A. A person required to deliver a disclosure statement pursuant to Subsection C of Section 54 [47-7D-2 NMSA 1978] of the Condominium Act shall provide a purchaser of a unit with a copy of the disclosure statement and all amendments thereto before conveyance of that unit and not later than the date of any contract of sale. Unless a purchaser is given the disclosure statement more than seven days before execution of a contract for the purchase of a unit, the purchaser, before conveyance, may cancel the contract within seven days after first receiving the disclosure statement.
B. If a purchaser elects to cancel a contract pursuant to Subsection A of this section, he may do so by hand-delivering notice thereof to the offerer or by mailing notice thereof by prepaid United States mail to the offerer or to his agent for service of process. Cancellation is without penalty, and all payments made by the purchaser before cancellation shall be refunded promptly.
C. If a person required to deliver a disclosure statement pursuant to Subsection C of Section 54 of the Condominium Act fails to provide a purchaser to whom a unit is conveyed with that disclosure statement and all amendments thereto as required by Subsection A of this section, the purchaser is entitled to rescind the purchase within six months from the date of conveyance upon delivery to the seller of a deed subject to no encumbrance attaching to the property suffered or caused by the purchaser.
History: Laws 1982, ch. 27, § 60.
ANNOTATIONSCompiler's notes. — This section is similar to § 4-108 of the Uniform Condominium Act, with the following main exceptions: "disclosure" is substituted for "public offering" throughout the section; "seven" is substituted for "15" in Subsection A of this section of the state Condominium Act; and at the end of Subsection C of this section of the state Condominium Act, the language beginning with "is entitled to rescind" is substituted for "in addition to any rights to damages or other relief, is entitled to receive from that person an amount equal to [10] percent of the sales price of the unit," as it appears at the end of subsection (c) of § 4-108 of the Uniform Condominium Act.
COMMISSIONERS' COMMENT
1. The "cooling off" period provided to a purchaser in this section is similar to provisions in many current state condominium statutes.
2. Subsection (a) [Subsection A] requires that each purchaser be provided with both the public offering statement and all amendments thereto prior to the time that the unit is conveyed. If there is a contract for the sale of the unit, these documents must be provided not later than the date of the contract. The section makes clear that any amendments to the public offering statement prepared between the date of any contract and the date of conveyance must also be provided to the purchaser.
3. This section does not require the delivery of a public offering statement prior to the execution by the purchaser of an agreement pursuant to which the purchaser reserves the right to buy a unit but is not contractually bound to do so. Because such agreements (frequently referred to as "non-binding reservation agreements") may be unilaterally cancelled at any time by a prospective purchaser without penalty, they do not constitute "contract[s] of sale" within the meaning of the section.
4. The requirement set forth in subsection (a) [Subsection A] that a purchaser be provided with subsequent amendments to the public offering statement during the period between execution of the contract for purchase and conveyance of the unit does not, in itself, extend the "cooling off" period. Indeed, the delivery of such amendments is required even if the "cooling off" period has expired. The purpose of this requirement is to assure that purchasers of units are advised of any material change in the condominium which may affect their sales contracts under general law. While many such amendments will be merely technical and will not affect the bargain that the purchaser and declarant entered into, each purchaser should be permitted to judge for himself the materiality of any change in the nature of the condominium.
5. Under the scheme set forth in this section, it is at least theoretically possible that there will be a contract for sale of the unit, and that a public offering statement will be given to the purchaser at closing just prior to conveyance. However, the available evidence suggests that such practice would be rare, and that the provision of a public offering statement moments prior to conveyance would, in itself, tend to dampen the enthusiasm of the purchaser for immediate closing. In such circumstances, under subsection (a) [Subsection A], the purchaser would, as a matter of right, be able to extend the date of closing for 15 days from the time the public offering statement was provided. This fact, together with the generally unsatisfactory experience with mandatory "cooling off" periods such as that imposed under the federal Real Estate Settlement Procedures Act [12 U.S.C. § 2601 et seq.], supports the conclusion that it is inappropriate to require a minimum period of delay between delivery of a public offering statement and conveyance.
6. Under subsection (a) [Subsection A], the failure to deliver a public offering statement before conveyance does not result in a statutory right by the purchaser to cancel the conveyance or to reconvey the unit once conveyance has occurred. Any such cancellation or reconveyance right following an actual conveyance could create serious mechanical and title problems that could not be easily resolved. The failure of the act to provide for such cancellation or reconveyance is not, however, intended to diminish any right which a purchaser may otherwise have under general state law. For example, where it appears that a seller, by deliberately failing to disclose certain material information with respect to a transaction, substantially changed the bargain which he and the purchaser entered into, it is possible under the common law in some states that reconveyance would be an available remedy.
Even absent such resort to general law, however, the penalty provisions of subsection (c) [Subsection C] are designed to provide a sufficient incentive to the seller to insure that the public offering statement is provided in the timely fashion required by the act. The penalty so specified in the subsection is in addition to any right a prevailing purchaser may have under § 4-117 [47-7D-17 NMSA 1978] to collect punitive damages and attorney's fees in connection with his action against the declarant.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 15A Am. Jur. 2d Condominiums and Cooperative Apartments §§ 14, 19 to 22, 26.
Plaintiff's rights to punitive or multiple damages when cause of action renders both available, 2 A.L.R.5th 449.
31 C.J.S. Estates § 153 et seq.