This article is reproduced from the Summit Daily News, June 2, 2010, by permission of author Noah Klug.
Until recently, if a Colorado real estate broker earned a commission for finding a commercial tenant and the owner did not pay the commission, the broker was generally obliged to sue the owner personally to collect the commission (or, in the case of a broker working with the tenant, to submit the dispute to arbitration with the listing broker). A new statute effective in August will give commercial real estate brokers the power to encumber the leased property with a broker lien that can be foreclosed to recover the commission. Here is an overview of the statute.
1. Commercial Real Estate. The broker lien is available for commissions relating to leasing any real property except (a) residential property containing four or fewer units or (b) residential property leased on a unit-by-unit basis. To give a few examples, it appears the lien could be claimed for leasing a vacant lot, commercial condominium unit or commercial building, or water rights. It would apparently not be available for leasing a single residential condominium unit, a group of residential condominium units that are leased on a unit-by-unit basis, or a single-family home.
2. Written Agreement: The broker lien is only available if there is a written agreement between the broker and the owner giving the broker the right to a commission for leasing or attempting to lease the commercial real estate. A broker working with the tenant cannot claim a lien if the owner paid the commission to the listing broker (although the broker could still arbitrate the dispute with the listing broker).
3. Mediation. A broker cannot claim the lien unless the broker first delivers a request to the owner's last known address asking to submit the dispute to mediation. If the dispute is not resolved within 30 days after such request, the broker can proceed with claiming the lien.
4. Notice of Intent to Lien. In addition to attempting to mediate the dispute, a broker must serve on the owner a notice of intent to record a notice of lien (“notice of intent to lien”) containing specified information. The request for mediation and notice of intent to lien can (and should) be combined into one document that is delivered to the owner personally or by registered or certified mail addressed to the owner's last known address.
5. Record Notice of Lien. Thirty days after delivering the request for mediation and the notice of intent to lien, a broker can record a notice of lien in the office of the clerk and recorder in the county where the leased property is located. The lien cannot be recorded more than 90 days after the commission is earned or the tenant takes possession of the property, whichever is later. The lien becomes invalid if a copy of the recorded notice of lien is not sent to the owner by registered or certified mail within 10 days after it is recorded. If a commission is due in installments, the broker can record a new lien each time an installment comes due and remains unpaid.
6. Commence Lawsuit. The lien becomes invalid if the broker does not file a lawsuit to foreclose the lien within six months after the lien is recorded. Unlike some liens, the broker lien is not given any special priority by statute. That means the lien's priority against other liens is based on the time of recording, and a broker lien will be junior to any existing liens at the time of recording (which has important implications for the foreclosure process).
The new broker lien law does not apply to all transactions … and brokers must carefully satisfy its requirements to enforce their lien rights … but, where the law is applicable, it may prove to be an important tool for commercial real estate brokers to obtain their earned commissions.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, commercial law and litigation. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com.
Subscribe To
Posts
All Comments
Wednesday, July 28, 2010
Mountain Law: Know your notices under the mechanics' lien statute
This article is reproduced from the Summit Daily News, May 5, 2010, by permission of author Noah Klug.
The Colorado mechanics' lien statute was enacted in 1899, and has remained relatively unchanged since. The purpose of the law is to protect contractors who supply labor, materials, or services during construction projects (these people are all referred to in the statute as “mechanics”) by giving them a lien against the property for unpaid sums. The statute also affords certain protections to owners. One feature of the statute is that it provides for various notices, which have significant legal consequences, as explained in this article.
• Government Notice: When a county or town issues a building permit, it is required to send a notice to the address of the property for which the permit was issued to advise the owner that contractors could file liens if they are not paid for the work. This notice is purely advisory.
• Recorded Contract. Once an owner and contractor enter into a contract, the owner can record the contract in the public records. The recording of the contract will restrict the contractor (or any subcontractors under him) from claiming liens for more than the contract price. If the contract is not recorded, contractors are entitled to a lien for the value of the materials, labor, and services they furnished to the property, which may be more or less than the contract price.
• Disburser's Notice: Construction funds may be disbursed by the owner or an agent of the lender. Whoever is acting as the disburser is required to file a notice of that fact in the public records before the first disbursement. This notice informs contractors whom they should ask for payment.
• Stop Notice: A person entitled to a mechanics' lien may give the disburser a “stop notice” advising that the person has provided materials, labor or services for the project, or will do so. The disburser is then obliged to withhold enough funds to directly pay the person providing the stop notice (rather than paying the funds directly to the general contractor). The disburser may be liable for not withholding the funds.
• Notice of Nonresponsibility: It sometimes happens that work is performed on a property for which the owner has not agreed to be responsible (a common case is work requested by a tenant that is not approved by the landlord). The owner can post a “notice of nonresponsibility” at a conspicuous place on the property within five days after the owner becomes aware of the unauthorized work, and this will prevent the property from being subject to a lien for the work.
• Notice of Intent to Lien: A contractor who wishes to claim a mechanics' lien must give the owner and general contractor a “notice of intent to file lien” at least ten days before recording the lien in the public records. Failure to send the notice prior to recording the lien renders the lien invalid.
• Notice of Extension: A person who wishes to claim a mechanics' lien must typically do so within four months after the person performs the last substantial work on the project. The person can file a “notice of extension” within the four-month window, which will extend the deadline for filing the lien until four months after the completion of the project or six months after the filing of the notice, whichever occurs first. If the project is not completed within six months after any notice of extension, the lien claimant can file amended notices of extension, which will again extend the deadline until four months after the completion of the project or six months after the filing of the notice, whichever occurs first.
Construction professionals should be aware of the various notices that may be filed under the mechanics' lien statute and their legal effect. The form, timing, and delivery of all these notices must meet certain requirements contained in the statute; consult a real estate attorney for more details.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, business law and litigation. He may be reached at (970)468-4953 or Noah@TheKlugLawFirm.com.
The Colorado mechanics' lien statute was enacted in 1899, and has remained relatively unchanged since. The purpose of the law is to protect contractors who supply labor, materials, or services during construction projects (these people are all referred to in the statute as “mechanics”) by giving them a lien against the property for unpaid sums. The statute also affords certain protections to owners. One feature of the statute is that it provides for various notices, which have significant legal consequences, as explained in this article.
• Government Notice: When a county or town issues a building permit, it is required to send a notice to the address of the property for which the permit was issued to advise the owner that contractors could file liens if they are not paid for the work. This notice is purely advisory.
• Recorded Contract. Once an owner and contractor enter into a contract, the owner can record the contract in the public records. The recording of the contract will restrict the contractor (or any subcontractors under him) from claiming liens for more than the contract price. If the contract is not recorded, contractors are entitled to a lien for the value of the materials, labor, and services they furnished to the property, which may be more or less than the contract price.
• Disburser's Notice: Construction funds may be disbursed by the owner or an agent of the lender. Whoever is acting as the disburser is required to file a notice of that fact in the public records before the first disbursement. This notice informs contractors whom they should ask for payment.
• Stop Notice: A person entitled to a mechanics' lien may give the disburser a “stop notice” advising that the person has provided materials, labor or services for the project, or will do so. The disburser is then obliged to withhold enough funds to directly pay the person providing the stop notice (rather than paying the funds directly to the general contractor). The disburser may be liable for not withholding the funds.
• Notice of Nonresponsibility: It sometimes happens that work is performed on a property for which the owner has not agreed to be responsible (a common case is work requested by a tenant that is not approved by the landlord). The owner can post a “notice of nonresponsibility” at a conspicuous place on the property within five days after the owner becomes aware of the unauthorized work, and this will prevent the property from being subject to a lien for the work.
• Notice of Intent to Lien: A contractor who wishes to claim a mechanics' lien must give the owner and general contractor a “notice of intent to file lien” at least ten days before recording the lien in the public records. Failure to send the notice prior to recording the lien renders the lien invalid.
• Notice of Extension: A person who wishes to claim a mechanics' lien must typically do so within four months after the person performs the last substantial work on the project. The person can file a “notice of extension” within the four-month window, which will extend the deadline for filing the lien until four months after the completion of the project or six months after the filing of the notice, whichever occurs first. If the project is not completed within six months after any notice of extension, the lien claimant can file amended notices of extension, which will again extend the deadline until four months after the completion of the project or six months after the filing of the notice, whichever occurs first.
Construction professionals should be aware of the various notices that may be filed under the mechanics' lien statute and their legal effect. The form, timing, and delivery of all these notices must meet certain requirements contained in the statute; consult a real estate attorney for more details.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, business law and litigation. He may be reached at (970)468-4953 or Noah@TheKlugLawFirm.com.
Mountain Law: New law protects tenants in foreclosures
This article is reproduced from the Summit Daily News, March 10, 2010, by permission of author Noah Klug.
In the recent economic downturn, many landlords lost their properties to foreclosure … and this resulted in many tenants being evicted with little notice by new property owners. To address this critical problem, Congress recently passed the Protecting Tenants at Foreclosure Act (PTFA), which slows down the eviction process after a foreclosure as discussed in this article.
Overview of state law before PTFA: Under Colorado state law, a completed foreclosure results in a new deed for the property being given to either the high bidder (which is often the foreclosing lender) at the public foreclosure sale or the redeemer of a junior lien. I discussed this process in more detail in my April 29, 2009, article entitled “Lien priority fundamentals.”
If the property is leased at the time of a foreclosure sale, the high bidder at the sale or redeeming junior lienholder can keep the lease(s) in effect by filing a notice with the officer conducting the foreclosure sale (either the sheriff or the public trustee) before the officer issues the deed. If the notice is not filed, existing leases are extinguished by the foreclosure. The new owner can then, upon receipt of the deed, commence an eviction action to regain possession of the property from the tenant(s) as necessary.
Effect of PTFA: PTFA slows down the ability of a new owner after foreclosure to evict an existing tenant. It provides that the new owner must give the tenant at least 90 days' notice from when the new deed for the property is issued before commencing eviction. Subject to the limitations discussed below, every tenant is entitled to the 90 days' notice, even if the lease was entered into after the foreclosure commenced; if there is not a written lease; or if the lease could be terminated at will by the landlord under state law.
In the case of a lease that was entered into before the foreclosure started, PTFA permits the tenant to remain in the property until the end of the lease term. The only exception is that the tenant may be evicted if the new owner sells the property to a purchaser who will occupy the property as a primary residence; however, even in that case, the tenant is still entitled to 90 days' notice before the sale. PTFA unhelpfully does not address the respective rights of the new owner and tenant if the tenant does not pay rent to the new owner during the lease term.
Limitations of PTFA: PTFA generally applies if the lien foreclosed: (1) is not temporary financing (such as a construction loan); (2) encumbers residential property (not commercial property); and (3) is made by a lender whose accounts are insured by the federal government or who is regulated by the federal government (which includes most commercial lenders, but not necessarily all private lenders). There are other special times PTFA applies (or does not apply) as provided in the statute.
To qualify under PTFA:
1. The lease must be “bona fide,” which means the tenant is not the owner of the property or his child, spouse or parent;
2. The lease must be the result of an “arms-length” transaction, which means the landlord and tenant are not on close business terms; and
3. The rent received by the landlord cannot be substantially less than fair market rent for the property (unless the rent is subsidized under federal, state or local law).
PTFA does not limit any greater protections that might be provided to tenants under State, Federal, or local law, for subsidized leases.
Summary: When applicable, PTFA permits tenants to stay in a foreclosed property for at least 90 days after the deed is issued to the new owner, and in some cases longer. The law provides relief to tenants when their landlords lose the property.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, business law and litigation. He may be reached at (970)468-4953 or Noah@TheKlugLawFirm.com.
In the recent economic downturn, many landlords lost their properties to foreclosure … and this resulted in many tenants being evicted with little notice by new property owners. To address this critical problem, Congress recently passed the Protecting Tenants at Foreclosure Act (PTFA), which slows down the eviction process after a foreclosure as discussed in this article.
Overview of state law before PTFA: Under Colorado state law, a completed foreclosure results in a new deed for the property being given to either the high bidder (which is often the foreclosing lender) at the public foreclosure sale or the redeemer of a junior lien. I discussed this process in more detail in my April 29, 2009, article entitled “Lien priority fundamentals.”
If the property is leased at the time of a foreclosure sale, the high bidder at the sale or redeeming junior lienholder can keep the lease(s) in effect by filing a notice with the officer conducting the foreclosure sale (either the sheriff or the public trustee) before the officer issues the deed. If the notice is not filed, existing leases are extinguished by the foreclosure. The new owner can then, upon receipt of the deed, commence an eviction action to regain possession of the property from the tenant(s) as necessary.
