Form 24-27

Before completing this form, the attorney should complete the real estate sales contract checklist (RC), form 4-1 in this manual, and the supplemental checklist (SC), form 24-19 in this chapter. Information called for in this form by item numbers corresponds with the same-numbered items on those check­lists.

At different stages in the drafting process of this agreement and the real estate sales contract, form 24-26 in this chapter, this form and all of its exhibits might be included as an exhibit in the other, and vice versa. To prevent confusion between the two forms’ exhibits, this form’s exhibits are numbered (“Exhibit 1” etc.) and form 24-26’s exhibits are lettered (“Exhibit A” etc.). Before forwarding these documents to the unit owners ahead of the special meeting, references to these two forms as exhibits in each other should be updated accordingly.

Condominium Termination Agreement

Notice of confidentiality rights: If you are a natural person, you may remove or strike any or all of the following information from any instrument that transfers an interest in real property before it is filed for record in the public records: your Social Security number or your driver’s license number.

STATE OF TEXAS

COUNTY OF [SC item 23]

This Condominium Termination Agreement is executed by [SC item 44], a Texas non­profit corporation (the “Association”), the condominium association for [SC item 22] as of [date] (the “Execution Date of This Termination Agreement”), subject to the satisfaction of various conditions set out herein, including the execution by the Requisite Number of Unit Owners of Ratifications, a form of which is attached hereto as Exhibit 1 (Unit Owners’ Respective Interests in Sales Proceeds). [SC item 22] is a condominium regime (“Condo­minium”) created pursuant to the [document name], recorded at [SC item 33], [SC item 23] County, Texas, and all other amendments thereto (said recorded documents and all exhibits and amendments thereto being referred to collectively herein as “Declaration”). Pursuant to the Declaration, the Condominium comprises [number] units (the “Condominium Units” or “Units”). The owners of the Units are referred to herein as the “Unit Owners.”

Recitals

A.TUCA Adoption

The Declaration was amended by document number [SC item 34] of the Official Public Records of [SC item 23] County, Texas. The Unit Owners in the Declaration Amendment elected to have the Condominium governed by chapter 82 of the Texas Property Code, also known as the Texas Uniform Condominium Act (“TUCA”), including section 82.068 of TUCA. A copy of section 82.068 of TUCA is attached hereto as Exhibit 2.

B.Amendment to Condominium Termination Provision

The Unit Owners in the Declaration Amendment amended the Declaration to provide that the Condominium may be terminated by Unit Owners owning at least 80 percent of the votes in the Association (called herein the “Requisite Number”).

C.TUCA’s Termination Provision

Section 82.068 of TUCA provides the following:

C.1.Ratification by Requisite Number of Unit Owners.      An agreement of unit own­ers to terminate a condominium regime must be evidenced by the execution or ratification of a condominium termination agreement by the Requisite Number of Unit Owners.

C.2.Sets Out Terms of Sale.      The termination or ratification agreement must set forth the terms of sale of the property comprising the former condominium.

C.3.Upon Ratification Title Vests in Association as Trustee.      Upon termination of a condominium pursuant to a termination agreement, title to the real property (“Real Property”) constituting the condominium vests in the association as trustee for the holders of all interests in the units with the power to effect the sale of the Real Property.

C.4.TUCA Appraisal of Each Unit Owner’s Respective Interest.      The proceeds of the sale must be distributed by the association to the unit owners pursuant to an independent appraisal of the fair market value (the “TUCA Appraisal”), determining each unit owner’s respective interest (“Respective Interest”) in the proceeds of the sale (referred to herein as the “Owner’s Sales Proceeds Percentage”).

C.5.Determination of Each Owner’s Respective Interest.      The Respective Interest of a unit owner is the fair market value of the owner’s unit, limited common elements, and common element interest immediately before the termination, as determined by independent appraisers selected by the association, and the proportion of a unit owner’s interest to that of all unit owners is determined by dividing the fair market value of the unit owner’s unit and common element interest by the total fair market values of all the units and common elements.

