With respect to a third person dealing with the association in the association's capacity as a trustee, the existence of trust powers and their proper exercise by the association may be assumed without inquiry. A third person is not bound to inquire whether the association has power to act as trustee or is properly exercising trust powers. A third person, without actual knowledge that the association is exceeding or improperly exercising its powers, is fully protected in dealing with the association as if it possessed and properly exercised the powers it purports to exercise. A third person is not bound to assure the proper application of trust assets paid or delivered to the association in its capacity as trustee.
History: Laws 1982, ch. 27, § 52.
ANNOTATIONSCompiler's notes. — This section is substantially similar to § 3-119 of the Uniform Condominium Act.
COMMISSIONERS' COMMENT
Based on § 7 of the Uniform Trustees' Powers Act, this section is intended to protect an innocent third party in its dealings with the association only when the association is acting as a trustee for the unit owners, either under § 3-113 [47-7C-13 NMSA 1978] for insurance proceeds, or § 2-118 [47-7B-18 NMSA 1978] following termination.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments § 28.
31 C.J.S. Estates § 153 et seq.