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We’re growing!

  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 […]

Ashley Nichols obtains CAI Educated Business Partner Distinction!

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, […]

2018 Legislative Wrap Up

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.

  • HB 1107 – Concerning a requirement that builders of new residences offer buyers the option to accommodate electric vehicle charging stations.
  • HB 1126 – Concerning the permissible regulation of dogs in common interest communities.
  • HB1127 (Landlord/Tenant) – Concerning the rental application process for prospective tenants.
  • HB 1175 – Sunset Community Association Managers
    • The CAM Manager Licensing program was set to be repealed on July 1, 2018, unless extended by the legislature.  Because it was not extended, the program will go through a “wind up” procedure, which means that the program will continue until July 1, 2019 (one year form the specified repeal date).  The program is still in operation until July 1, 2019, so managers and management companies must still comply with the regulations through that date.
    • It is possible that the Colorado legislature could pass a bill next legislative session to reestablish the program, however, we will just have to wait and see what is introduced and how our elected officials vote on what is introduced.  Be sure to keep your eyes and ears peeled for more news on this hot topic!
  • HB 1261 – This bill would have created the Colorado Arbitration Fairness Act.
  • HB 1397 (Landlord/Tenant) – Concerning modifications to the residential warranty of habitability for the purpose of protecting renters.
  • SB 120 (Landlord/Tenant) – Concerning the time allowed for a tenant to cure a lease violation for unpaid rent.

Now, let’s talk about what DID pass.

  • HB 1057
    • As introduced, this bill would have allowed a judgment creditor to file a petition in court to compel the Department of Labor and Employment to disclose the name and address of the individual judgment debtor’s current employer(s). Judgment creditors must follow federal requirements for protecting any information disclosed and may not share it with other persons. A civil penalty of $1,000 may be assessed against a judgment creditor who fails to comply with these requirements.
    • As passed, the bill provided for certain fees and costs to be added to the amount due by a private collection agency or privately retained attorney THAT IS COLLECTING ON A DEBT OWED TO THE STATE OR TO ANY POLITICAL SUBDIVISION.  As passed, the bill does not affect general collections (those that we deal with on a regular basis that are owed to a community association or landlord), only those debts that are owed to the state or political subdivision.
    • Once signed, the bill will go into effect on July 1, 2019 (but again, should not materially affect community associations or landlords).
  • HB 1254
    • This bill modifies the foreclosure process on property that is encumbered by a deed of trust.  Much of the bill only applies to entities able to foreclosure through the Public Trustee (not community associations which have to foreclose through the judicial process).  Of interest to associations is that the bill clarifies the process for junior lienors to redeem a property and specifies the amount of interest and other amounts that may be charged when a property is redeemed by a junior lien holder.  All in all, for community associations, this bill does not have too much impact.
    • The bill was signed by the Governor on April 23, 2018 and will go into effect on August 8, 2018.
  • HB 1342
    • This bill requires that pre-CCIOA community associations have to comply with the CCIOA budget ratification procedures UNLESS (1) the association’s declaration sets a maximum assessment amount or limits the increase in an annual budget to a specific amount, and (2) the budget proposed by the board does not exceed such maximum or limits as provided for in the declaration.
    • Once signed by the Governor, this law will go into effect on July 1, 2018.
  • SB 10 (Landlord/Tenant)
    • The bill requires a residential landlord to provide each tenant with a copy of a written rental agreement signed by the parties and to give a tenant a contemporaneous receipt for any payment made in person with cash or money order. For payments not made in person with cash or money order, the landlord must provide a receipt if the tenant requests it. The landlord may provide the tenant with an electronic copy of the agreement or the receipt unless the tenant requests a paper copy.
    • The bill was signed by the Governor on March 22, 2018 and will go into effect on August 8, 2018.
  • SB 56
    • Under current law, a person may file a civil action in county court if the value of the claim is $15,000 or less. The bill, as introduced, would have increased that limit to $35,000 or less and would have increased certain civil action filing fees for district courts and county courts.
    • As passed, the county court jurisdictional limit will increase to $25,000.  The bill also addresses and sets certain civil action filing fees for district and county courts (based on the amount claimed in suit and type of action).
      • This will impact community associations by allowing more actions to be brought in county court. Although many of our debts do not generally exceed the $15,000 threshold, there are some cases that do, and if the association is not interested in foreclosure of the property (or if that is not an option under the specific case circumstances), then this new law will allow the association to bring the action in county court, where the rules of civil procedure are not quite as structured (and there is not generally motions practice).
    • Once signed by the Governor, this law will go into effect on January 1, 2019.
  • SB 62
    • The bill enacts the “Snow Removal Service Liability Limitation Act”, which voids provisions of snow removal agreements that require one party to indemnify the other party for damages, hold the other party harmless for damages, and provide for the defense of the other party in a liability lawsuit.
    • Once signed by the Governor, this law will go into effect on August 8, 2018 (just in time for the next snow season, so make sure that you get those contracts reviewed!).

