Section 3-112 - Conveyance or encumbrance of common elements(a) Portions of the common elements may be conveyed or subject to a security interest by the association, if persons entitled to cast at least 80 percent of the votes in the association, including 80 percent of the votes allocated to units not owned by a declarant, or any larger percentage specified in the declaration, agree to that action; but all owners of units to which any limited common element is allocated must agree in order to convey that limited common element or be subjected to a security interest. The declaration may specify a smaller percentage only if all the units are restricted exclusively to nonresidential uses. Proceeds of the sale are an asset of the association; but the proceeds of the sale of limited common elements shall be distributed equitably among the owners of units to which the limited common elements were allocated.(b) An agreement to convey common elements or subject them to a security interest shall be evidenced by an agreement executed or ratified in the same manner as a deed by the requisite number of unit owners. The agreement shall specify a date after which the agreement will be void unless recorded. The agreement and all ratifications shall be recorded in every town in which a portion of the common interest community is situated and is effective only upon recordation.(c) The association, on behalf of the unit owners, may contract to convey an interest in a common interest community pursuant to subsection (a) of this section, but the contract is not enforceable against the association until approved pursuant to subsections (a) and (b) of this section. Thereafter, the association has all powers necessary and appropriate to effect the conveyance or encumbrance, including the power to execute deeds or other instruments.(d) Unless made pursuant to this section, any purported conveyance or encumbrance, judicial sale or other voluntary transfer of common elements is void.(e) Unless the declaration otherwise provides, if the holders of first security interests on 80 percent of the units that are subject to security interests on the day the unit owners' agreement under subsection (c) of this section is recorded consent in writing: (1) a conveyance of common elements pursuant to this section terminates both the undivided interests in those common elements allocated to the units and the security interests in those undivided interests held by all persons holding security interests in the units; and(2) an encumbrance of common elements pursuant to this section has priority over all preexisting encumbrances on the undivided interests in those common elements held by all persons holding security interests in the units.(f) The consents by holders of first security interests on units described in subsection (e) of this section, or a certificate of the secretary affirming that those consents have been received by the association, may be recorded at any time before the date on which the agreement under subsection (c) of this title becomes void. Consents or certificates so recorded are valid from the date they are recorded for purposes of calculating the percentage of consenting first security interest holders, regardless of later sales or encumbrances on those units. Even if the required percentage of first security interest holders so consents, a conveyance or encumbrance of common elements does not affect interests having priority over the declaration, or created by the association after the declaration was recorded.Added 1997, No. 104 (Adj. Sess.), § 3, eff. 1/1/1999.