Effect of PTFA: PTFA slows down the ability of a new owner after foreclosure to evict an existing tenant. It provides that the new owner must give the tenant at least 90 days' notice from when the new deed for the property is issued before commencing eviction. Subject to the limitations discussed below, every tenant is entitled to the 90 days' notice, even if the lease was entered into after the foreclosure commenced; if there is not a written lease; or if the lease could be terminated at will by the landlord under state law.
In the case of a lease that was entered into before the foreclosure started, PTFA permits the tenant to remain in the property until the end of the lease term. The only exception is that the tenant may be evicted if the new owner sells the property to a purchaser who will occupy the property as a primary residence; however, even in that case, the tenant is still entitled to 90 days' notice before the sale. PTFA unhelpfully does not address the respective rights of the new owner and tenant if the tenant does not pay rent to the new owner during the lease term.
Limitations of PTFA: PTFA generally applies if the lien foreclosed: (1) is not temporary financing (such as a construction loan); (2) encumbers residential property (not commercial property); and (3) is made by a lender whose accounts are insured by the federal government or who is regulated by the federal government (which includes most commercial lenders, but not necessarily all private lenders). There are other special times PTFA applies (or does not apply) as provided in the statute.
To qualify under PTFA:
1. The lease must be “bona fide,” which means the tenant is not the owner of the property or his child, spouse or parent;
2. The lease must be the result of an “arms-length” transaction, which means the landlord and tenant are not on close business terms; and
3. The rent received by the landlord cannot be substantially less than fair market rent for the property (unless the rent is subsidized under federal, state or local law).
PTFA does not limit any greater protections that might be provided to tenants under State, Federal, or local law, for subsidized leases.
Summary: When applicable, PTFA permits tenants to stay in a foreclosed property for at least 90 days after the deed is issued to the new owner, and in some cases longer. The law provides relief to tenants when their landlords lose the property.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, business law and litigation. He may be reached at (970)468-4953 or Noah@TheKlugLawFirm.com.
Mountain Law: Understanding HOA liens
This article is reproduced from the Summit Daily News, December 23, 2009, by permission of author Noah Klug.
Colorado homeowner's associations have the power to assess their owners for common expenses. If an owner fails to pay a required assessment when due, the HOA can enforce a lien as discussed in this article.
An HOA lien begins to encumber an owner's unit as soon as an assessment becomes due without the necessity of the HOA filing a notice of the lien in the public records. Nonetheless, many HOAs regularly record a notice of their lien in the public records.
HOA liens are given special priority under Colorado law, which has significant implications in the foreclosure process. An HOA lien is senior to all other liens except a first deed of trust and the county's lien for property taxes. A portion of an HOA lien “equivalent” to six months' worth of dues is senior to a first deed of trust. This portion is often referred to as the “priority portion.” The priority portion of the lien need not actually represent monthly dues. For example, if an owner is current on monthly dues of $100 but fails to pay a special assessment of $600, the priority portion of the lien is still $600 (the equivalent of six months' worth of dues).
A senior lien will continue to encumber the property after foreclosure of a junior lien, but a junior lien will cease to encumber the property after foreclosure of a senior lien unless the junior lienholder “redeems” the property by paying the amount of the high bid at the foreclosure sale plus the amount of any lien senior to it that also redeemed.
For example, say that a property is encumbered by a first deed of trust of $100,000 that is in foreclosure, a second deed of trust of $25,000, and an HOA lien of $5,000. The HOA dues are $100 per month, the property is worth $150,000, and the high bid at the foreclosure sale is $100,000.
The liens can be ranked from most senior to most junior as follows:
1. Priority Portion of HOA Lien ($600)
2. First Deed of Trust ($100,000)
3. Non-Priority Portion of HOA Lien ($4,400)
4. Second Deed of Trust ($25,000)
The priority portion of the HOA lien is most senior; it will continue to encumber the property after the foreclosure sale (and could then be foreclosed by the HOA). The non-priority portion of the HOA lien is junior to the first deed of trust being foreclosed; it will cease to encumber the property after the foreclosure sale unless the HOA redeems the property by paying the amount of the high bid at the sale ($100,000). The second deed of trust is junior to every other lien; it too will cease to encumber the property after the foreclosure sale unless its holder redeems the property by paying the amount of the high bid at the sale ($100,000) plus the amount of the HOA's non-priority lien ($4,400) if the HOA redeems first.
In deciding whether or not to redeem, the HOA will have to determine (1) if it has funds available to redeem; and (2) if it is worth paying $105,000 (the amount to redeem plus the amount the HOA is owed) for a property worth $150,000 after taking into account the cost of holding the property (insurance, taxes, HOA dues, maintenance) and the cost of reselling the property (real estate broker commissions, closing costs). Whether or not to redeem is ultimately a business decision for the HOA to make after reviewing the numbers.
If the HOA is not in a position to redeem by itself, it could sell its redemption rights and the purchaser could then redeem the property. If an HOA loses any portion of its lien, it still typically has the option of suing the owner personally for the debt.
If you understand the principles given in this article, you are well on your way to understanding how HOA liens work. This article is written from the perspective of an HOA; in a future column I will write about options available to a homeowner in dealing with an HOA lien.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, commercial law and litigation. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com.
Colorado homeowner's associations have the power to assess their owners for common expenses. If an owner fails to pay a required assessment when due, the HOA can enforce a lien as discussed in this article.
An HOA lien begins to encumber an owner's unit as soon as an assessment becomes due without the necessity of the HOA filing a notice of the lien in the public records. Nonetheless, many HOAs regularly record a notice of their lien in the public records.
HOA liens are given special priority under Colorado law, which has significant implications in the foreclosure process. An HOA lien is senior to all other liens except a first deed of trust and the county's lien for property taxes. A portion of an HOA lien “equivalent” to six months' worth of dues is senior to a first deed of trust. This portion is often referred to as the “priority portion.” The priority portion of the lien need not actually represent monthly dues. For example, if an owner is current on monthly dues of $100 but fails to pay a special assessment of $600, the priority portion of the lien is still $600 (the equivalent of six months' worth of dues).
A senior lien will continue to encumber the property after foreclosure of a junior lien, but a junior lien will cease to encumber the property after foreclosure of a senior lien unless the junior lienholder “redeems” the property by paying the amount of the high bid at the foreclosure sale plus the amount of any lien senior to it that also redeemed.
For example, say that a property is encumbered by a first deed of trust of $100,000 that is in foreclosure, a second deed of trust of $25,000, and an HOA lien of $5,000. The HOA dues are $100 per month, the property is worth $150,000, and the high bid at the foreclosure sale is $100,000.
The liens can be ranked from most senior to most junior as follows:
1. Priority Portion of HOA Lien ($600)
2. First Deed of Trust ($100,000)
3. Non-Priority Portion of HOA Lien ($4,400)
4. Second Deed of Trust ($25,000)
The priority portion of the HOA lien is most senior; it will continue to encumber the property after the foreclosure sale (and could then be foreclosed by the HOA). The non-priority portion of the HOA lien is junior to the first deed of trust being foreclosed; it will cease to encumber the property after the foreclosure sale unless the HOA redeems the property by paying the amount of the high bid at the sale ($100,000). The second deed of trust is junior to every other lien; it too will cease to encumber the property after the foreclosure sale unless its holder redeems the property by paying the amount of the high bid at the sale ($100,000) plus the amount of the HOA's non-priority lien ($4,400) if the HOA redeems first.
In deciding whether or not to redeem, the HOA will have to determine (1) if it has funds available to redeem; and (2) if it is worth paying $105,000 (the amount to redeem plus the amount the HOA is owed) for a property worth $150,000 after taking into account the cost of holding the property (insurance, taxes, HOA dues, maintenance) and the cost of reselling the property (real estate broker commissions, closing costs). Whether or not to redeem is ultimately a business decision for the HOA to make after reviewing the numbers.
If the HOA is not in a position to redeem by itself, it could sell its redemption rights and the purchaser could then redeem the property. If an HOA loses any portion of its lien, it still typically has the option of suing the owner personally for the debt.
If you understand the principles given in this article, you are well on your way to understanding how HOA liens work. This article is written from the perspective of an HOA; in a future column I will write about options available to a homeowner in dealing with an HOA lien.
Noah Klug is principal of The Klug Law Firm, LLC, a general law practice in Summit County emphasizing real estate, commercial law and litigation. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com.
A Tale of Two HOAs
This article is reproduced from the Summit Daily News, October 28, 2009, by permission of author Noah Klug.
Long Run and Short Run are both older condominium projects in the mountains of Colorado. The units are owned by individual homeowners, but the exterior of each building, including the windows, siding, decks, and parking areas are “common elements” owned by all the unit owners (which is typical in a condominium).
It was the best of times: An HOA With Money in Reserve
Twenty years ago, Long Run recognized some day all of the common elements would wear out or become outdated and need to be replaced. Its board commissioned a study of how long each significant part of the common elements would be expected to last; it then determined how much it might cost to replace each part as needed (adjusted for inflation). It calculated an amount that each owner would be required to pay monthly into a “reserve” account (in addition to the regular dues) so funds would be available to pay for needed renovations in the future. The siding and windows needed replacement this year, and Long Run had the money available in its reserve account for the work. The Long Run owners are pleased with the renovations and thankful that the prior unit owners had the foresight to plan ahead and contributed their share to the replacement costs.
It was the worst of times: An HOA That Relies on Special Assessments
Short Run's board of directors figured replacement of the common elements could be addressed when needed in the future. It did not collect any amount for “reserves”; as a result, it was able to keep the regular dues lower than at Long Run. This year the siding and windows needed replacement. There was no money to pay for this work, so Short Run's board approved a large “special assessment” on each owner to raise the money. Some of the owners can afford this payment, and they are looking forward to the renovations. Other owners are upset because they don't have the money readily available. They are irate that prior unit owners did not plan ahead or contribute their share to the replacement costs. The Short Run board told the owners that they have 30 days to pay and, if they don't pay, the HOA will be forced to take enforcement action. It doesn't seem fair to some Short Run owners that they could be forced to make such a big payment on short notice.
Colorado law gives the board of directors of each HOA the power, but not the obligation, to place money into a reserve account. If an association has conducted a “reserve study” for the common elements, the association must disclose to the owners how the study was done, whether there is a funding plan for the work recommended by the study and, if so, the projected source(s) of funding.
Colorado law does not place any restrictions on the ability of an HOA to impose a “special assessment” for irregular expenses (although restrictions might appear in an HOA's covenants). It is not uncommon for an HOA to approve a renovation project requiring each owner to pay thousands of dollars on short notice; failure to pay can result in the HOA foreclosing on its lien for unpaid assessments.
The moral of the story is clear: Condominium owners and potential buyers should be aware of whether the HOA collects a reserve and that the absence of an adequate reserve may mean that a hefty special assessment is in their future. Perhaps some HOAs should plan now for a different ending to the tale ....
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734, or Noah@BreckenridgeLawyer.com.
Long Run and Short Run are both older condominium projects in the mountains of Colorado. The units are owned by individual homeowners, but the exterior of each building, including the windows, siding, decks, and parking areas are “common elements” owned by all the unit owners (which is typical in a condominium).
It was the best of times: An HOA With Money in Reserve
Twenty years ago, Long Run recognized some day all of the common elements would wear out or become outdated and need to be replaced. Its board commissioned a study of how long each significant part of the common elements would be expected to last; it then determined how much it might cost to replace each part as needed (adjusted for inflation). It calculated an amount that each owner would be required to pay monthly into a “reserve” account (in addition to the regular dues) so funds would be available to pay for needed renovations in the future. The siding and windows needed replacement this year, and Long Run had the money available in its reserve account for the work. The Long Run owners are pleased with the renovations and thankful that the prior unit owners had the foresight to plan ahead and contributed their share to the replacement costs.
It was the worst of times: An HOA That Relies on Special Assessments
Short Run's board of directors figured replacement of the common elements could be addressed when needed in the future. It did not collect any amount for “reserves”; as a result, it was able to keep the regular dues lower than at Long Run. This year the siding and windows needed replacement. There was no money to pay for this work, so Short Run's board approved a large “special assessment” on each owner to raise the money. Some of the owners can afford this payment, and they are looking forward to the renovations. Other owners are upset because they don't have the money readily available. They are irate that prior unit owners did not plan ahead or contribute their share to the replacement costs. The Short Run board told the owners that they have 30 days to pay and, if they don't pay, the HOA will be forced to take enforcement action. It doesn't seem fair to some Short Run owners that they could be forced to make such a big payment on short notice.
Colorado law gives the board of directors of each HOA the power, but not the obligation, to place money into a reserve account. If an association has conducted a “reserve study” for the common elements, the association must disclose to the owners how the study was done, whether there is a funding plan for the work recommended by the study and, if so, the projected source(s) of funding.
