Colorado § 7-30-104 - Real and personal property - nonprofit association as legatee, devisee, or beneficiary.

§ 7-30-104. Real and personal property - nonprofit association as legatee, devisee, or beneficiary.

(1) A nonprofit association in its name may acquire, hold, encumber, or transfer an estate or interest in real or personal property.

(2) A nonprofit association may be a legatee, devisee, or beneficiary of a trust or contract.

Source: L. 94: Entire article added, p. 1272, § 1, effective May 22.

OFFICIAL COMMENT

1. Subsection (a) (numbered as subsection (1) in C.R.S.) is based on Section 3-102(8), Uniform Common Interest Act. It reverses the common law rule. Inasmuch as an unincorporated, nonprofit association was not a legal entity at common law, it could not acquire, hold, or convey real or personal property. Harold J. Ford, Unincorporated Non-Profit Associations 1-45 (Oxford Univ. Press 1959), 15 A.L.R. 2d 1451 (1951); Warburton, The Holding of Property by Unincorporated Associations, Conveyancer 318 (September-October 1985).

2. This strict common law rule has been modified in various ways in most jurisdictions by courts and statutes. For example, courts have held that a gift by will or inter vivos transfer of real property to a nonprofit association is not effective to vest title in the nonprofit association but is effective to vest title in the officers of the association to hold as trustees for the members of the association. Matter of Anderson's Estate, 571 P. 2d 880 (Okla. App. 1977).

A New York statute specifies that a grant by will of real or personal property to an unincorporated association is effective if within three years after probate of the will the association incorporates. McKinney's N.Y. Estates, Powers, & Trust Law, Section 3-1.3 (1981).

California gives any "unincorporated society or association and every lodge or branch of any such association, and any labor organization" full right to acquire, hold, or transfer any "real estate and other property as may be necessary for the business purposes and objects of the society," and acquire and hold any property not so necessary for 10 years. California Corporations Code, Title 3, Unincorporated Associations, Section 20001 (West 1991).

As is the case with many of the problems created by the view that an unincorporated association is not an entity the statutory solutions are often partial — limited to special circumstances and associations. Subsection (a) (numbered as subsection (1) in C.R.S.) solves this problem for all nonprofit associations, for all kinds of transactions, and for both real and personal property.

3. Even if a nonprofit association's governing documents provide that it "may not acquire real property," subsection (a) (numbered as subsection (1) in C.R.S.) makes effective a transfer of Blackacre to the association. A different result would obviously disrupt real estate titles. The remedy for this violation of internal rules lies not in preventing title from passing but, as with other organizations, in an action by members against their association and its appropriate officers to undo the transaction.

4. Subsection (b) (numbered as subsection (2) in C.R.S.) is a necessary corollary of subsection (a) (numbered as subsection (1) in C.R.S.) and, thus, it may be unnecessary. However, several states expressly provide that an unincorporated, nonprofit association may be a legatee, devisee, or beneficiary. See, for example, Md. Estates & Trusts Code Ann. Section 4-301 (1991). Therefore, it is desirable to continue this as an express rule. Subsection (b) (numbered as subsection (2) in C.R.S.) applies to both trusts and contracts. Not all state statutes apply expressly to both.