§ 47C-3-104. Transfer of special declarant rights. - North Carolina Statutes

§ 47C‑3‑104. Transfer of special declarant rights.

(a)        No special declarant right (G.S. 47C‑1‑103(23))created or reserved under this chapter may be transferred except by aninstrument evidencing the transfer recorded in every county in which anyportion of the condominium is located. The instrument is not effective unlessexecuted by the transferee.

(b)        Upon transfer of any special declarant right, the liabilityof a transferor declarant is as follows:

(1)        A transferor is not relieved of any obligation or liabilityarising before the transfer, including, but not limited to, liability orobligations relating to warranties. Lack of privity does not deprive any unitowner of standing to bring an action to enforce any obligation of thetransferor.

(2)        If the successor to any special declarant right is anaffiliate of a declarant (G.S. 47C‑1‑103(1)), the transferor isjointly and severally liable with the successor for any obligation or liabilityof the successor which relates to the condominium.

(3)        If a transferor retains any special declarant right, buttransfers other special declarant rights to a successor who is not an affiliateof the declarant, the transferor is liable for any obligations or liabilitiesimposed on a declarant by this chapter or by the declaration relating to theretained special declarant rights and arising after the transfer.

(4)        A transferor has no liability for any act or omission orany  breach of a contractual or warranty obligation arising from the exerciseof a special declarant right by a successor declarant who is not an affiliateof the transferor.

(c)        Unless otherwise provided in a mortgage instrument or deedof trust, in case of foreclosure of a mortgage, tax sale, judicial sale, saleby a trustee under a deed of trust, or sale under Bankruptcy Code orreceivership proceedings, of any units owned by a declarant, or real estate ina condominium subject to development rights, a person acquiring title to allthe real estate being foreclosed or sold, but only upon his request, succeedsto all special declarant rights related to that real estate held by thatdeclarant, or only to any rights reserved in the declaration and held by thatdeclarant to maintain models, sales offices and signs. The judgment orinstrument conveying title shall provide for transfer of only the specialdeclarant rights requested.

(d)        Upon foreclosure, tax sale, judicial sale, sale by a trusteeunder a deed of trust, or sale under Bankruptcy Code or receivershipproceedings, of all units and other real estate in a condominium owned by adeclarant the declarant ceases to have any special declarant rights.

(e)        The liabilities and obligations of persons who succeed tospecial declarant rights are as follows:

(1)        A successor to any special declarant right who is an affiliateof a declarant is subject to all obligations and liabilities imposed on thetransferor related to the condominium.

(2)        A successor to any special declarant right, other than asuccessor described in paragraphs (3) and (4) who is not an affiliate of adeclarant, is subject to all obligations and liabilities:

a.         On a declarant which relate to his exercise or nonexerciseof  special declarant rights; or

b.         On his transferor, other than:

(i) Misrepresentations by any prior declarant;

(ii) Warranty obligations on improvements made by any previousdeclarant, or made before the condominium was created;

(iii) Breach of any fiduciary obligation by any previous declarant orhis appointees to the executive board; or

(iv) Any liability or obligation imposed on the transferor as a resultof the transferor's acts or omissions after the transfer.

(3)        A successor to only a right reserved in the declaration tomaintain models, sales offices, and signs (G.S. 47C‑2‑115), if heis not an affiliate of a declarant, may not exercise any other specialdeclarant right, and is not subject to any liability or obligation as adeclarant, except the obligation to provide a public offering statement, andany liability arising as a result thereof.

(4)        A successor to all special declarant rights held by histransferor who is not an affiliate of that declarant and who succeeded to thoserights pursuant to a deed in lieu of foreclosure or a judgment or instrumentconveying title to units under subsection (c), may declare his intention in arecorded instrument to hold those rights solely for transfer to another person.Thereafter, until transferring all special declarant rights to any personacquiring title to any unit owned by the successor, or until recording aninstrument permitting exercise of all those rights other than the right  heldby his transferor to control the executive board in accordance with theprovisions of G.S. 47C‑3‑103(d) for the duration of any period ofdeclarant control, and any attempted exercise of those rights is void. So longas a successor declarant may not exercise special declarant rights under thissubsection, he is not subject to any liability or obligation as a declarantother than liability for his acts and omissions under G.S. 47C‑3‑103(d).(1985 (Reg. Sess., 1986),c. 877, s. 1.)