Colorado law does not place any restrictions on the ability of an HOA to impose a “special assessment” for irregular expenses (although restrictions might appear in an HOA's covenants). It is not uncommon for an HOA to approve a renovation project requiring each owner to pay thousands of dollars on short notice; failure to pay can result in the HOA foreclosing on its lien for unpaid assessments.
The moral of the story is clear: Condominium owners and potential buyers should be aware of whether the HOA collects a reserve and that the absence of an adequate reserve may mean that a hefty special assessment is in their future. Perhaps some HOAs should plan now for a different ending to the tale ....
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734, or Noah@BreckenridgeLawyer.com.
Tax sales: Nightmare ... and an opportunity
This article is reproduced from the Summit Daily News, September 16, 2009, by permission of author Noah Klug.
All real property in Colorado is encumbered by a tax lien for real property taxes until the taxes are paid. If the taxes aren't paid on time, the lien can be sold at a tax sale, and the owner can eventually lose his property. Here is an introduction to the tax sale process.
Property Tax Payment Schedule: The county treasurer sends owners tax statements early each year indicating the taxes due for the previous year. Owners have the option of paying the taxes in one payment not later than the last day in April, or in two equal installments on or before the last day of February and the 15th day of June. If payment is not made according to one of these options, the taxes are considered delinquent and pre-sale interest begins accruing at the rate of 1 percent per month. No later than September 1 of each year, the treasurer mails notices to owners who have not paid their taxes indicating the delinquent amounts and the date of the tax sale. The treasurer also posts the notices and publishes them three times in a local paper. (In Summit County, the first publication will occur on September 18, 2009, in the Summit County Journal, and the sale will commence on October 21, 2009.)
Conduct of sale: The treasurer sells each tax lien to the highest bidder at a public sale commencing on the date indicated in the notices. The minimum bid for each lien is the taxes due, plus the pre-sale interest and the treasurer's costs of the sale. Any liens that don't sell become “owned” by the government entities that levied the taxes. The treasurer issues a certificate after each sale naming the new owner of the lien.
Effect of sale: After the tax sale, the owner of the property retains all normal rights in the property, but the property is encumbered by the tax lien, which has priority over all over liens. The holder of the certificate can pay the taxes in subsequent years to prevent new tax liens from encumbering the property, and these amounts are then added to the amount of the lien. The holder of the certificate can also sell or assign his certificate to other parties.
Issuance of tax deed: If the taxes remain unpaid, the treasurer can issue a treasurer's deed for the property to the holder of the certificate three years after the tax sale. Upon receiving a tax deed request from the holder of the certificate, the treasurer gives a notice to persons with interests in the property and publishes the notice in the local paper. The notice must be given not more than five months or less than three months before the treasurer issues the deed. If no one redeems the property before the date given in the notice, the treasurer issues the deed to the holder of the certificate, who then becomes the new owner of the property free and clear of all liens.
Redemption: The holder of the certificate earns post-sale interest on the lien at a specified rate, which is currently 9.5 percent. The owner or any lienholder can redeem the property at any time before the treasurer issues the deed by paying all amounts due to the holder of the certificate, including the amount bid at the sale plus certain allowed costs and post-sale interest. Redemption does not transfer title to the person redeeming; it only prevents title from transferring to the holder of the certificate.
For those unfortunate owners who lose their properties following a tax sale, tax liens are a bad deal; but, in some cases, purchasing tax liens can be a reasonable investment for patient investors.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at (970) 453-2734 or Noah@BreckenridgeLawer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.
All real property in Colorado is encumbered by a tax lien for real property taxes until the taxes are paid. If the taxes aren't paid on time, the lien can be sold at a tax sale, and the owner can eventually lose his property. Here is an introduction to the tax sale process.
Property Tax Payment Schedule: The county treasurer sends owners tax statements early each year indicating the taxes due for the previous year. Owners have the option of paying the taxes in one payment not later than the last day in April, or in two equal installments on or before the last day of February and the 15th day of June. If payment is not made according to one of these options, the taxes are considered delinquent and pre-sale interest begins accruing at the rate of 1 percent per month. No later than September 1 of each year, the treasurer mails notices to owners who have not paid their taxes indicating the delinquent amounts and the date of the tax sale. The treasurer also posts the notices and publishes them three times in a local paper. (In Summit County, the first publication will occur on September 18, 2009, in the Summit County Journal, and the sale will commence on October 21, 2009.)
Conduct of sale: The treasurer sells each tax lien to the highest bidder at a public sale commencing on the date indicated in the notices. The minimum bid for each lien is the taxes due, plus the pre-sale interest and the treasurer's costs of the sale. Any liens that don't sell become “owned” by the government entities that levied the taxes. The treasurer issues a certificate after each sale naming the new owner of the lien.
Effect of sale: After the tax sale, the owner of the property retains all normal rights in the property, but the property is encumbered by the tax lien, which has priority over all over liens. The holder of the certificate can pay the taxes in subsequent years to prevent new tax liens from encumbering the property, and these amounts are then added to the amount of the lien. The holder of the certificate can also sell or assign his certificate to other parties.
Issuance of tax deed: If the taxes remain unpaid, the treasurer can issue a treasurer's deed for the property to the holder of the certificate three years after the tax sale. Upon receiving a tax deed request from the holder of the certificate, the treasurer gives a notice to persons with interests in the property and publishes the notice in the local paper. The notice must be given not more than five months or less than three months before the treasurer issues the deed. If no one redeems the property before the date given in the notice, the treasurer issues the deed to the holder of the certificate, who then becomes the new owner of the property free and clear of all liens.
Redemption: The holder of the certificate earns post-sale interest on the lien at a specified rate, which is currently 9.5 percent. The owner or any lienholder can redeem the property at any time before the treasurer issues the deed by paying all amounts due to the holder of the certificate, including the amount bid at the sale plus certain allowed costs and post-sale interest. Redemption does not transfer title to the person redeeming; it only prevents title from transferring to the holder of the certificate.
For those unfortunate owners who lose their properties following a tax sale, tax liens are a bad deal; but, in some cases, purchasing tax liens can be a reasonable investment for patient investors.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at (970) 453-2734 or Noah@BreckenridgeLawer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.
Transferring development rights, Summit County style
This article is reproduced from the Summit Daily News, August 26, 2009, by permission of author Noah Klug
A recent court ruling muddies the waters.
The Summit County District Court recently decided the county could not require a landowner to purchase density through the county's transferable development rights (TDR) program in order to develop his four lots. The court's decision is likely to result in changes to the county master plans and regulations.
In the 1960s, the Stoningtons bought four contiguous platted lots in the Silver Shekel subdivision near Breckenridge. In 1978, the Stoningtons successfully petitioned the county to vacate the lot lines between the four lots to create one large lot. The Stoningtons indicated in their petition that they did not plan to develop the property. Since that time, the county has treated the lots as one lot for purposes of property tax and other matters. Doug Polanski purchased the consolidated lots in 2006 and then applied to the county to re-establish the lot lines. The board of county commissioners (BOCC) approved the request subject to certain conditions, including the requirement that Polanski purchase density for the three recreated lots through the county's TDR program. Polanski asked the district court to review the TDR requirement.
The BOCC said it made its decision because (1) the Stoningtons told the county that they would not develop the lots and (2) the county relied on the Stoningtons' representations to its detriment by foregoing “decades of property tax revenues, and assessments for public improvements.” The court rejected the county's reasoning because there was no evidence that Polanski knew about the Stoningtons' representations when he purchased the lots. The court also found that the Stoningtons' representations were not a promise that they (and future owners) would never develop the lots, but only a statement that the Stoningtons personally had no intent to develop the lots at that time. The court noted that the county could have protected its interests in 1978 by replatting the lots into a single lot or recording a covenant restricting the lots' development (neither of which was done).
The court found these reasons sufficient to overrule the BOCC. Nevertheless, it took the unusual step of identifying an additional ground for reversing the BOCC's decision based on the language of the county master plans and regulations (even though that issue had not been raised by Polanski). Courts don't usually consider arguments that are not raised by the parties to a dispute, but they have discretion to do so in exceptional circumstances.
The court interpreted the Countywide Comprehensive Plan, which provides guidance for development of the county overall, two Upper Blue Master Plans, which provide guidance for development specifically in the Upper Blue Basin (which extends from Hoosier Pass to Lake Dillon), and the County Land Use & Development Code. Taken together, the court found the language of these documents to mean that a property's underlying zoning governs its allowed density, not provisions in the master plans that purport to restrict density. Since the lots at issue were zoned to allow two homes per acre, and they were more than two acres in total size, the court said the county could not require Polanski to purchase additional density in order to recreate the four lots.
Summit County disagrees with the court's decision; but, rather than appealing, the county decided it would be more productive to make significant changes to its regulations and master plans to ensure the continuing viability of the TDR program. It will be interesting to watch this process develop. A copy of the Polanski decision is on my firm's website, www.BreckenridgeLawyer.com, for those interested in reading it.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at (970) 453-2734 or Noah@BreckenridgeLawyer.com. He is a member of the Snake River Planning Commission, which may be involved in reviewing the TDR program.
A recent court ruling muddies the waters.
The Summit County District Court recently decided the county could not require a landowner to purchase density through the county's transferable development rights (TDR) program in order to develop his four lots. The court's decision is likely to result in changes to the county master plans and regulations.
In the 1960s, the Stoningtons bought four contiguous platted lots in the Silver Shekel subdivision near Breckenridge. In 1978, the Stoningtons successfully petitioned the county to vacate the lot lines between the four lots to create one large lot. The Stoningtons indicated in their petition that they did not plan to develop the property. Since that time, the county has treated the lots as one lot for purposes of property tax and other matters. Doug Polanski purchased the consolidated lots in 2006 and then applied to the county to re-establish the lot lines. The board of county commissioners (BOCC) approved the request subject to certain conditions, including the requirement that Polanski purchase density for the three recreated lots through the county's TDR program. Polanski asked the district court to review the TDR requirement.
The BOCC said it made its decision because (1) the Stoningtons told the county that they would not develop the lots and (2) the county relied on the Stoningtons' representations to its detriment by foregoing “decades of property tax revenues, and assessments for public improvements.” The court rejected the county's reasoning because there was no evidence that Polanski knew about the Stoningtons' representations when he purchased the lots. The court also found that the Stoningtons' representations were not a promise that they (and future owners) would never develop the lots, but only a statement that the Stoningtons personally had no intent to develop the lots at that time. The court noted that the county could have protected its interests in 1978 by replatting the lots into a single lot or recording a covenant restricting the lots' development (neither of which was done).
The court found these reasons sufficient to overrule the BOCC. Nevertheless, it took the unusual step of identifying an additional ground for reversing the BOCC's decision based on the language of the county master plans and regulations (even though that issue had not been raised by Polanski). Courts don't usually consider arguments that are not raised by the parties to a dispute, but they have discretion to do so in exceptional circumstances.
The court interpreted the Countywide Comprehensive Plan, which provides guidance for development of the county overall, two Upper Blue Master Plans, which provide guidance for development specifically in the Upper Blue Basin (which extends from Hoosier Pass to Lake Dillon), and the County Land Use & Development Code. Taken together, the court found the language of these documents to mean that a property's underlying zoning governs its allowed density, not provisions in the master plans that purport to restrict density. Since the lots at issue were zoned to allow two homes per acre, and they were more than two acres in total size, the court said the county could not require Polanski to purchase additional density in order to recreate the four lots.
Summit County disagrees with the court's decision; but, rather than appealing, the county decided it would be more productive to make significant changes to its regulations and master plans to ensure the continuing viability of the TDR program. It will be interesting to watch this process develop. A copy of the Polanski decision is on my firm's website, www.BreckenridgeLawyer.com, for those interested in reading it.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at (970) 453-2734 or Noah@BreckenridgeLawyer.com. He is a member of the Snake River Planning Commission, which may be involved in reviewing the TDR program.
Mountain Law: Enforcing community standards, Six things to know
This article is reproduced from the Summit Daily News, July 29, 2009, by permission of author Noak Klug
Condominiums and single-family homes are often subject to protective covenants, as well as rules and regulations adopted by their homeowner associations. Even though the association may be primarily responsible for enforcing these provisions, they can usually be enforced by individual owners. Here are six things to know about enforcing community standards:
1. Options for enforcing community standards.
Community standards are best enforced informally. Where informal efforts fail, associations have the power to impose fines for violations (see #4 below) and to enforce a lien (#5 below). Standards may be enforced through legal action. If the cost to remove the violation is less than $7,500, a covenant can often be enforced quickly and inexpensively in small claims court.
2. One-year limit on enforcing some community standards.
If an owner builds something on his property that violates the covenants, such as building a fence when the community prohibits fences, the association and neighbors have only one year to file a lawsuit. A prudent association will confront the situation soon after discovering the violation so that meaningful discussions can take place with the owner long before the expiration of this short statute of limitations. There is no statute of limitations for building or zoning violations; if a covenant violation is also a building or zoning violation (such as building a home that is too tall), the association may have a remedy through government authorities.