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!

Manager Licensing Bill Dead

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 […]

Quick Legislative Update!

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 […]

Changes on the Horizon for Community Association Foreclosures?

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:

  • On the six-month super-priority lien, which would extinguish any existing mortgage holder’s interest; or
  • On the entire balance due, but the deed of trust would remain in place, and any purchaser at sale would take subject to that interest.

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.

 

Legislative Update

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 […]

New Bills Introduced – Manager Licensing and Landlord/Tenant Issues

Two bills have been introduced since I last blogged about the Colorado Legislative Session: one concerning community associations, and more specifically, manager licensing (HB 1175) and the second regarding landlord/tenant issues (SB 120). First, the Colorado General Assembly sets specific dates that a particular agency, […]

Excuses, Excuses, Excuses!

If you’ve been in the business long enough (and long enough is a week), you’ve heard plenty of excuses!  Association members who pay their assessments late or not at all come up with some very interesting excuses.  Here are a few of the most common and what you should know to rebut them.

  • “I didn’t get what I paid for.”  “My building hasn’t been painted in five years!  I’m not paying another cent until some basic maintenance gets done.”  “Snow removal didn’t happen to my standards.  I’m withholding a prorated amount from my assessment check.” 
    You’ve heard those, or something similar, right?  Of course you have!  Owners DO have a right to require the association to perform its duties, and there are various legal channels that exist to accomplish this.  BUT, withholding assessments is not one of them.  The obligation for the association to maintain the association and the obligation for the owner to pay its assessments are independent covenants, meaning that an owner’s obligation to pay the assessments has nothing to do with the association’s obligation to provide maintenance and service.
  • “You didn’t bill me.” “I didn’t get an invoice.”  “You didn’t tell me I was behind on my payments.”  “I never got notice.”  
    It may surprise you that many association governing documents do not require the association to send invoices. Colorado law DOES require that an association provide a delinquent owner with at least one notification that provides the following:

    • The total balance due, with an accounting of how the total past due balance is determined;
    • Whether or not the opportunity for a payment plan exists and instructions for contacting the association to enter into said plan should they desire to do so;
    • The name and contact information for the individual the owner may contact to request a copy of the owner’s ledger to verify the amount of the debt; and
    • A statement stating what action is required to cure the delinquency and that failure to do so within 30 days may result in the account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the owner’s property, and other remedies available under Colorado law.

Associations are also required to send the approved budget to each owner annually.  So, there should be no doubt from owners what assessments are due and when.

  • “You can’t do that!” “These people have no right to make me pay for the neighborhood upkeep.”  “If they think I’m paying those outrageous late fees and interest, they’re crazy.” 
    An association not only has the authority, it has a DUTY to all owners to collect assessments.  This authority is provided for in both state law (the Colorado Common Interest Ownership Act, or CCIOA) and the association’s governing documents.  Owners, when they purchase in a community association, agree to abide by those documents (often times never even reading them) – and that includes paying assessments, both regular, and special assessments, should they arise.
  • “But I don’t even use the recreational facilities.”  “I don’t play golf.  I shouldn’t have to pay to maintain the course.”  “I’ve never seen the inside of the recreation center, and I don’t plan to ever use it.  Why can’t you prorate my assessments?”
    Admittedly, recreational facilities are expensive to operate and – for some associations – represent a good portion of the budget.  Nevertheless, most declarations specify that even if you don’t use the amenities, you are still obligated to pay for their upkeep.  Even if the owner is not using the amenities, he/she is still benefitting from them – they make the community more desirable and the homes in the community more valuable!
  • “I paid in full.”
    What if you receive a check that says “paid in full” in the memo section – but it isn’t?  What if the check comes with a letter that states that the payment represents “payment in full” or asserts to cover all charges through a certain date, but it doesn’t?  These statements are called restrictive endorsements.  DON’T ACCEPT THE CHECK.  If there is still an outstanding balance on the account and you do cash the check, you could be effectively stating that the owner is, in fact, paid in full.  Return the check to the owner explaining the situation.  They may not be aware of late fees and interest that have been incurred (honest mistake) or they may be trying to pull a fast one in order to get out of paying late fees and interest.  Either way, play it safe.

If you have questions about collecting assessments, or just how to communicate with owners regarding the topic, please contact us at mail@yourcornerstoneteam.com or at 720.279.4351.

Introducing What Would be the Rental Application Fairness Act

HB18-1127, also known as the Rental Application Fairness Act (creating C.R.S. § 38-12-801 et seq), was introduced in the house on January 19, 2018.  If passed, the bill would do three things: Limit the application fee that a landlord may charge an applicant to the actual […]