C.6.Appraiser’s Decision Not Disapproved by 25 Percent of Unit Owners During Disapproval Period.      The decision of the appraiser is final unless disapproved by unit own­ers of units to which 25 percent of the votes in the association are allocated not later than the thirtieth day after the date of distribution of the TUCA Appraisal to the unit owners (the “Dis­approval Period”).

D.Agreement

[SC item 44] executed a real estate sales contract for condominium regime termination and sale of property (the “Contract”) for the sale of the Real Property comprising the Condo­minium to [RC item 3] and its successors and assigns (“Buyer”) on the terms set out below, conditioned on the satisfaction of various conditions referenced herein, including execution of Ratifications by the Requisite Number of Unit Owners. A copy of the Contract is available to be read at the offices of the Association by the Owners and their legal counsel. Also, a copy of the Contract is escrowed with [RC item 7] (the “Title Company”) [, and a copy is attached hereto as Exhibit 4].

E.TUCA Appraisal

The Association obtained a TUCA Appraisal and has distributed it to the Owners. Attached hereto as Exhibit 1 (Unit Owners’ Respective Interests in Sales Proceeds) is a chart showing each Unit Owner’s Respective Interest expressed as a percentage in the gross sales proceeds on Closing of the sale pursuant to the Contract and each Unit Owner’s Respective Interest in the gross sales proceeds expressed as a dollar amount.

Agreement

NOW, THEREFORE, upon execution of the attached form of Ratification by the Req­uisite Number of Unit Owners voting to ratify (“FOR”) this Condominium Termination Agreement and the Contract, and accepting the TUCA Appraisal and the resultant Owner’s Sales Proceeds Percentage allocated to the respective Unit Owner, the Unit Owners and the Association agree as follows:

A.Termination

The Condominium is terminated, effective on the recording in the public records of this Condominium Termination Agreement and the Ratifications executed by the Requisite Num­ber of Unit Owners. The documents shall be filed of record only in conjunction with Closing of the sale of the Real Property; should Closing not occur for any reason, termination will not be effectuated.

B.Real Property to Be Sold

The Real Property constituting the Condominium, including the land described as [legal description] (the “Land”), shall be sold and conveyed by the Association to Buyer free and clear of the Condominiums following the termination of the Condominium on the Terms of the Sale in the Contract, which are set out below.

C.Terms of Sale

The terms of the sale of the Real Property (“Terms of the Sale”) are set forth in the Contract executed by the Association to sell and convey the Real Property to [RC item 3] or its successors and assigns (“Buyer”), a copy of which [will be/is] attached hereto as Exhibit 4 before recording of this Condominium Termination Agreement in the public records. The Contract is expressly made subject to the execution and recording of this Condominium Ter­mination Agreement and other conditions and contingencies set forth therein and described below. The Contract was executed by the Association acting in its representative and trustee capacity for and on behalf of the Unit Owners. The Association executed the Contract as the Seller, and [RC item 3] executed the Contract as Buyer. The Terms of the Sale in the Contract include the following:

C.1.Gross Purchase Price.      The Purchase Price is set forth as the Purchase Price in the Contract (the “Gross Purchase Price”).

C.2.TUCA Condominium Termination Conditions.      Closing is to occur following the satisfaction of the Closing contingencies (the “TUCA Condominium Termination Condi­tions”):

a.the ratification of this Condominium Termination Agreement by the Requisite Number of Unit Owners;

b.the approval of the terms of the Contract by the Requisite Number of Unit Own­ers;

c.the delivery to all Unit Owners of the TUCA Appraisal and it not being disap­proved by 25 percent or more of the Unit Owners within the TUCA Appraisal Disapproval Period; and

d.satisfaction of any other items or contingencies set forth in section 82.068 of the Texas Property Code (TUCA termination requirements).