3. Attorney fees. In most disputes between an association and a homeowner, the court has the power to award reasonable attorney fees and costs to the prevailing party. If an association sues an owner for a perceived violation and the owner prevails, the association cannot assess the owner for any portion of the association's litigation expenses.
4. Enforcement by imposition of fines. Associations may enforce standards by imposing fines; however, fines are not valid unless the association has a written policy providing the fine schedule. The policy must include a fair and impartial fact-finding process to determine whether an owner should be held responsible. The process must, at a minimum, provide the owner with notice of an alleged violation and the opportunity for a hearing before impartial decision makers who do not have a financial interest in the outcome or personal interests in the outcome greater than general membership of the association.
5. Enforcement by association lien. Homeowner associations may enforce a lien under Colorado law against the property of an owner who does not pay required fines or assessments. The lien exists by operation of the statute and need not be recorded in the public records to be valid (although many associations record a notice of lien anyway). The amount of the lien includes fees, charges, attorney fees, fines, accelerated payments, and interest. Associations may enforce their liens by foreclosing on the property with a sheriff's sale. A portion of the lien has special priority under Colorado law, which makes it a powerful collection tool. (For a general discussion of lien priority, see my April 29, 2009, article titled “Lien Priority Fundamentals”).
6. Dispute resolution policy. Colorado law requires that homeowner association boards adopt written policies concerning how disputes will be handled between the association and owners. These policies often require that disputes be submitted to mediation with a neutral third party before either side can file a lawsuit.
Owners and associations should consider carefully the options available, the risks, and the correct procedures for enforcing community standards. This is one topic I will address at a free class I am teaching on homeowner association law Thursday (July 30). For more information, contact Brooke Roberts, Land Title Guarantee Company, (970) 453-2255.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.
Condominiums and single-family homes are often subject to protective covenants, as well as rules and regulations adopted by their homeowner associations. Even though the association may be primarily responsible for enforcing these provisions, they can usually be enforced by individual owners. Here are six things to know about enforcing community standards:
1. Options for enforcing community standards.
Community standards are best enforced informally. Where informal efforts fail, associations have the power to impose fines for violations (see #4 below) and to enforce a lien (#5 below). Standards may be enforced through legal action. If the cost to remove the violation is less than $7,500, a covenant can often be enforced quickly and inexpensively in small claims court.
2. One-year limit on enforcing some community standards.
If an owner builds something on his property that violates the covenants, such as building a fence when the community prohibits fences, the association and neighbors have only one year to file a lawsuit. A prudent association will confront the situation soon after discovering the violation so that meaningful discussions can take place with the owner long before the expiration of this short statute of limitations. There is no statute of limitations for building or zoning violations; if a covenant violation is also a building or zoning violation (such as building a home that is too tall), the association may have a remedy through government authorities.
3. Attorney fees. In most disputes between an association and a homeowner, the court has the power to award reasonable attorney fees and costs to the prevailing party. If an association sues an owner for a perceived violation and the owner prevails, the association cannot assess the owner for any portion of the association's litigation expenses.
4. Enforcement by imposition of fines. Associations may enforce standards by imposing fines; however, fines are not valid unless the association has a written policy providing the fine schedule. The policy must include a fair and impartial fact-finding process to determine whether an owner should be held responsible. The process must, at a minimum, provide the owner with notice of an alleged violation and the opportunity for a hearing before impartial decision makers who do not have a financial interest in the outcome or personal interests in the outcome greater than general membership of the association.
5. Enforcement by association lien. Homeowner associations may enforce a lien under Colorado law against the property of an owner who does not pay required fines or assessments. The lien exists by operation of the statute and need not be recorded in the public records to be valid (although many associations record a notice of lien anyway). The amount of the lien includes fees, charges, attorney fees, fines, accelerated payments, and interest. Associations may enforce their liens by foreclosing on the property with a sheriff's sale. A portion of the lien has special priority under Colorado law, which makes it a powerful collection tool. (For a general discussion of lien priority, see my April 29, 2009, article titled “Lien Priority Fundamentals”).
6. Dispute resolution policy. Colorado law requires that homeowner association boards adopt written policies concerning how disputes will be handled between the association and owners. These policies often require that disputes be submitted to mediation with a neutral third party before either side can file a lawsuit.
Owners and associations should consider carefully the options available, the risks, and the correct procedures for enforcing community standards. This is one topic I will address at a free class I am teaching on homeowner association law Thursday (July 30). For more information, contact Brooke Roberts, Land Title Guarantee Company, (970) 453-2255.
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.
5 things to keep in mind on property co-ownership
This article is reproduced from the Summit Daily News, July 8, 2009, by permission of author Noah Klug
When unrelated individuals share the ownership of a home or condo, it's wise for them to take the time at the outset to prepare a co-ownership agreement. The two most common forms for holding title to co-owned property are (a) holding title to the property in the owners' individual names and (b) forming an entity to hold title, with the entity owned by the individuals. The form used depends on many factors, and affects many issues, including how the property can be financed (if at all), the owners' respective tax benefits and burdens from owning the property, the owners' potential liability to third parties injured at the property, the potential for protection from the owners' creditors, and how the property will pass upon the death of any owner. The choice should be made only with professional advice. Regardless of how title is held to the property, here are five topics that should be addressed in any co-ownership agreement:
1. Usage Rights. The co-ownership agreement should provide firm and fair guidelines for when the property may be used by each owner. Many co-owners create a rotating schedule so that key periods (such as Christmas and other holidays) are allocated equally. A fixed schedule, however, doesn't prevent the owners from informally re-arranging their occupancy periods.
2. House Rules. The co-owners should have a clear understanding of the dos and don'ts of usage. For example, will pets or smoking be allowed? May an owner allow friends and relatives to use the property? May any owner put the property into a rental management program for their use period? Are the owners required to have the property professionally cleaned after each use?
3. Management and Financial Issues. Unless the co-owners hire a professional property manager, the co-ownership agreement should designate the owner (perhaps on a rotating basis) who will handle the bills and other paperwork for the property. The agreement should include a list of these duties, and provision should be made for when the designated manager cannot or does not perform the required tasks.
The likelihood of disputes over money will be reduced if the owners agree to an annual budget in advance, including the anticipated expenses and income (if any), coupled with a schedule of regular contributions from each owner. The budget should include building a cash reserve so funds are readily available to pay for needed repairs and replacement.
4. Making Decisions and Resolving Disputes. It is not uncommon for co-owners to have a difference of opinion on crucial issues, and a well-drafted co-ownership agreement will contain a dispute resolution process. If, for example, a home were co-owned by two couples and one couple wanted to remodel but the other couple didn't, the result could be a stalemate. Many co-ownership agreements include a requirement that disputes be mediated by a third party.
5. Exit Strategy. When co-owners buy a property together, they usually have similar goals. But, sooner or later, their interests may diverge because of changes in their individual financial situations, relocation, divorce, death and other events. The co-ownership agreement should address whether one owner can sell or give his interest to an outside party and whether any owner can force a sale of the entire property or another owners' interest. Co-owners often retain a preemptive “right of first refusal,” with special rules for disposition to a relative.
When co-owners address important issues at the outset, it is more likely that they will have a smooth relationship. For a longer list of issues that should be addressed in any co-ownership agreement, check our firm's website at www.BreckenridgeLawyer.com and click on “Co-Ownership Questionnaire.”
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult a professional for advice on your particular situation.
When unrelated individuals share the ownership of a home or condo, it's wise for them to take the time at the outset to prepare a co-ownership agreement. The two most common forms for holding title to co-owned property are (a) holding title to the property in the owners' individual names and (b) forming an entity to hold title, with the entity owned by the individuals. The form used depends on many factors, and affects many issues, including how the property can be financed (if at all), the owners' respective tax benefits and burdens from owning the property, the owners' potential liability to third parties injured at the property, the potential for protection from the owners' creditors, and how the property will pass upon the death of any owner. The choice should be made only with professional advice. Regardless of how title is held to the property, here are five topics that should be addressed in any co-ownership agreement:
1. Usage Rights. The co-ownership agreement should provide firm and fair guidelines for when the property may be used by each owner. Many co-owners create a rotating schedule so that key periods (such as Christmas and other holidays) are allocated equally. A fixed schedule, however, doesn't prevent the owners from informally re-arranging their occupancy periods.
2. House Rules. The co-owners should have a clear understanding of the dos and don'ts of usage. For example, will pets or smoking be allowed? May an owner allow friends and relatives to use the property? May any owner put the property into a rental management program for their use period? Are the owners required to have the property professionally cleaned after each use?
3. Management and Financial Issues. Unless the co-owners hire a professional property manager, the co-ownership agreement should designate the owner (perhaps on a rotating basis) who will handle the bills and other paperwork for the property. The agreement should include a list of these duties, and provision should be made for when the designated manager cannot or does not perform the required tasks.
The likelihood of disputes over money will be reduced if the owners agree to an annual budget in advance, including the anticipated expenses and income (if any), coupled with a schedule of regular contributions from each owner. The budget should include building a cash reserve so funds are readily available to pay for needed repairs and replacement.
4. Making Decisions and Resolving Disputes. It is not uncommon for co-owners to have a difference of opinion on crucial issues, and a well-drafted co-ownership agreement will contain a dispute resolution process. If, for example, a home were co-owned by two couples and one couple wanted to remodel but the other couple didn't, the result could be a stalemate. Many co-ownership agreements include a requirement that disputes be mediated by a third party.
5. Exit Strategy. When co-owners buy a property together, they usually have similar goals. But, sooner or later, their interests may diverge because of changes in their individual financial situations, relocation, divorce, death and other events. The co-ownership agreement should address whether one owner can sell or give his interest to an outside party and whether any owner can force a sale of the entire property or another owners' interest. Co-owners often retain a preemptive “right of first refusal,” with special rules for disposition to a relative.
When co-owners address important issues at the outset, it is more likely that they will have a smooth relationship. For a longer list of issues that should be addressed in any co-ownership agreement, check our firm's website at www.BreckenridgeLawyer.com and click on “Co-Ownership Questionnaire.”
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult a professional for advice on your particular situation.
When local government says ‘time out!'
This article is reproduced from the Summit Daily News, June 9, 2009, by permission of author Noah Klug.
I read with interest a recent article in the Summit Daily News titled “Condo-Hotel Approval Triggers A Look At Zoning,” which discussed Summit County's approval of a new development on Tiger Road. We don't have a pony in the race about the development, but it struck me that the project was apparently approved because it complied with zoning adopted in 1969 despite concerns about how well that zoning meshes with today's community vision. Summit County's hands were likely not tied in the matter. When faced with potentially inadequate regulations, Summit County, like all local governments, has tools at its disposal to halt or slow growth until it adopts new growth-management programs, comprehensive plans, or zoning ordinances. One frequently used approach is imposition of a moratorium.
The leading Colorado case involved a businessman who purchased a shuttered historic theater in Central City prior to the 1991 constitutional amendment allowing limited-stakes gambling in that city. After the amendment was adopted, the landowner entered into a contract to sell the theater contingent upon the city's approval of a gambling permit, and he applied for the permit. The city then placed a moratorium on new development in the gaming district until studies were completed concerning the city's capacity to absorb growth spawned by gambling. As a direct result of the moratorium, the landowner's permit application was suspended and his pending sale fell through. Ten months later, the growth studies were completed and the city repealed the moratorium. The landowner then sued the city alleging that the moratorium constituted a taking of his property because it left him with no reasonable use of the theater during the 10-month period. The court held that it was permissible for a municipality to impose a moratorium if it was based on a good faith and reasonable effort to permit more effective governmental decision making. The court also held that there had been no “taking” of private property, and the owner was not entitled to any compensation.
The Central City case showed the power of local governments to impose moratoria under their police powers. In another case involving controversial proposed development of a large ranch between Aspen and Snowmass, the court held that Pitkin County had authority under a statute known as the Local Government Land Use Control Enabling Act to impose a temporary moratorium on land use application reviews while the county made changes to its master plan. Similar provisions likely could have been invoked concerning the development on Tiger Road.
Local governments do not have unlimited powers to impose moratoria. In a case from Colorado Springs, the city council, by resolution, approved a moratorium on adult bookstores pending further studies of the issue, and a bookstore operator sued. The court held that because ordinances are adopted by legislative process, they can only be changed by new ordinances adopted through legislative process. Thus, the city's moratorium by resolution was ineffective.
A case from Boulder went all the way to the United States Supreme Court, which held that it was a violation of federal antitrust law to adopt a moratorium on the expansion of cable television businesses in the city while the council drafted a new ordinance to regulate these businesses and invite new operators into the market.
