Serving Colorado Community Associations
Today, we are celebrating one year of business for Cornerstone Law Firm. Ashley Nichols has over a decade of experience partnering with managers, business partners, and community board members to provide a strong foundation for our associations. This foundation leads to the overall vitality and …
Recently, a condominium community in Chicago, by a vote of almost 80% of its owners (75% was required by the governing documents), accepted an offer to sell the building to an investment group that will turn its 188 units into apartments. According to the Chicago Tribune, …
Cornerstone Law Firm would like to introduce Sam Firenze as the newest addition to our Community Associations team. With over 18+ years as a Business Development professional, Sam brings with him his ability to build long lasting relationships and to serve the needs of …
Today, Ashley Nichols, Cornerstone’s founder, received the Community Associations Institute (CAI) Educated Business Partner distinction. She is the first, and only, attorney in Colorado to obtain this distinction. Additionally, only a few hundred individuals hold this distinction nationwide! CAI Chief Executive Officer Thomas M. Skiba, …
The Colorado legislative session wrapped up yesterday, so today on the blog we are wrapping up all the information you need to know about bills affecting community associations and landlords and tenants. What did and did not pass?
First, what DID NOT pass. Let’s just get this out of the way.
Now, let’s talk about what DID pass.
If you have questions or want more information on the legislative session, please contact us at mail@yourcornerstoneteam.com or 720.279.4351. You can also see a quick wrap-up (in chart form) of the legislative session on our 2018 Legislation page!
The following is from the Colorado Legislative Action Committee. The Colorado Legislative Action Committee (CLAC) is a statewide committee appointed by CAI National. House Bill 18-1175, the Community Association Manager Licensing Sunset Bill that would continue the CAM licensing program for 5 more years, was defeated …
For those interested in landlord/tenant law, SB-10 was signed by the Governor on March 22, 2018. The bill will go into effect on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 8, 2018). The bill requires a residential landlord …
A recent Washington D.C. appellate court’s decision, while not binding in Colorado, could make waves in the community association industry, especially if judges in other jurisdictions, including our own, take notice. The case is Andrea Liu v. US Bank. In 2014, Liu purchased a condominium unit at foreclosure auction – on the association’s lien, not the bank’s note. As such, she bought the condominium, valued at approximately $700,000, for a mere $17,000, the balance of the debt owed to the association.
Like in Colorado, community associations in D.C. have a super-priority lien, which is a lien that takes priority even over the first mortgage, to the extent of six months of assessments. The remainder of the association’s lien is junior to the mortgage holder’s interest. Because of the impact of the super-priority lien, it is standard for lenders, when an association commences foreclosure proceedings, to pay, at a minimum, the super-priority portion of the lien to not lose its interest in the property.
In the Liu case, the bank attempted to pay the balance, but only after the foreclosure had already taken place. The bank filed its foreclosure action against the original owner (the owner that had failed to pay the association assessments and was therefore foreclosed upon) and included Liu, the purchaser at the association’s foreclosure sale. The court, at the Superior Court level (which in Colorado, would be our District Court), found in favor of the bank stating in its opinion, “it would be an inequitable windfall and contrary to the parties’ expectations to permit Ms. Liu to disavow the bank’s mortgage … and would impose an enormous foreclosure deficiency on [the previous owner] if Ms. Liu’s purchase is not subject to the bank’s lien.”
The appellate court reversed the decision earlier this month, confirming that Liu was the owner of the property, not subject to the bank’s lien, which had been extinguished through the association’s foreclosure, including the super-priority portion of its lien.
This case was decided in this manner partly due to when the association’s foreclosure took place, prior to April 7, 2017. In Washington D.C., the legislature addressed association foreclosure and changed the law, effective April 7, 2017, to state that associations could choose to foreclose either:
Prior to the law change and due to uncertainty regarding the interpretation of the statute, community associations would expressly state in their foreclosure suit that the property would be sold at the foreclosure sale subject to the lender’s mortgage. In Liu, the appellate court expressly rejected this part of the argument and stated that notwithstanding the express representations made by the association that the first mortgage would survive the association’s foreclosure sale, Ms. Liu bought the property free and clear of that interest.
In Colorado, we have a similar super-priority lien statute, without the “choice” above of which portion of the lien to foreclose. Typically, the association would foreclose on its lien, both the super-priority portion and the remaining balance. Currently, banks will, at a minimum, pay the super-priority portion of the lien in order to not lose their interest in the property (i.e., any subsequent purchaser at the association’s foreclosure sale would take subject to the first mortgage). If courts in Colorado start to reject this practice, it could mean good news for community associations. Commencing a foreclosure upon an unpaid assessment lien, could mean payment in full by the banks in order to protect their interest, rather than just payment of the super-priority portion – which would lead to quicker collection of the debt for associations.
For questions or to discuss how this could impact your association, contact Cornerstone at mail@yourcornerstoneteam.com or at 720.279.4351.
Some quick updates on a few of the pending bills that we are tracking this legislative session: SB 10, which concerns the requirement that residential landlords provide tenants with specified documents relevant to the landlord-tenant relationship, has passed the Senate and has been introduced in the …
