2023 Colorado Revised Statutes › Title 7 - CORPORATIONS AND ASSOCIATIONS (§§ 7-1-101 — 7-137-301) › CORPORATIONS (§§ 7-1-101 — 7-52-106) › NONPROFIT CORPORATIONS (§§ 7-20-101 — 7-30-119) › Article 30 - UNIFORM UNINCORPORATED NONPROFIT ASSOCIATION ACT (§§ 7-30-101 — 7-30-119) › Section 7-30-118 - Transition concerning real and personal property

If, before July 1, 1994, an estate or interest in real or personal property was purportedly transferred to a nonprofit association, on July 1, 1994, the estate or interest vests in the nonprofit association, unless the parties had treated the transfer as ineffective. No such purported transfer of real property shall impart notice pursuant to section
38-35-109
, C.R.S., until the date after July 1, 1994, a deed or other proper instrument conveying such estate or interest in real property is recorded in the office of the clerk and recorder of the county or city and county in which such real property is located.
L. 94: Entire article added, p. 1276, § 1, effective May 22.
Colorado amended § 7-30-118 (numbered as Section 19 in the uniform act) by adding a provision that specifies that the transfer of real property will not impart notice until the date a deed or other proper instrument is recorded after July 1, 1994, whether such transfer was effective prior to July 1, 1994, and by removing the language found in subsection (b) in the uniform act. The official comment should be read with these changes in mind.
OFFICIAL COMMENT
1. Section 19 (numbered as section 7-30-118 in C.R.S.) brings to fruition the parties' expectations that previous law frustrated. Inasmuch as the common law did not consider an unincorporated, nonprofit association to be a legal entity, it could not acquire property. A gift of real or personal property thus failed. Reference in subsection (a) (numbered as section 7-30-118 in C.R.S.) to the transfer as "purportedly" made identifies the document of transfer as one not effective under the law. Subsection (a) (numbered as section 7-30-118 in C.R.S.) gives effect to the gift. However, if parties were informed about the common law they may have treated the gift as ineffective. In that case, the final clause of subsection (a) (numbered as section 7-30-118 in C.R.S.) provides that the gift does not become effective when this Act takes effect.
2. Section 19 (numbered as section 7-30-118 in C.R.S.) should not be read as a retroactive rule. It applies to the facts existing when this Act takes effect. At that time subsection (a) (numbered as section 7-30-118 in C.R.S.) applies to a purported transfer of property that under the law of the jurisdiction could not be given effect at the time it was made. Subsection (a) (numbered as section 7-30-118 in C.R.S.) belatedly makes it effective -- effective when this Act takes effect and not when made. The practical result of this difference in when the purported transfer is effective is that the transfer is subject to interests in the property that came into being in the interim. The nonprofit association's interest is subject, for example, to a tax or judgment lien that became effective in the interim. An intervening transfer by the initial transferor may simply be evidence that the "parties had treated the transfer as ineffective." If so, subsection (a) (numbered as section 7-30-118 in C.R.S.) by its terms does not vest ownership in the nonprofit association.
3. Some courts gave effect to gift of property to an unincorporated, nonprofit association by determining that the gift lodged title in someone, often officers of the association, to hold the property in trust for the benefit of the association and its members. Subsection (b) (language removed in C.R.S.) addresses this situation. When the Act takes effect it authorizes the fiduciary to transfer the property to the association. If the fiduciary is unwilling or reluctant, the association may require the fiduciary to transfer the property to the association. In either case, the association will get a deed transferring the property to it which, in the case of real property, the association may record.
4. Jurisdictions may face one of three different legislative situations with respect to Section 19 (numbered as section 7-30-118 in C.R.S.). First, a jurisdiction may not have changed the common law. In that case, Section 19 (numbered as section 7-30-118 in C.R.S.) fits its situation well. Subsections (a) (numbered as section 7-30-118 in C.R.S.) and (b) (language removed in C.R.S.) address the two approaches taken by the courts under the common law. Secondly, a jurisdiction may have changed the common law so as to make effective transfers of real and personal property to some but not all nonprofit associations. In this case Section 19 (numbered as section 7-30-118 in C.R.S.) should be made applicable to those nonprofit associations that did not have the benefit of the special acts. Thirdly, some jurisdictions may have extended to all nonprofit associations the privilege of acquiring in their names real and personal property. In this case, the jurisdiction does not need Section 19 (numbered as section 7-30-118 in C.R.S.) and so should not adopt it.
5. Jurisdictions that have a statute like New York's concerning grants of property by will have a problem that needs special attention. The New York statute provides that a grant by will of real or personal property to an unincorporated association is effective only if the association incorporates within three years after probate of the will. McKinney's N.Y. Estates, Powers & Trust Law Section 3-1.3 (1991). The grants by will that need attention are those that have not become effective by incorporation of the association and have not become ineffective by the running of the three year period. These grants seem entitled to the benefits of Section 19 (numbered as section 7-30-118 in C.R.S.). If so, some modification of Section 19 (numbered as section 7-30-118 in C.R.S.) may be required.