So, when local governments are faced with regulations that are potentially inconsistent with community goals, they have the ability to call “time out” for a reasonable period of time to study and address the issues provided that they follow the correct procedures. That option was likely available in the Tiger Run case (as well as other options that the county may be pursuing).
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.
I read with interest a recent article in the Summit Daily News titled “Condo-Hotel Approval Triggers A Look At Zoning,” which discussed Summit County's approval of a new development on Tiger Road. We don't have a pony in the race about the development, but it struck me that the project was apparently approved because it complied with zoning adopted in 1969 despite concerns about how well that zoning meshes with today's community vision. Summit County's hands were likely not tied in the matter. When faced with potentially inadequate regulations, Summit County, like all local governments, has tools at its disposal to halt or slow growth until it adopts new growth-management programs, comprehensive plans, or zoning ordinances. One frequently used approach is imposition of a moratorium.
The leading Colorado case involved a businessman who purchased a shuttered historic theater in Central City prior to the 1991 constitutional amendment allowing limited-stakes gambling in that city. After the amendment was adopted, the landowner entered into a contract to sell the theater contingent upon the city's approval of a gambling permit, and he applied for the permit. The city then placed a moratorium on new development in the gaming district until studies were completed concerning the city's capacity to absorb growth spawned by gambling. As a direct result of the moratorium, the landowner's permit application was suspended and his pending sale fell through. Ten months later, the growth studies were completed and the city repealed the moratorium. The landowner then sued the city alleging that the moratorium constituted a taking of his property because it left him with no reasonable use of the theater during the 10-month period. The court held that it was permissible for a municipality to impose a moratorium if it was based on a good faith and reasonable effort to permit more effective governmental decision making. The court also held that there had been no “taking” of private property, and the owner was not entitled to any compensation.
The Central City case showed the power of local governments to impose moratoria under their police powers. In another case involving controversial proposed development of a large ranch between Aspen and Snowmass, the court held that Pitkin County had authority under a statute known as the Local Government Land Use Control Enabling Act to impose a temporary moratorium on land use application reviews while the county made changes to its master plan. Similar provisions likely could have been invoked concerning the development on Tiger Road.
Local governments do not have unlimited powers to impose moratoria. In a case from Colorado Springs, the city council, by resolution, approved a moratorium on adult bookstores pending further studies of the issue, and a bookstore operator sued. The court held that because ordinances are adopted by legislative process, they can only be changed by new ordinances adopted through legislative process. Thus, the city's moratorium by resolution was ineffective.
A case from Boulder went all the way to the United States Supreme Court, which held that it was a violation of federal antitrust law to adopt a moratorium on the expansion of cable television businesses in the city while the council drafted a new ordinance to regulate these businesses and invite new operators into the market.
So, when local governments are faced with regulations that are potentially inconsistent with community goals, they have the ability to call “time out” for a reasonable period of time to study and address the issues provided that they follow the correct procedures. That option was likely available in the Tiger Run case (as well as other options that the county may be pursuing).
Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.
Making land available for public recreation? Protection exists
This article is reproduced from the Summit Daily News, May 26, 2009, by permission of author, Noah Klug
Every so often I run across a landowner who tells me that he would like to make his land available to the general public for skiing, hiking, or some other recreational use, but he is afraid of the liability that might result if a person were injured on the land. Fortunately, there is a state law known as the Colorado Recreational Use Statute (CRUS) that is designed to promote public use of private lands for recreation by shielding landowners from most liability. Here is a brief discussion of the law.
Generally speaking, Colorado law divides users of land into three categories: trespassers, licensees, and invitees. The potential liability of the owner depends on the status of the user and increases with each category.
• Trespassers: A trespasser is a person who enters onto land without the landowner’s consent. A landowner is liable to trespassers only if the owner causes intentional harm. For example, if a landowner erects a cable across his private road to restrict access and a trespassing mountain biker is injured when he runs into the unexpected cable, the landowner would only be liable if the cyclist could show that the landowner erected the cable with the intent of causing harm rather than simply as a roadblock.
• Licensees: A licensee is a person who enters onto land for his own purposes, but with the landowner’s consent. This category includes the landowner’s social guests. A landowner is liable to licensees for failure to take reasonable precautions or give reasonable warnings about known dangers on his property. For example, if a homeowner knows that a glass door in his home is difficult to see, but doesn’t tell his guests about it or mark it conspicuously, he could be liable if one of his guests walks into the door and breaks his nose.
• Invitees: An invitee is either a person who transacts business on the property with the owner or a member of the public who is expressly or impliedly invited onto the property. A businessman at a meeting is generally an invitee of the host company, and a shopper is an invitee of the supermarket. A landowner is liable to invitees if he fails to take reasonable action to protect against dangers — not just those of which he had actual knowledge, but also those of which he should have been aware.
In the absence of CRUS, a landowner might be justifiably reluctant to make his land available to the public for fear that the users would be categorized as licensees or invitees, and that the landowner could be liable not just for his intentional acts, but also for his failure to protect or warn about known risks or risks of which a judge or jury determine he should have known.
So what does CRUS do? CRUS provides that a landowner who either directly or indirectly invites or permits, without charge, any person to use his property for recreational purposes (a) does not thereby extend any assurance that the property is safe for any purpose; (b) does not confer upon such person the legal status of an invitee or licensee to whom special duties are owed; and (c) does not assume responsibility in any way for such person’s acts or omissions. The term “recreational purposes” is given a broad definition that includes most pursuits. In the event that a recreational user of land sues the landowner, the prevailing party in the action is entitled to his attorney fees and costs of litigation. CRUS’s protections extend to the landowner’s tenants and other occupants.
A landowner can still be liable under CRUS if:
• He intentionally harms someone;
• He charges for the use of his land;
• He permits use of the land as part of his business; or
• He maintains an “attractive nuisance” on the land, which is a dangerous condition that is extraordinarily attractive to children (such as unattended machinery). Abandoned mining operations and areas of natural or manmade water storage or diversion (i.e. ponds, ditches and streams) are not considered attractive nuisances under CRUS.
So, a landowner who is hesitating to make his land available to the public should consider whether CRUS’s protections justify a change in position.
Noah Klug is an attorney with Bauer & Burns, P.C. in Breckenridge. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for a review of your particular situation.
Every so often I run across a landowner who tells me that he would like to make his land available to the general public for skiing, hiking, or some other recreational use, but he is afraid of the liability that might result if a person were injured on the land. Fortunately, there is a state law known as the Colorado Recreational Use Statute (CRUS) that is designed to promote public use of private lands for recreation by shielding landowners from most liability. Here is a brief discussion of the law.
Generally speaking, Colorado law divides users of land into three categories: trespassers, licensees, and invitees. The potential liability of the owner depends on the status of the user and increases with each category.
• Trespassers: A trespasser is a person who enters onto land without the landowner’s consent. A landowner is liable to trespassers only if the owner causes intentional harm. For example, if a landowner erects a cable across his private road to restrict access and a trespassing mountain biker is injured when he runs into the unexpected cable, the landowner would only be liable if the cyclist could show that the landowner erected the cable with the intent of causing harm rather than simply as a roadblock.
• Licensees: A licensee is a person who enters onto land for his own purposes, but with the landowner’s consent. This category includes the landowner’s social guests. A landowner is liable to licensees for failure to take reasonable precautions or give reasonable warnings about known dangers on his property. For example, if a homeowner knows that a glass door in his home is difficult to see, but doesn’t tell his guests about it or mark it conspicuously, he could be liable if one of his guests walks into the door and breaks his nose.
• Invitees: An invitee is either a person who transacts business on the property with the owner or a member of the public who is expressly or impliedly invited onto the property. A businessman at a meeting is generally an invitee of the host company, and a shopper is an invitee of the supermarket. A landowner is liable to invitees if he fails to take reasonable action to protect against dangers — not just those of which he had actual knowledge, but also those of which he should have been aware.
In the absence of CRUS, a landowner might be justifiably reluctant to make his land available to the public for fear that the users would be categorized as licensees or invitees, and that the landowner could be liable not just for his intentional acts, but also for his failure to protect or warn about known risks or risks of which a judge or jury determine he should have known.
So what does CRUS do? CRUS provides that a landowner who either directly or indirectly invites or permits, without charge, any person to use his property for recreational purposes (a) does not thereby extend any assurance that the property is safe for any purpose; (b) does not confer upon such person the legal status of an invitee or licensee to whom special duties are owed; and (c) does not assume responsibility in any way for such person’s acts or omissions. The term “recreational purposes” is given a broad definition that includes most pursuits. In the event that a recreational user of land sues the landowner, the prevailing party in the action is entitled to his attorney fees and costs of litigation. CRUS’s protections extend to the landowner’s tenants and other occupants.
A landowner can still be liable under CRUS if:
• He intentionally harms someone;
• He charges for the use of his land;
• He permits use of the land as part of his business; or
• He maintains an “attractive nuisance” on the land, which is a dangerous condition that is extraordinarily attractive to children (such as unattended machinery). Abandoned mining operations and areas of natural or manmade water storage or diversion (i.e. ponds, ditches and streams) are not considered attractive nuisances under CRUS.
So, a landowner who is hesitating to make his land available to the public should consider whether CRUS’s protections justify a change in position.
Noah Klug is an attorney with Bauer & Burns, P.C. in Breckenridge. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for a review of your particular situation.
Protection for contractors as construction season begins
This article is reproduced from the Summit Daily News, May 13, 2009, by permission of the author Noah Klug.
Top 10 things to know about mechanic’s liens
As the construction season begins in the mountains, here are 10 things to know about mechanic’s liens:
1. What is a mechanic’s lien?
State law gives a lien to most workers on real property and suppliers of materials incorporated into real property to help protect against nonpayment. The law calls these people “mechanics.” A mechanic’s lien makes it more likely the “little guy” will get paid.
2. Who can claim a mechanic’s lien?
Almost any person who performs work or supplies materials to improve another person’s property can claim a lien, including contractors, subcontractors, decorators, tree services, architects, surveyors, and engineers (but not lawyers or real estate brokers).
3. What is the process for claiming a mechanic’s lien?
A person entitled to a mechanic’s lien who has not been paid must first give 10 days’ notice to the property owner and general contractor of his intent to record the lien. The notice must include certain information and must be delivered in person or by regular or certified mail. If the worker is not paid during the 10-day period, he can record the lien statement in the office of the Clerk and Recorder.
4. Are there any deadlines for recording a mechanic’s lien?
Yes. A lien statement must generally be recorded no more than four months after the worker did his last substantial work at the property (so the worker must allow 10 extra days before the recording deadline to deliver the notice of intent to file the lien). The four-month deadline can be extended if the worker records, within the four-month period, a proper notice to extend the time.
5. What happens if the worker doesn’t follow the statutory procedure for filing a mechanic’s lien?
Courts typically enforce the mechanic’s lien statute strictly, which means that failure to give proper notice or to meet deadlines may result in a lien being invalidated.
6. What are the options once a lien has been recorded?
The lien claimant can (a) file a lawsuit in district court to have the sheriff sell the property to satisfy the liens; (b) let a another lienholder file the lawsuit and jump into the lawsuit; or (c) take no action and pray that he gets paid before the lien expires. With a few exceptions, the lien will expire if a lien foreclosure lawsuit is not filed within six months after the whole project is completed or 12 months after the lien is recorded (whichever is sooner).
7. What is the priority of a mechanic’s lien?
A mechanic’s lien is given special priority by statute; its date of priority is the date that the first work was done on the project by any worker. This is often the date that the architect drew plans or that the property was surveyed, and it often predates a construction loan. (For a discussion of lien priority, see my April 29 column on Lien Priority Fundamentals).
8. What are the alternatives to filing a mechanic’s lien?
Mechanic’s lien litigation is complex and expensive, with little hope of recovering attorney fees. Some mechanics with modest claims (or invalid liens) choose to skip lien litigation and simply file a lawsuit for breach of contract against the person who should have paid. If the claim is less than $7,500, it can usually be filed in small claims court, where things happen quickly, inexpensively, and (usually) without lawyers. County court is almost as quick and simple and has jurisdiction over claims up to $15,000.
9. What happens if the worker files a lien for more than he is owed?
If a worker knowingly files a lien for more than he could reasonably recover in court, the whole lien could be invalidated and the owner could be awarded his attorney fees.
10. What if the owner pays the general contractor but the general doesn’t pay a subcontractor?
The subcontractor is still entitled to a lien on the property.
Noah Klug is an attorney with Bauer & Burns P.C. He may be reached at (970) 453-2734 or
Noah@BreckenridgeLawyer.com.
