§1141.29. Transfer or encumbrance of common areas or right to income

            A. All or portions of the common areas may be transferred or subjected to a security right by a two-thirds vote or such greater vote required by the declaration. Any limited common area may be transferred or subjected to a security right with the consent of all owners of lots to which any limited common area is allocated. Nevertheless, if all of the lots in a planned community are restricted exclusively to nonresidential uses, the declaration may provide that all or portions of the common areas may be transferred or subjected to a security right by a vote that is less than two-thirds or that limited common areas may be transferred or subjected to a security right upon the consent of fewer than all of the owners of lots to which the limited common area is allocated.

            B. An agreement to transfer common areas or limited common areas or to subject them to a security right shall be prepared and executed by an authorized officer or agent of the association and shall contain a certification that the minimum voting requirements have been met. The agreement, and all ratifications thereof, shall be filed for registry in accordance with R.S. 9:1141.4(D) and is effective only upon registry. An agreement subjecting property of the association to a security right shall be created and made effective against third persons as required by law.

            C. The association, on behalf of the lot owners, may contract to transfer or encumber a right in a planned community, or to grant a security right in the association's right to receive assessments or other income, but the contract is not enforceable against the association until approved pursuant to Subsections A and B of this Section. Thereafter, the association has all powers necessary and appropriate to effect the transfer or encumbrance.

            D. Unless the security right is effective and filed for registry prior to the filing of the declaration, neither the transfer or encumbrance of any portion of a common area, nor the foreclosure upon such an encumbrance, shall release that common area from the burdens and restrictions imposed by the declaration. Subject to the rights of a holder of a security right in a common area, proceeds from the sale of the common areas are an asset of the association, but the proceeds from the sale of limited common areas shall be distributed equitably among the owners of the lots to which the limited common areas were allocated. If any common areas are transferred to a creditor pursuant to a giving in payment in accordance with Civil Code Article 2655, the transferee acquires the common areas subject to the burdens and restrictions imposed by the declaration.

            E. Proceeds of loans made to the association shall be used only for the purposes approved by the association.

            Acts 2024, No. 158, §2, eff. Jan. 1, 2025.