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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 […]

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, board, or function of government will terminate unless the legislature passes new legislation to continue.  An analysis is performed to determine if the program is necessary and should be continued, modified, or cease operations.  The Community Association Manager Program and the Division of Real Estate’s administration of same are under sunset review this year.

Last week, the House Business Affairs and Labor Committee reviewed and held public comment on the Sunset Report prepared by DORA (Department of Regulatory Agencies) in order to determine whether to approve the introduction of a bill which would continue the licensure program for another five years.  The Committee did approve the introduction of HB 1175 (introduced on February 2, 2018) which, if passed, will implement the recommendations contained in the sunset report.

The recommendations included in the bill are as follows:

  • Continuing the licensing of community association managers and management companies, subject to regulation y the director of DORA, for an additional five years (until September 1, 2023).
  • Allowing certain ministerial functions to be delegated to unlicensed persons while maintaining the license requirement for higher-level management functions such as the conduct of board meetings, handling of money, and negotiation of maintenance contracts.
  • Scaling back the amount of, and circumstances in which, direct supervision of an apprentice is required and specifying that a supervising manager is accountable for the actions of an apprentice.
  • Giving the director of DORA the authority to adopt rules governing supervision of apprentices.
  • Removing the automatic acceptance of certain private credentials as qualifications for licensure and substituting a requirement that the director specify the acceptable credentials by rule.
  • Adding due process protections and specific procedural requirements to the director’s authority to issue cease and desist orders.
    • The director also has the option to issue an order to show cause and to hold a hearing before, rather than after, ordering a respondent to cease and desist from suspected unauthorized practices.

It is expected that this bill will ultimately pass and the provisions of the Community Association Manager Program will continue for another five years.

The other bill introduced this past week relates to landlord/tenant issues.  SB 120 was introduced on January 29, 2018, and would allow landlords to initiate an eviction proceeding after providing three days’ notice but requires landlords to accept payment of all outstanding amounts due before the date by which a tenant is required to appear in court in an eviction proceeding.   For a second or subsequent violation of the same agreement within six months of a violation, a landlord may require payment within three days.

This bill, if passed, would provide tenants a longer period of time to cure a default in the payment of rent.  Current law requires a landlord to provide a tenant three days to cure a violation of unpaid rent before the landlord can initiate eviction proceedings based on that unpaid rent.  However, current law does not require a landlord to accept payment of rent once eviction proceedings have commenced.  This law would change that and make the law friendlier towards tenants in regard to payment of late rent and evictions.

Keep following the blog or keep track of bills at the 2018 Legislation page on the website!

 

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 […]

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 […]

More Legislation Introduced!

A couple more bills that would affect developments, community associations, and landlords/tenants!  Let’s dive in!

  • HB-1107 was introduced in the house on January 18, 2018.  The intent of the bill is to facilitate the installation of electric vehicle charging systems.  The bill would require builders to offer purchasers of new residences the option to install; 1) an electric vehicle charging systems; 2) upgrades of wiring to accommodate future installation of an electric vehicle charging station; or 3)  a chase or conduit (or both) to accommodate future installation of wiring necessary for such a system.  It would apply both in traditional detached, single-family homes and also in buildings that contain owner-occupied condominium units.
  • HB-1126 was introduced in the house on January 19, 2018.  This bill would add a provision to the Colorado Common Interest Ownership Act (“CCIOA”) (in Section 106.5 titled Prohibitions Contrary to Public Policy) which would invalidate any covenant that prohibits the keeping of certain types of dogs based solely on a breed, weight, or size classification.  Additionally, the added language states that an association may regulate the number of dogs per household and that it may enforce covenants concerning dog or owner behavior, nuisance barking, waste disposal, and other matters.
  • Another bill related to landlord/tenant law, HB-1127 was introduced in the house on January 19, 2018. This bill does three things:
    1. Limits the application fee that a landlord charges to cover a landlord’s actual costs for a personal reference check or for obtaining a consumer credit report or tenant screening report;
    2. Requires a landlord to provide each prospective tenant with written notice of the landlord’s tenant selection criteria and the grounds upon which a rental application may be denied before accepting an application or collecting an application fee; and
    3. Requires a landlord to provide a prospective tenant with an adverse action notice if the landlord takes adverse action on a prospective tenant after reviewing the prospective tenant’s rental application.

    Check back for a future blog post about the specifics of this bill!

Check out the list of bills being watched here.  The 2018 Legislation page on our website will continually be updated with the status of each bill.  If you have questions or want more information on the legislative session or bills being introduced, please contact us at mail@yourcornerstoneteam.com or 720.279.4351.

