructiveamendments to Chapter 515A.4. Id § 515A.4-109.5. UNIF. CONDOMINIUM ACT § 4-109, 7 U.L.A. 206 (1977).[Vol. 104William Mitchell Law Review, Vol. 10, Iss. 1 [1984], Art. 2http://open.mitchellhamline.edu/wmlr/vol10/iss1/2

Reflections on the Minnesota Uniform Condominium Act

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Reflections on the Minnesota Uniform Condominium Act

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