C.3.Additional Conditions to Closing Under Contract.      The Contract additionally conditions Closing on the satisfaction of the following (“Additional Conditions to Closing Under the Contract”), any of which may be waived or modified by agreement of the parties:

a.issuance by the Title Company to the parties of its determination that the Title Company will issue on Closing of the sale of the Real Property of an owner’s policy of title insurance insuring indefeasible title of the Real Property in Buyer without an exception for the satisfaction of the TUCA Condominium Termination Conditions;

b.Buyer not terminating the Contract due to Seller being unwilling or unable to cure an objection to matters reflected on the title commitment to be provided by the Title Company or the survey obtained by Buyer;

c.Buyer not terminating the Contract within the period commencing on the Effective Date of the Contract and expiring on the date that is [RC item 14] days after the Effective Date of this Contract (“Inspection Period”); and

d.contemporaneously at termination of the Condominium each holder of a deed of trust or vendor’s lien on a Unit is paid in full and has or will unconditionally release its lien.

C.4.Closing of Sale

a.Closing.      The Closing and conveyance of the Property to Buyer (the “Clos­ing”) shall be in accordance with section 82.068(c) of TUCA specifically allowing the Associ­ation to act as trustee for the holders of all interests in the Units and to hold the proceeds of the sale for distribution to all Unit Owners and lienholders, as their interests may appear, in pro­portion to each Unit Owner’s respective interest in the Purchase Price as provided in section 82.068(f) of TUCA after deducting therefrom the Unit Owner’s Closing costs. The Closing Date is [RC item 17].

b.Recordation of Termination Contract and Ratifications.      This Condominium Termination Agreement together with the Ratifications will be recorded before the Closing of the sale.

D.Association

D.1.Preclosing Obligations.      During that period of occupancy before the sale of the Real Property has been concluded, the Unit Owners and the Unit Owners’ successors in interest shall remain liable for all assessments and other obligations imposed on the Unit Owners by the Declaration and TUCA.

D.2.Association Postclosing.      The Association shall continue in existence for the purpose of winding up its affairs in accordance with the Texas Business Organizations Code and other applicable laws. The Association shall be dissolved pursuant to the Texas Business Organizations Code.

D.3.Actions by Association.      The Association (acting by and through its president, as empowered by the board of directors of the Association), pursuant to section 82.068(c) of TUCA, is authorized to act as trustee for all Unit Owners for the purposes of selling the Prop­erty, paying expenses, and distributing sales proceeds, including but not limited to the follow­ing:

a.negotiating and executing the following documents:

i.the Contract and reasonable amendments to the Contract necessary to avoid termination by Buyer, as long as the same does not include a mate­rial reduction of the Purchase Price;

ii.agreements or affidavits required by the Title Company or the Title Insurance Underwriter to issue the Title Policies pertaining to the Clos­ing and conveyance of the Property, including but not limited to lien affi­davits, Closing statements, reporting forms, notices, insuring agreements, escrow agreements, indemnifications, and disbursement instructions or authorizations, including, if applicable, release of earnest money forms;

iii.conveyance and other Closing documents (including a special warranty deed conveying the Property, bill of sale, assignments of Association contracts, assignment of Association leases, assignments of Unit Owner leases); and

iv.other documents that reasonably relate to, or support the sale of, the Property or the distribution of the proceeds of the sale;

b.negotiating with any holders of liens on Units (deed of trust, judgment, tax, or oth­erwise) and to secure a payoff, payment instructions and lien release both satisfactory to the Title Company;

c.providing notice to each Unit Owner about, and keeping each Unit Owner apprised of, the estimated Net Proceeds from the Closing of the sale to be payable to the Unit Owner;

d.distributing to each Unit Owner the Unit Owner’s respective interest in the “Net Proceeds,” which means the Purchase Price under the Contract, less the following costs (“Closing Costs”):

i.all actual costs incurred in connection with the sale of the Property, including brokerage commissions, attorney’s fees, appraisal costs, title insurance premiums, title escrow fees not charged to a Unit, recording fees, holdback escrows and reserves held back to be used for the pay­ment of post-Closing costs and expenses relating to the sale of the Prop­erty and any other fees and expenses required by the Contract or the Title Company to be paid by the Association or the Unit Owners and not included in ii.–iv. below;

ii.for each Unit, costs allocable solely to that Unit including tax prorations, payoff of liens on the Unit, fees to record lien releases, the unpaid bal­ance of any assessments owing by the Unit Owner to the Association, the Title Company’s escrow fee for the Closing of the sale of the Unit, wire transfer fees, and overnight courier charges;

iii.the costs to wind down and terminate the Association; and

iv.“Costs of Challenges,” including all damages, costs, and expenses (including attorney’s fees) incurred by the Association, any Unit Own­ers, or both relating to any challenge to or contest of the sale of the Prop­erty, termination of the Condominium, the TUCA Appraisal, the determination by the appraiser of the fair market value of the Property, and the determination by the appraiser of the respective interests of the Unit Owners in the fair market value of the Property, with—