The 2018 Colorado General Assembly Regular Session is Off and Running!

The General Assembly got underway yesterday, January 10, 2018 and 130 bills have already been introduced. We will be keeping on top of issues that affect debt collection and community associations, so make sure to check back regularly for updates. HB-1057 was introduced in the […]

What to Expect When You Are … Increasing Your Dues!

In the vain of the popular pregnancy book, What to Expect When You’re Expecting, this article will discuss what to expect to hear from members of your communities when you are increasing your dues.  Many association assessments will increase in the new year and it isn’t […]

Cover Your Bases: Do you have email addresses for owners in your communities? You may want to use them when collecting!

A North Carolina Court of Appeals court recently held that a homeowner, Ms. Ackah, that lost her home to a foreclosure by her association, did not have notice of said proceeding.  The lower court had also found that the notice was not sufficient and had previously entered an order returning possession of the property to Ms. Ackah.  The matter was on appeal by the third-party buyer, the Jones Family, of the property at the foreclosure sale seeking an order that it should retain the property.

 

Here are the facts of this case.  The homeowner moved to Africa and failed to update her mailing address with the association.  The property was leased and mail for the owner was being forwarded to the owner’s uncle in South Carolina.  After the owner became delinquent on the assessments, the association began foreclosure proceedings to collect on the debt.

 

The association sent certified letters addressed to Ms. Ackah to her mother’s and her uncle’s addresses, which were returned as “unclaimed.”  The association also posted notice of the hearing on the front door of the property (which was leased).  The association had an email address for the owner but failed to notify the owner of the foreclosure via email. 

 

Because Ms. Ackah never made an appearance or otherwise opposed the sale, the property went to sale and the Jones Family purchased the property, subject to the first mortgage.

 

Rule 4 in North Carolina requires the use of “due diligence” in providing notice.  Colorado’s rule on service (also Rule 4) also requires “due diligence.”  The appellate court was not convinced that the association had satisfied the requirement of due diligence for the following reasons:

  • It had reason to know that Ms. Ackah was not residing at the property as the association sent the certified letters to her mother and uncle’s addresses. Remember, that these letters were also returned unclaimed.
  • The association had an email address for Ms. Ackah and did not use it, rather it “simply resort[ed] to posting a Notice on the property.”
    • The Court noted that a previous North Carolina Court of Appeals decision had already ruled that due diligence requires emailing to a known email address before resorting to service by publication.

 

The Court did state that, according to jurisprudence from the United States Supreme Court, that the attempts by the association to notify the owner of the foreclosure were constitutionally sufficient. Jones v. Flowers, 547 U.S. 220, 220 (2006)

 

The Supreme Court has ruled that constitutional “due process does not require that the property owner receive actual notice.”  Where certified mail is returned as “unclaimed” the sender must take some reasonable follow up measure to provide other notice where it is practicable to do so.  The Supreme Court specifically held that where the owner no longer resides at the property, due process is satisfied if the notice is posted on the front door of the property, as it is reasonable that the owner’s tenant would notify the owner of the posting.

 

The association did JUST that and in doing so, believed that it had properly satisfied the rule.  While the Court held that the association’s notice was constitutionally sufficient, it did note that it did not satisfy the “due diligence” requirement of North Carolina’s Rule 4.  As such, Ms. Ackah is entitled to some relief, just not the property.  And here’s why.

 

The North Carolina Supreme Court has stated that where a court sets aside a judgment, the court may not enter an order which affects the title to property sold under that judgment to a good-faith purchaser, at least so long as the debtor received constitutionally adequate notice of the proceedings.  The Jones Family was a good-faith purchaser.  As such, the Court ordered that the property would be retained by the Jones Family.  Ms. Ackah is entitled to relief in the form of restitution from the association and the case was remanded to the lower court for a ruling on those damages.

 

While this is a North Carolina case which does not set precedent in Colorado, it is certainly instructive and provides a good practice pointer for our associations.  If you have an email address for an owner and you are preparing to foreclose, use that email address to notify the owner of the proceedings.  If you don’t, your association could potentially open itself up to liability if you find yourself in a similar situation.

 

If you are interested in reading the entire opinion from the North Carolina Court of Appeals, you can find the case here: https://appellate.nccourts.org/opinions/?c=2&pdf=35255.   If you have questions, comments, or would just like to discuss debt recovery solutions for your association, don’t hesitate to contact us at mail@yourcornerstoneteam.com.