Top 10 things to know about mechanic’s liens
As the construction season begins in the mountains, here are 10 things to know about mechanic’s liens:
1. What is a mechanic’s lien?
State law gives a lien to most workers on real property and suppliers of materials incorporated into real property to help protect against nonpayment. The law calls these people “mechanics.” A mechanic’s lien makes it more likely the “little guy” will get paid.
2. Who can claim a mechanic’s lien?
Almost any person who performs work or supplies materials to improve another person’s property can claim a lien, including contractors, subcontractors, decorators, tree services, architects, surveyors, and engineers (but not lawyers or real estate brokers).
3. What is the process for claiming a mechanic’s lien?
A person entitled to a mechanic’s lien who has not been paid must first give 10 days’ notice to the property owner and general contractor of his intent to record the lien. The notice must include certain information and must be delivered in person or by regular or certified mail. If the worker is not paid during the 10-day period, he can record the lien statement in the office of the Clerk and Recorder.
4. Are there any deadlines for recording a mechanic’s lien?
Yes. A lien statement must generally be recorded no more than four months after the worker did his last substantial work at the property (so the worker must allow 10 extra days before the recording deadline to deliver the notice of intent to file the lien). The four-month deadline can be extended if the worker records, within the four-month period, a proper notice to extend the time.
5. What happens if the worker doesn’t follow the statutory procedure for filing a mechanic’s lien?
Courts typically enforce the mechanic’s lien statute strictly, which means that failure to give proper notice or to meet deadlines may result in a lien being invalidated.
6. What are the options once a lien has been recorded?
The lien claimant can (a) file a lawsuit in district court to have the sheriff sell the property to satisfy the liens; (b) let a another lienholder file the lawsuit and jump into the lawsuit; or (c) take no action and pray that he gets paid before the lien expires. With a few exceptions, the lien will expire if a lien foreclosure lawsuit is not filed within six months after the whole project is completed or 12 months after the lien is recorded (whichever is sooner).
7. What is the priority of a mechanic’s lien?
A mechanic’s lien is given special priority by statute; its date of priority is the date that the first work was done on the project by any worker. This is often the date that the architect drew plans or that the property was surveyed, and it often predates a construction loan. (For a discussion of lien priority, see my April 29 column on Lien Priority Fundamentals).
8. What are the alternatives to filing a mechanic’s lien?
Mechanic’s lien litigation is complex and expensive, with little hope of recovering attorney fees. Some mechanics with modest claims (or invalid liens) choose to skip lien litigation and simply file a lawsuit for breach of contract against the person who should have paid. If the claim is less than $7,500, it can usually be filed in small claims court, where things happen quickly, inexpensively, and (usually) without lawyers. County court is almost as quick and simple and has jurisdiction over claims up to $15,000.
9. What happens if the worker files a lien for more than he is owed?
If a worker knowingly files a lien for more than he could reasonably recover in court, the whole lien could be invalidated and the owner could be awarded his attorney fees.
10. What if the owner pays the general contractor but the general doesn’t pay a subcontractor?
The subcontractor is still entitled to a lien on the property.
Noah Klug is an attorney with Bauer & Burns P.C. He may be reached at (970) 453-2734 or
Noah@BreckenridgeLawyer.com.
Mountain Law: Lien priority fundamentals
Reproduced from the Summit Daily News, April 28, 2008, by permission of the author, Noah Klug.
Any person interested in foreclosures should understand lien priority fundamentals. Here’s an introduction.
A “lien” is a legally protected interest that a creditor has in a debtor’s property. One common type of lien is a deed of trust (or mortgage) recorded to secure repayment of a loan. There are many other types of liens.
All liens against a property can be ranked in order of priority. Generally, lien priority is determined by the order in which the liens were recorded in the office of the clerk and recorder. Some liens, such as tax liens, homeowner association assessment liens and mechanics’ liens, are given special priority by statute, meaning that they can sometimes “jump ahead” in priority over liens that were recorded earlier.
Any creditor who holds a lien, regardless of the lien’s priority, can potentially force sale of the encumbered property through foreclosure proceedings to satisfy the debt. The rights of competing lienholders in the foreclosure depend on whether their liens are senior or junior to the lien being foreclosed.
A lien senior in priority to a lien being foreclosed continues to encumber the property after the foreclosure. For example, if a property has two liens encumbering it and the second lien forecloses, the first lien remains in place after the foreclosure. This is a trap for the unwary buyer, who might purchase a property at a foreclosure sale not realizing that his title will be subject to one or more liens. The buyer is then forced to make arrangements to pay the liens or those liens could be foreclosed.
In contrast to the holder of a senior lien, whose interest is not threatened by foreclosure of a junior lien, the holder of a lien junior in priority to a lien being foreclosed must either “redeem” the property within a specified time after the sale or his lien will terminate. For example, if there are two liens against a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the foreclosure sale (plus interest). The second lienholder would then receive deed to the property free and clear of the first lien. If the junior lienholder in this example does not redeem, his lien will no longer encumber the property after the foreclosure. This doesn’t mean that the debtor no longer owes him money; it means that the property is no longer collateral for the debt and he must enforce the debt using remedies other than foreclosure (such as suing for breach of contract).
Matters get more complicated if there are multiple liens junior to the lien being foreclosed, but the principles are the same: Junior lienholders, starting with the most senior, must, in turn, pay the amount of the high bid at the sale plus all senior liens that redeemed ahead of them or their liens will be terminated. For example, if there are three liens encumbering a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the sale. The holder of the third lien can then redeem by paying the amount of the high bid at the sale plus the amount of the second lien (if the second lien redeemed). The high bidder or last to redeem gets deed to the property.
When faced with foreclosure of a senior lien, a junior lienholder should determine how much equity is in the property, which is the difference between the property’s fair market value and the amount necessary to redeem. If there is little or no equity, redemption is usually inadvisable because it would cost more than could realistically be recovered by later sale of the property (taking into account sales commissions and holding costs). If there is sufficient equity in the property, it might be worth redeeming to save a junior lien because the cost to redeem could potentially be recovered by later sale.
Lien priority affects many aspects of the complex foreclosure process. This article is intended as a general overview; consult a real estate attorney for advice on your particular situation.
Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. For a general overview of the residential foreclosure process in Colorado, go to www.BreckenridgeLawyer.com and click on “A Summary of the Foreclosure Process”.
Any person interested in foreclosures should understand lien priority fundamentals. Here’s an introduction.
A “lien” is a legally protected interest that a creditor has in a debtor’s property. One common type of lien is a deed of trust (or mortgage) recorded to secure repayment of a loan. There are many other types of liens.
All liens against a property can be ranked in order of priority. Generally, lien priority is determined by the order in which the liens were recorded in the office of the clerk and recorder. Some liens, such as tax liens, homeowner association assessment liens and mechanics’ liens, are given special priority by statute, meaning that they can sometimes “jump ahead” in priority over liens that were recorded earlier.
Any creditor who holds a lien, regardless of the lien’s priority, can potentially force sale of the encumbered property through foreclosure proceedings to satisfy the debt. The rights of competing lienholders in the foreclosure depend on whether their liens are senior or junior to the lien being foreclosed.
A lien senior in priority to a lien being foreclosed continues to encumber the property after the foreclosure. For example, if a property has two liens encumbering it and the second lien forecloses, the first lien remains in place after the foreclosure. This is a trap for the unwary buyer, who might purchase a property at a foreclosure sale not realizing that his title will be subject to one or more liens. The buyer is then forced to make arrangements to pay the liens or those liens could be foreclosed.
In contrast to the holder of a senior lien, whose interest is not threatened by foreclosure of a junior lien, the holder of a lien junior in priority to a lien being foreclosed must either “redeem” the property within a specified time after the sale or his lien will terminate. For example, if there are two liens against a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the foreclosure sale (plus interest). The second lienholder would then receive deed to the property free and clear of the first lien. If the junior lienholder in this example does not redeem, his lien will no longer encumber the property after the foreclosure. This doesn’t mean that the debtor no longer owes him money; it means that the property is no longer collateral for the debt and he must enforce the debt using remedies other than foreclosure (such as suing for breach of contract).
Matters get more complicated if there are multiple liens junior to the lien being foreclosed, but the principles are the same: Junior lienholders, starting with the most senior, must, in turn, pay the amount of the high bid at the sale plus all senior liens that redeemed ahead of them or their liens will be terminated. For example, if there are three liens encumbering a property and the first lien forecloses, the holder of the second lien can redeem by paying the amount of the high bid at the sale. The holder of the third lien can then redeem by paying the amount of the high bid at the sale plus the amount of the second lien (if the second lien redeemed). The high bidder or last to redeem gets deed to the property.
When faced with foreclosure of a senior lien, a junior lienholder should determine how much equity is in the property, which is the difference between the property’s fair market value and the amount necessary to redeem. If there is little or no equity, redemption is usually inadvisable because it would cost more than could realistically be recovered by later sale of the property (taking into account sales commissions and holding costs). If there is sufficient equity in the property, it might be worth redeeming to save a junior lien because the cost to redeem could potentially be recovered by later sale.
Lien priority affects many aspects of the complex foreclosure process. This article is intended as a general overview; consult a real estate attorney for advice on your particular situation.
Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. For a general overview of the residential foreclosure process in Colorado, go to www.BreckenridgeLawyer.com and click on “A Summary of the Foreclosure Process”.
Mountain Law: Landmark law brings changes for landlords and tenants
Reproduced from the Summit Daily News, March 18, 2009 by permission of the author, Noah Klug.
,
The Colorado Legislature passed a new law in 2008 codifying certain obligations of residential landlords and tenants. The statute applies to tenancies that began on or after September 1, 2008, and applies to all sorts of properties, including apartments, rooming houses, rental condos, single-family homes, and trailers (if the landlord owns the trailer). It applies to verbal leases as well as written leases, but does not apply to rentals for less than 30 days.
Landlord Obligations
The new law requires landlords to maintain leased premises in a condition “fit for human habitation,” and includes a long list of specific landlord obligations, such as:
• Maintaining “weather protection” of the roof and exterior walls;
• Maintaining the plumbing, heating, electrical and sewer systems in good order and in compliance with the building code that was in effect when they were installed;
• Providing reasonable hot water;
• Maintaining floors, stairways and railings in good repair;
• Providing locks or security devices for all exterior doors and operable windows; and
• Complying with applicable building, housing, and health codes.
It’s not uncommon for written leases to contain a provision whereby the tenant waives claims for dangerous or defective conditions. Except in a few limited situations, the new law makes unenforceable any provision in a lease that attempts to waive the landlord’s obligations for habitability.
If a tenant gives the landlord written notice of an uninhabitable condition (if the tenant is not the cause of the problem), and the landlord fails to fix the problem within five business days after receipt of the notice, the tenant may vacate the premises and terminate the lease. If the tenant prefers to stay in the premises, he can ask a court to order the landlord to fix the problem (but the tenant must report the unsatisfactory condition to local government before filing suit).
In the past, tenants would often defend their failure to pay rent on the basis that there was something wrong with the premises. Under the new law, if a landlord files a lawsuit to evict a tenant for nonpayment of rent, the tenant will be obligated to give some or all of the delinquent rent to the court as a prerequisite to contesting the condition of the property.
The new law does not change a landlord’s right and obligation to follow the statutory eviction process to remove a tenant who doesn’t pay rent or violates other terms of the lease. The new law prohibits certain forms of landlord self-help such as turning off utilities and changing the locks on the doors unless the property has been abandoned by the tenant.
Tenant obligations
The new statute also imposes duties on tenants (including occupants who haven’t signed a written lease), such as:
• Keeping the premises reasonably clean, safe, and sanitary;
• Complying with building and health codes;
• Using utilities and appliances in a reasonable manner;
• Not disturbing the peace of neighbors;
• Informing the landlord if the premises are actually or potentially uninhabitable; and
• Not damaging, defacing, or removing any part of the premises.
Here are some additional details of the law:
• In response to a tenant’s notice that a property is uninhabitable, a landlord is permitted to move the tenant to a comparable property at the landlord’s expense;
• If certain requirements are met, landlords and tenants can agree that the tenant will perform work to remedy conditions making the property uninhabitable; and
• Landlords are not permitted to retaliate against tenants who claim that a property is uninhabitable by arbitrarily increasing rent or decreasing services, or by pursuing or threatening to pursue eviction of the tenant.
The last major revision to landlord tenant law in Colorado was in 1971, when the Legislature imposed treble damages on residential landlords who fail to timely refund or account for security deposits after termination of the lease. The 2008 law promises to bring a new wave of accountability for landlords and tenants.
The new statute contains details and exceptions that are not mentioned in this article. A complete copy of the new statute can be found at www.BreckenridgeLawyer.com. You should consult a real estate attorney for a review of your own situation.
Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.