(a)the Net Proceeds not being distributed to the Unit Owner of the Unit involved until the contest is resolved;

(b)the Costs of Challenges being deducted from the Net Proceeds due the former Unit Owner that is a Contesting Person before the balance is dis­tributed to a contesting Unit Owner; and

(c)any Unit Owner or other person challenging or contesting the validity of the Real Property purchase Contract, this Condominium Termination Agreement, the validity of the termination provisions of TUCA or as applied to this sale (collectively, a “Contesting Person”) being person­ally liable to the Association and the other Unit Owners for the Costs of the Challenges, including both the Contesting Person’s costs and the cost of the Association and each of the Unit Owners, whether or not the Contesting Person is the prevailing party in a Challenge;

e.taking any other actions related to the sale of the Property and the Closing of that sale;

f.directing the Title Company to disburse all costs associated with the Closing including payoffs acceptable to the Title Company of liens; and

g.directing the Title Company to return all escrowed funds and documents to the Association or Buyer.

E.Sale Free and Clear of Condominium Regime and Condominium Documents

Pursuant to TUCA, the Declaration, and the Contract, the Real Property is to be con­veyed by the Association to Buyer free and clear of the condominium regime and the Condo­minium Documents.

F.Termination

The condominium regime created pursuant to the Declaration is hereby terminated upon the recordation of this Condominium Termination Agreement and Ratifications by the Requisite Number of Unit Owners. This Condominium Termination Agreement shall not be recorded until the date of the Closing in accordance with the terms of the Agreement.

G.Postclosing Leases and Subleases

G.1.Postclosing Lease.      Each Unit Owner and the existing tenant of a Unit Owner will have the option to retain the use and occupancy of the former condominium Unit on the terms and conditions set forth in the form of Postclosing Lease and Postclosing Sublease required by the Contract.

G.2.Conditions to Having Postclosing Lease.      As a condition to such use and occu­pancy, any Unit Owner electing to occupy the former Unit after the Closing of the sale of the Property will, before the Closing Date of the sale, execute the Postclosing Lease. As a condi­tion to such use and occupancy, any existing tenant of a Unit Owner as of the Closing (“Exist­ing Tenant”) electing to occupy the former Unit after the Closing of the sale of the Property will, before the Closing Date of the sale, execute the Postclosing Sublease between former Unit Owner and the Existing Tenant.

G.3.Holding Over After Postclosing Lease Term.      Any Unit Owner or Existing Tenant that either (a) holds over in a Unit beyond the Closing without having executed a Post­closing Lease and Postclosing Sublease and complied with its terms and conditions as of the Closing or (b) holds over beyond the Postclosing Lease Term will be a tenant at sufferance and be liable for damages incurred by Buyer as a result of that holdover (such as delays to the construction schedule and timely project delivery). Buyer will be permitted to sue any such tenant at sufferance for damages, evict the tenant at sufferance, turn off all services to the for­mer Unit occupied by the tenant at sufferance, change the locks of the former Unit, and remove any personal property of the tenant from the Unit or from other location on the Prop­erty.

H.Rescission of Agreement

This Contract to terminate the Declaration and the Condominium pursuant to the execu­tion and recording of this Condominium Termination Agreement and the Ratifications may be rescinded by the Unit Owners—

1.by the execution and recording of a written rescission agreement or

2.without action of the Unit Owners, if Buyer fails or refuses to consummate the Closing.

I.Execution and Effect of Execution of Ratification

The Ratification may be executed in multiple counterparts, and the aggregate of all originals whether combined and recorded as one document or recorded in multiple documents shall constitute one original. By their respective execution of a Ratification, each signatory represents that such signatory (1) is the Unit Owner of the Condominium Unit identified adja­cent to the undersigned’s signature, or is the duly authorized representative or attorney-in-fact of the Unit Owner, and (2) is duly authorized to execute this document as the Unit Owner of that Condominium Unit or on behalf of the Unit Owner of that Condominium Unit.

Each of the undersigned hereby agree that the TUCA Appraisal, the Appraised Value set for in the TUCA Appraisal, and the Unit Owner’s share allocable to the Unit Owner’s respective interest as set out in the TUCA Appraisal (the “Appraisal Determined Items”) are acceptable to the Unit Owner of the Unit designated in the Ratification.

Each Unit Owner that signs the attached Ratification represents and warrants to the Association and Buyer that the Unit Owner knowingly waives and relinquishes any right that the Unit Owner has to object to the Appraisal Determined Items.

Signature Page to Condominium Termination Agreement

Association:

[SC item 44], a Texas nonprofit corporation

By:      
        [SC item 35], President

STATE OF TEXAS

COUNTY OF [county]

This instrument was acknowledged before me on [date] by [SC item 35], president of [SC item 44], a Texas nonprofit corporation, on behalf of the corporation.

   
Notary Public, State of Texas

Exhibit 1

Unit Owners’ Respective Interests in Sales Proceeds

*Subject to update based on Title Company commitment.

^†To be filled in based on the TUCA Appraisal before execution of the Condominium Termination Agreement.

^‡Subject to deduction of Transaction Costs and the Costs of Challenges (as defined in the Condominium Termi­nation Agreement).

Exhibit 2

Texas Property CodeChapter 82 (Texas Uniform Condominium Act (TUCA))Section 82.068 (Termination of Condominium)

(a) Unless the declaration provides otherwise and except for a taking of all the units by con­demnation, a condominium may be terminated only by the agreement of 100 percent of the votes in the association and each holder of a deed of trust or vendor’s lien on a unit. The dec­laration may not allow a termination by less than 80 percent of the votes in the association if any unit is restricted exclusively to residential uses.

(b) An agreement of unit owners to terminate a condominium must be evidenced by the exe­cution or ratification of a termination agreement by the requisite number of unit owners. If, pursuant to a termination agreement, the real property constituting the condominium is to be sold following termination, the termination agreement must set forth the terms of the sale. To be effective, a termination agreement and all ratifications of the agreement must be recorded in each county in which a portion of the condominium is located.

(c) The association, on behalf of the unit owners, may contract for the sale of real property in the condominium, but the contract is not binding on the unit owners until it is approved under Subsections (a) and (b). If the real property constituting the condominium is to be sold follow­ing termination, on termination title to that real property vests in the association as trustee for the holders of all interests in the units, and the association has all powers necessary and appro­priate to effect the sale, including the power to convey the interests of nonconsenting owners. Until the sale has been concluded and the proceeds distributed, the association shall continue to exist and retains the powers it had before termination. Proceeds of the sale must be distrib­uted to unit owners and lienholders as their interests may appear, in proportion to the respec­tive interests of unit owners as provided by Subsection (f). Unless the termination agreement specifies differently, as long as the association holds title to the real property, each unit owner and the owner’s successors in interest have an exclusive right to occupy the portion of the real property that formerly constituted the owner’s unit. During that period of occupancy a unit owner and the owner’s successors in interest remain liable for all assessments and other obli­gations imposed on unit owners by this chapter or the declaration.

(d) If the real property constituting the condominium is not to be sold following termination, on termination title to the real property vests in the unit owners as tenants in common in pro­portion to their respective interests, and liens on the units shift accordingly. While the tenancy in common exists, a unit owner and the owner’s successors in interest have an exclusive right to occupy the portion of the real property that formerly constituted the owner’s unit.

(e) Following termination of the condominium, and after payment of or provision for the claims of the association’s creditors, the assets of the association shall be distributed to unit owners in proportion to their respective interests. The proceeds of sale described by Subsec­tion (c) and held by the association as trustee are not assets of the association.