,
The Colorado Legislature passed a new law in 2008 codifying certain obligations of residential landlords and tenants. The statute applies to tenancies that began on or after September 1, 2008, and applies to all sorts of properties, including apartments, rooming houses, rental condos, single-family homes, and trailers (if the landlord owns the trailer). It applies to verbal leases as well as written leases, but does not apply to rentals for less than 30 days.
Landlord Obligations
The new law requires landlords to maintain leased premises in a condition “fit for human habitation,” and includes a long list of specific landlord obligations, such as:
• Maintaining “weather protection” of the roof and exterior walls;
• Maintaining the plumbing, heating, electrical and sewer systems in good order and in compliance with the building code that was in effect when they were installed;
• Providing reasonable hot water;
• Maintaining floors, stairways and railings in good repair;
• Providing locks or security devices for all exterior doors and operable windows; and
• Complying with applicable building, housing, and health codes.
It’s not uncommon for written leases to contain a provision whereby the tenant waives claims for dangerous or defective conditions. Except in a few limited situations, the new law makes unenforceable any provision in a lease that attempts to waive the landlord’s obligations for habitability.
If a tenant gives the landlord written notice of an uninhabitable condition (if the tenant is not the cause of the problem), and the landlord fails to fix the problem within five business days after receipt of the notice, the tenant may vacate the premises and terminate the lease. If the tenant prefers to stay in the premises, he can ask a court to order the landlord to fix the problem (but the tenant must report the unsatisfactory condition to local government before filing suit).
In the past, tenants would often defend their failure to pay rent on the basis that there was something wrong with the premises. Under the new law, if a landlord files a lawsuit to evict a tenant for nonpayment of rent, the tenant will be obligated to give some or all of the delinquent rent to the court as a prerequisite to contesting the condition of the property.
The new law does not change a landlord’s right and obligation to follow the statutory eviction process to remove a tenant who doesn’t pay rent or violates other terms of the lease. The new law prohibits certain forms of landlord self-help such as turning off utilities and changing the locks on the doors unless the property has been abandoned by the tenant.
Tenant obligations
The new statute also imposes duties on tenants (including occupants who haven’t signed a written lease), such as:
• Keeping the premises reasonably clean, safe, and sanitary;
• Complying with building and health codes;
• Using utilities and appliances in a reasonable manner;
• Not disturbing the peace of neighbors;
• Informing the landlord if the premises are actually or potentially uninhabitable; and
• Not damaging, defacing, or removing any part of the premises.
Here are some additional details of the law:
• In response to a tenant’s notice that a property is uninhabitable, a landlord is permitted to move the tenant to a comparable property at the landlord’s expense;
• If certain requirements are met, landlords and tenants can agree that the tenant will perform work to remedy conditions making the property uninhabitable; and
• Landlords are not permitted to retaliate against tenants who claim that a property is uninhabitable by arbitrarily increasing rent or decreasing services, or by pursuing or threatening to pursue eviction of the tenant.
The last major revision to landlord tenant law in Colorado was in 1971, when the Legislature imposed treble damages on residential landlords who fail to timely refund or account for security deposits after termination of the lease. The 2008 law promises to bring a new wave of accountability for landlords and tenants.
The new statute contains details and exceptions that are not mentioned in this article. A complete copy of the new statute can be found at www.BreckenridgeLawyer.com. You should consult a real estate attorney for a review of your own situation.
Noah Klug is an attorney with Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com.
Vail Resorts reports strong Spring
This article was pubished in the Summit Daily News, June 9, 2010, by Julie Sutor.
SUMMIT COUNTY — Vail Resorts finished the 2009-2010 ski season in stronger shape than in the previous year, with increased activity among destination visitors and improved guest spending, according to an earnings report the company released Wednesday.
Skier visits during the company's third quarter (February through April) improved by 4.6 percent over the same period in 2009. Its third-quarter bottom line in the mountain segment improved by 9.6 percent.
Vail Resorts CEO Rob Katz said he was “very pleased” with the company's performance in its mountain segment, which includes lift tickets, restaurants and ski school.
“In fact, during the spring break and Easter periods in 2010, we saw levels of skier visitation, total lift revenue, ski school revenue, dining revenue and retail/rental revenue that were comparable to the results we saw during the same periods in 2008 and 2007, giving us confidence in improving customer trends as we start planning for the 2010-2011 season,” Katz said.
Destination visitation during the third quarter increased by an estimated 7.9 percent over the same quarter last year.
Skier visits on the rise
Heavenly posted the strongest improvement in skier visits, with a 9.6 percent increase in visitation in the third quarter of fiscal year 2010, compared to the same period in 2009. Overall visitation for the quarter at the company's Colorado resorts — Breckenridge, Keystone, Beaver Creek and Vail — increased by 3.7 percent. Total skier visitation for all five of the company's resorts during the 2009-2010 season increased 2.5 percent over 2008-2009, despite record-low snowfall at the Colorado resorts during the early part of the 2009-2010 season.
Of the four Colorado resorts, Breckenridge fared best in terms of skier numbers, with an increase of 5.6 percent for the season. Neither Vail nor Beaver Creek were able to surpass the previous season's skier numbers, owing to the scant early-season snowfall. Vail did not open its back bowls until after Christmas. Skier visits at Vail declined by 1.4 percent for the season, even though third-quarter skier visits were stronger than in the previous year. Beaver Creek's skier numbers were down by 0.4 percent for the season.
Season passholders skied approximately 10 days on average during the 2009-2010 ski season, down by half a day compared to last season.
Within the mountain segment, ski school and retail/rental revenues were particularly improved. Revenue from ski school increased $4.3 million, or 11.7 percent, for the quarter, and retail/rental revenue increased $6.9 million, or 14.3 percent, primarily due to higher retail sales and rental volumes across the majority of locations.
Lodging still sluggish
The company's bottom line in the lodging segment during the third quarter was down 5.5 percent from the same period last year. The decrease was due almost entirely to declines at Keystone lodging properties and increased expenses in marketing and employee medical costs. Keystone experienced a significant drop in business from large groups, with a 24.6 percent decline in group room nights during the three-month period.
Excluding Keystone properties, total room revenues would have increased by $0.5 million, and transient room nights would have increased by 7.9 percent.
Looking forward
Vail Resorts recently completed its One Ski Hill Place project in Breckenridge. To date, the company has closed on 23 of its 88 luxury condominiums and anticipates additional closings over the next several weeks.
“We have full confidence in the ultimate success of this project and will be patient in our approach to ensure we maximize our proceeds from future sales,” Katz said.
Spring season pass sales for next season are down by about 14 percent compared to last spring. But Katz said last spring's strong season pass sales were due to a “mad dash” by consumers to purchase the Epic Pass, uncertain over whether the company would continue to offer the product. This year, the company assured consumers of the ongoing availability of the Epic Pass, thereby eliminating their urgency to purchase it.
The company has allocated $75-85 million in capital projects and maintenance, most of which will be spent this summer. The projects include a new high-speed chairlift at Vail, an alpine coaster at Breckenridge and renovations to lodging rooms at Keystone.
SUMMIT COUNTY — Vail Resorts finished the 2009-2010 ski season in stronger shape than in the previous year, with increased activity among destination visitors and improved guest spending, according to an earnings report the company released Wednesday.
Skier visits during the company's third quarter (February through April) improved by 4.6 percent over the same period in 2009. Its third-quarter bottom line in the mountain segment improved by 9.6 percent.
Vail Resorts CEO Rob Katz said he was “very pleased” with the company's performance in its mountain segment, which includes lift tickets, restaurants and ski school.
“In fact, during the spring break and Easter periods in 2010, we saw levels of skier visitation, total lift revenue, ski school revenue, dining revenue and retail/rental revenue that were comparable to the results we saw during the same periods in 2008 and 2007, giving us confidence in improving customer trends as we start planning for the 2010-2011 season,” Katz said.
Destination visitation during the third quarter increased by an estimated 7.9 percent over the same quarter last year.
Skier visits on the rise
Heavenly posted the strongest improvement in skier visits, with a 9.6 percent increase in visitation in the third quarter of fiscal year 2010, compared to the same period in 2009. Overall visitation for the quarter at the company's Colorado resorts — Breckenridge, Keystone, Beaver Creek and Vail — increased by 3.7 percent. Total skier visitation for all five of the company's resorts during the 2009-2010 season increased 2.5 percent over 2008-2009, despite record-low snowfall at the Colorado resorts during the early part of the 2009-2010 season.
Of the four Colorado resorts, Breckenridge fared best in terms of skier numbers, with an increase of 5.6 percent for the season. Neither Vail nor Beaver Creek were able to surpass the previous season's skier numbers, owing to the scant early-season snowfall. Vail did not open its back bowls until after Christmas. Skier visits at Vail declined by 1.4 percent for the season, even though third-quarter skier visits were stronger than in the previous year. Beaver Creek's skier numbers were down by 0.4 percent for the season.
Season passholders skied approximately 10 days on average during the 2009-2010 ski season, down by half a day compared to last season.
Within the mountain segment, ski school and retail/rental revenues were particularly improved. Revenue from ski school increased $4.3 million, or 11.7 percent, for the quarter, and retail/rental revenue increased $6.9 million, or 14.3 percent, primarily due to higher retail sales and rental volumes across the majority of locations.
Lodging still sluggish
The company's bottom line in the lodging segment during the third quarter was down 5.5 percent from the same period last year. The decrease was due almost entirely to declines at Keystone lodging properties and increased expenses in marketing and employee medical costs. Keystone experienced a significant drop in business from large groups, with a 24.6 percent decline in group room nights during the three-month period.
Excluding Keystone properties, total room revenues would have increased by $0.5 million, and transient room nights would have increased by 7.9 percent.
Looking forward
Vail Resorts recently completed its One Ski Hill Place project in Breckenridge. To date, the company has closed on 23 of its 88 luxury condominiums and anticipates additional closings over the next several weeks.
“We have full confidence in the ultimate success of this project and will be patient in our approach to ensure we maximize our proceeds from future sales,” Katz said.
Spring season pass sales for next season are down by about 14 percent compared to last spring. But Katz said last spring's strong season pass sales were due to a “mad dash” by consumers to purchase the Epic Pass, uncertain over whether the company would continue to offer the product. This year, the company assured consumers of the ongoing availability of the Epic Pass, thereby eliminating their urgency to purchase it.
The company has allocated $75-85 million in capital projects and maintenance, most of which will be spent this summer. The projects include a new high-speed chairlift at Vail, an alpine coaster at Breckenridge and renovations to lodging rooms at Keystone.
Keystone, county strike deal with Denver Water to safeguard resort snowmaking
This is an article from the Summit Daily News, July 28, 2010, reported by Julie Sutor.
Denver Water will delay repairs to Roberts Tunnel, allowing Keystone to blow snow in early season.
SUMMIT COUNTY — Snow will blow as scheduled this season at Keystone Resort, thanks to a deal among the ski area, Summit County government and Denver Water.
The resort relies on water from the Roberts Tunnel, owned by Denver Water, to blanket its slopes in white every year through early-season snowmaking. Keystone is allowed to pump as much as 1,500 acre feet from the tunnel between Sept. 1 and March 31 each winter.
Denver Water needs to make repairs on the Roberts Tunnel, which draws about 54,000 acre feet per year from Dillon Reservoir to supply municipal water to the Denver Metro Area. The tunnel is 50 years old and requires valve replacements at its east end — a project that must be performed while the tunnel is drained, thus rendering water unavailable for Keystone during construction. The repairs were originally scheduled to begin on Nov. 1 and last throughout the winter until April 4, 2011.
“That would impact an entire season of Keystone's snowmaking, which is essential to guarantee good snow by the holidays,” Summit County manager Gary Martinez said.
That scenario would be worrisome to Summit County government, which receives sales tax revenues from Keystone and the many businesses in and around its base areas.
So Keystone and Summit County have negotiated a deal through which the resort will pay Denver Water $120,000 to postpone work on the Roberts Tunnel until Dec. 16. The delay will allow Keystone to draw water through Dec. 15.
Denver Water is still planning to finish construction by April 4, 2011, in time to capture spring runoff and fill reservoirs with water for summer use. The Keystone funds will cover the added costs of completing the project on a tighter timeline.
In the event that construction isn't done by the April deadline, and Denver Water loses the opportunity to store spring runoff, both Summit County and Keystone will make up for the deficits with water from Clinton Reservoir and Dillon Reservoir for up to three years.
“This is an example of the county putting our water portfolio to good use. It would be really tough for our revenue budget to have Keystone fall flat because of an inability to make snow,” Martinez said.
In a separate agreement, Breckenridge Ski Resort will lease water from Summit County for snowmaking for three years. Summit County will use funds from the lease agreement to purchase water rights in Wolford Mountain Reservoir, just north of Kremmling.