(f) The interest of a unit owner referred to in Subsections (c), (d), and (e) is, except as pro­vided by Subsection (g), the fair market value of the owner’s unit, limited common elements, and common element interest immediately before the termination, as determined by one 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 by unit owners of units to which 25 percent of the votes in the association are allocated not later than the 30th day after the date of distribution. The proportion of a unit owner’s interest to that of all unit owners is determined by dividing the fair market value of the unit owner’s unit and common element interest by the total fair market values of all the units and common elements.

(g) If a unit or a limited common element is destroyed to the extent that an appraisal of the fair market value before the destruction cannot be made, the interest of a unit owner is the owner’s common element interest immediately before the termination.

(h) 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 does not withdraw that portion from the condo­minium, unless the portion is withdrawable real property or unless the mortgage being foreclosed was recorded before the date the declaration was recorded and the mortgagee did not consent in writing to the declaration.

(i) By agreement of the same percentage of unit owners that is required to terminate the con­dominium, the unit owners may rescind a termination agreement and reinstate the declaration in effect immediately before the election to terminate. To be effective, the rescission agree­ment must be in writing, executed by the unit owners who desire to rescind, and recorded in each county in which any portion of the condominium is located.

Exhibit 3

Ratification

The undersigned is the Owner of the Unit or Units shown with the Owner’s name and signature below in [SC item 22] (the “Condominium”), a condominium regime created pursu­ant to that certain Condominium Declaration for [SC item 22], recorded in [SC item 33], of the Condominium Records of [SC item 23] County, Texas, and all amendments thereto (the recorded documents and all their exhibits and amendments referred to collectively herein as “Declaration”). The undersigned is a member of the [SC item 44], a Texas nonprofit corpora­tion (the “Association”).

As set out below, the undersigned votes for ratifying (1) the Condominium Termina­tion Agreement for termination of the condominium regime for [SC item 22] and the sale of the real property of the Condominium, including the Unit Owner’s Unit and undivided interest in the common elements, in accordance with the provisions of section 82.068(b) of the Texas Property Code, and (2) the terms of the Real Estate Sales Contract for the sale of the property comprising the Condominium to [RC item 3] or its assigns (“Buyer”).

The undersigned Owner votes as follows:

The undersigned Unit Owner expressly agrees and directs that this Ratification (also referred to as this “Ballot”) shall be affixed to the Condominium Termination Agreement doc­ument to which it relates to be recorded in the Official Public Records of [SC item 23] County, Texas. This Ratification also is a ratification by the undersigned Unit Owner of the Declara­tion (which includes all exhibits and amendments thereto). The ratification of the Declaration shall survive if the closing of the sale to [RC item 3], and its successors and assigns, does not occur. The undersigned recognizes that this Ratification is irrevocable and may be rescinded as to the Condominium Termination Agreement by a document signed by the holders of no less than 80 percent of the votes in the Association. If the closing of the sale to [RC item 3] does not occur, the board of directors of the Association acting through an officer is irrevoca­bly appointed as the agent and attorney in fact of the undersigned Unit Owner, and the Unit Owner’s heirs, personal representatives, successors, and assigns, to execute and file for record, in the board’s discretion, as set out in section 82.068(i) of the Texas Uniform Condo­minium Act, a rescission of the Condominium Termination Agreement and a reinstatement of the Declaration in effect immediately before the election to terminate (“Rescission Agree­ment”). The undersigned executes this Ratification in consideration of and in reliance on the execution of Ratifications by other owners of the Condominium and acknowledges that those owners are executing those Ratifications in consideration of and reliance on the undersigned’s execution of this Ratification. Accordingly, this Ratification is irrevocable and coupled with an interest, and will survive the undersigned’s death before closing of the sale contemplated under the Condominium Termination Agreement.

Signature and Notarization Page to Ratification

Unit No.: __________

Signature: _________________________________

Printed Name: ______________________________

STATE OF TEXAS

COUNTY OF _____________

This instrument was acknowledged before me on this _____ day of __________, 20___, by _____________________.

   

Notary Public, State of Texas

Exhibit 4

Real Estate Sales Contract