Denver Water will delay repairs to Roberts Tunnel, allowing Keystone to blow snow in early season.
SUMMIT COUNTY — Snow will blow as scheduled this season at Keystone Resort, thanks to a deal among the ski area, Summit County government and Denver Water.
The resort relies on water from the Roberts Tunnel, owned by Denver Water, to blanket its slopes in white every year through early-season snowmaking. Keystone is allowed to pump as much as 1,500 acre feet from the tunnel between Sept. 1 and March 31 each winter.
Denver Water needs to make repairs on the Roberts Tunnel, which draws about 54,000 acre feet per year from Dillon Reservoir to supply municipal water to the Denver Metro Area. The tunnel is 50 years old and requires valve replacements at its east end — a project that must be performed while the tunnel is drained, thus rendering water unavailable for Keystone during construction. The repairs were originally scheduled to begin on Nov. 1 and last throughout the winter until April 4, 2011.
“That would impact an entire season of Keystone's snowmaking, which is essential to guarantee good snow by the holidays,” Summit County manager Gary Martinez said.
That scenario would be worrisome to Summit County government, which receives sales tax revenues from Keystone and the many businesses in and around its base areas.
So Keystone and Summit County have negotiated a deal through which the resort will pay Denver Water $120,000 to postpone work on the Roberts Tunnel until Dec. 16. The delay will allow Keystone to draw water through Dec. 15.
Denver Water is still planning to finish construction by April 4, 2011, in time to capture spring runoff and fill reservoirs with water for summer use. The Keystone funds will cover the added costs of completing the project on a tighter timeline.
In the event that construction isn't done by the April deadline, and Denver Water loses the opportunity to store spring runoff, both Summit County and Keystone will make up for the deficits with water from Clinton Reservoir and Dillon Reservoir for up to three years.
“This is an example of the county putting our water portfolio to good use. It would be really tough for our revenue budget to have Keystone fall flat because of an inability to make snow,” Martinez said.
In a separate agreement, Breckenridge Ski Resort will lease water from Summit County for snowmaking for three years. Summit County will use funds from the lease agreement to purchase water rights in Wolford Mountain Reservoir, just north of Kremmling.
Summit County Energy Loans on Hold
This article was reported in the Summit Daily News, July 28, 2010, by Julie Sutor.
SUMMIT COUNTY — Ten local households are hoping to receive low-interest loans this summer to pay for energy-saving upgrades like new insulation, crack-sealing and efficient boilers. But loan giants Fannie Mae and Freddie Mac are standing in the way.
The 10 households are prospective participants in Summit County government's Home Energy Loan Program (HELP), launched this year as a small-scale pilot project. Each home underwent an energy audit that identified the most cost-effective and energy-saving improvements. Under HELP, households are eligible to receive loans of up to $17,000 for energy improvements. The loans would be repaid at 4 percent interest over a period of 10 years through the owners' property tax bills. Of the 10 households that have applied so far, the average loan amount would be $12,000.
“They're all good, they're all cost effective, and they're all going to create good energy savings,” said Lynne Westerfield, of High Country Conservation Center.
However, Fannie Mae and Freddie Mac won't touch mortgages on homes in which people have participated in energy loan programs like HELP. The two corporations do not provide home loans directly; rather, they buy mortgages from lenders after borrowers complete the closing process, thereby allowing lenders to complete more loans.
The problem stems from the fact that HELP loans, and others like them, are repaid through property tax bills. That's convenient for the homeowner and relatively simple for the county. And it helps the county meet its goal of reducing energy consumption in the residential community. But in the event of a foreclosure, back property taxes (including the balance of the HELP loan, in such cases) are repaid first, before the mortgage. In essence, such mortgages are riskier investments for Fannie Mae and Freddie Mac, which together guarantee more than half of the home mortgages in the country.
Other communities that offer similar programs, including the Town of Breckenridge, the City of Boulder, Pitkin County and Gunnison County, are likewise impacted. In all, 22 states have authorized the loans, often referred to as Property Assessed Clean Energy, or PACE programs. A new batch of PACE pilot projects was set to launch this summer, with the help of $150 million in Recovery Act and Department of Energy funding.
Some mortgage lenders have proposed increasing the loan amount on all mortgages in communities that offer PACE programs, regardless of whether a given borrower plans to partake.
“We had something elegantly simple turn into something unbelievably complex,” assistant county manager Thad Noll said.
A national problem
At a meeting of the Summit Board of County Commissioners Tuesday, county officials agreed to put the program on hold, pending a solution at the local, state or federal level. The county commissioners were firm on the point that they could not offer a program that would effectively raise the purchase price of homes throughout the county.
“This is not a Summit County problem: This is a national problem,” Commissioner Thomas Davidson said. “They have to figure this out. It's too important to too many people.”
The Colorado Congressional Delegation and other lawmakers are applying pressure at the federal level to salvage the PACE programs. The State of California, where PACE was first conceived, has gone so far as to sue Freddie Mac, Fannie Mae and the Federal Housing Finance Agency (FHFA).
Rep. Jared Polis, who represents Summit County, signed on to a letter earlier this month urging FHFA Director Edward DeMarco to resolve the deadlock.
“PACE programs have been expanding rapidly across Colorado because they create jobs, cut pollution and allow homeowners the chance to save money on their utility bills,” Polis said. “Resistance to these groundbreaking programs has gone on for far too long, and our communities are suffering.”
Polis said DeMarco should step down from his post if he won't cooperate on the issue.
In the mean time, Summit County's 10 households, and others like them across the country, will have to wait.
“We're going to tell these people and their contractors that we're still trying. But we're on hold for right now,” Noll said.
The Summit County loans were tentatively scheduled to go out in mid-August. Delays have the potential to increase the cost or complexity of the proposed home-improvement projects, since many such upgrades are easier to perform before cold weather hits.
SUMMIT COUNTY — Ten local households are hoping to receive low-interest loans this summer to pay for energy-saving upgrades like new insulation, crack-sealing and efficient boilers. But loan giants Fannie Mae and Freddie Mac are standing in the way.
The 10 households are prospective participants in Summit County government's Home Energy Loan Program (HELP), launched this year as a small-scale pilot project. Each home underwent an energy audit that identified the most cost-effective and energy-saving improvements. Under HELP, households are eligible to receive loans of up to $17,000 for energy improvements. The loans would be repaid at 4 percent interest over a period of 10 years through the owners' property tax bills. Of the 10 households that have applied so far, the average loan amount would be $12,000.
“They're all good, they're all cost effective, and they're all going to create good energy savings,” said Lynne Westerfield, of High Country Conservation Center.
However, Fannie Mae and Freddie Mac won't touch mortgages on homes in which people have participated in energy loan programs like HELP. The two corporations do not provide home loans directly; rather, they buy mortgages from lenders after borrowers complete the closing process, thereby allowing lenders to complete more loans.
The problem stems from the fact that HELP loans, and others like them, are repaid through property tax bills. That's convenient for the homeowner and relatively simple for the county. And it helps the county meet its goal of reducing energy consumption in the residential community. But in the event of a foreclosure, back property taxes (including the balance of the HELP loan, in such cases) are repaid first, before the mortgage. In essence, such mortgages are riskier investments for Fannie Mae and Freddie Mac, which together guarantee more than half of the home mortgages in the country.
Other communities that offer similar programs, including the Town of Breckenridge, the City of Boulder, Pitkin County and Gunnison County, are likewise impacted. In all, 22 states have authorized the loans, often referred to as Property Assessed Clean Energy, or PACE programs. A new batch of PACE pilot projects was set to launch this summer, with the help of $150 million in Recovery Act and Department of Energy funding.
Some mortgage lenders have proposed increasing the loan amount on all mortgages in communities that offer PACE programs, regardless of whether a given borrower plans to partake.
“We had something elegantly simple turn into something unbelievably complex,” assistant county manager Thad Noll said.
A national problem
At a meeting of the Summit Board of County Commissioners Tuesday, county officials agreed to put the program on hold, pending a solution at the local, state or federal level. The county commissioners were firm on the point that they could not offer a program that would effectively raise the purchase price of homes throughout the county.
“This is not a Summit County problem: This is a national problem,” Commissioner Thomas Davidson said. “They have to figure this out. It's too important to too many people.”
The Colorado Congressional Delegation and other lawmakers are applying pressure at the federal level to salvage the PACE programs. The State of California, where PACE was first conceived, has gone so far as to sue Freddie Mac, Fannie Mae and the Federal Housing Finance Agency (FHFA).
Rep. Jared Polis, who represents Summit County, signed on to a letter earlier this month urging FHFA Director Edward DeMarco to resolve the deadlock.
“PACE programs have been expanding rapidly across Colorado because they create jobs, cut pollution and allow homeowners the chance to save money on their utility bills,” Polis said. “Resistance to these groundbreaking programs has gone on for far too long, and our communities are suffering.”
Polis said DeMarco should step down from his post if he won't cooperate on the issue.
In the mean time, Summit County's 10 households, and others like them across the country, will have to wait.
“We're going to tell these people and their contractors that we're still trying. But we're on hold for right now,” Noll said.
The Summit County loans were tentatively scheduled to go out in mid-August. Delays have the potential to increase the cost or complexity of the proposed home-improvement projects, since many such upgrades are easier to perform before cold weather hits.
Saturday, July 24, 2010
This article by Erica Christoffer and Robert Freedman, is reproduced in total from Realtor Magazine, August, 2010
Housing Myths Busted!
Two e-mail chains are spreading misinformation about pending legislation, NAR says. One claims that the energy bill that’s working its way through Congress would require home sellers to obtain an energy audit or make energy retrofits before they can sell their home. In reality, the bill includes a provision that requires new construction to be energy-labeled but prohibits states from requiring new ratings when the house is resold.
The second e-mail states that the health care bill contains a 4 percent transfer tax on home sales. The truth is that the bill imposes a 3.8 percent Medicare tax for some high-income households that have "net investment income."
The tax, which goes into effect in 2013, applies only to households with adjusted gross income of more than $250,000 ($200,000 for individuals). Also, since the capital gains exclusion rule is still in effect, the tax would be charged only on home-sale proceeds that exceed the exclusion amount of $500,000 ($250,000 for individuals). That’s an amount that touches few households.
Housing Myths Busted!
Two e-mail chains are spreading misinformation about pending legislation, NAR says. One claims that the energy bill that’s working its way through Congress would require home sellers to obtain an energy audit or make energy retrofits before they can sell their home. In reality, the bill includes a provision that requires new construction to be energy-labeled but prohibits states from requiring new ratings when the house is resold.
The second e-mail states that the health care bill contains a 4 percent transfer tax on home sales. The truth is that the bill imposes a 3.8 percent Medicare tax for some high-income households that have "net investment income."
The tax, which goes into effect in 2013, applies only to households with adjusted gross income of more than $250,000 ($200,000 for individuals). Also, since the capital gains exclusion rule is still in effect, the tax would be charged only on home-sale proceeds that exceed the exclusion amount of $500,000 ($250,000 for individuals). That’s an amount that touches few households.
Global Issues Affect U. S. Mortgages
This article byh Lawrence Yun, chief economist of the National Association of Realtors, is reproduced in full from his article in Realtor magazine.
Economy: Global Issues Affect U.S. Mortgages
The Gulf Coast oil disaster and European economic issues will likely affect the U.S. mortgage market.
By Lawrence Yun
August 2010
With the home buyer tax credit ended and the housing market now largely on its own, how can we expect the real estate market to perform? In the near term, we’ll probably see home sales slide measurably lower. By the third quarter, it will be up to job creation and consumer confidence to bring in buyers.
One factor that should help the market is the improving availability of financing for second homes and high-priced properties that require a jumbo loan.
These segments of the housing market were essentially shut down last year as banks scrambled to boost their capital to well beyond government “stress test” levels. Even the most creditworthy buyers found it difficult to get financing.
Today, banks are steadily moving toward more normal lending activity, even in sectors that don’t have government backing—not surprising given the huge profits and improved capital situation in the banking sector. Commercial financing could improve, too.
But as the housing market shows signs of stronger health, bigger economic issues are now on the horizon, putting important variables outside of the control of our market.
The meltdown in Greece could impact the capital position of U.S. banks if that country defaults on its obligations and Germany and other big economies of Europe say no to providing additional bailout funds to Greece and other at-risk countries like Spain and Portugal. With global capital at risk, money in the United States for any mortgages other than those with government backing could once again disappear.
The devastating oil spill in the Gulf of Mexico is another big unknown. The full impact won’t be understood for years, but we can expect domestic oil prices to rise measurably or the United States to import more oil. In either case our economic growth will be impeded.
Economy: Global Issues Affect U.S. Mortgages
The Gulf Coast oil disaster and European economic issues will likely affect the U.S. mortgage market.
By Lawrence Yun
August 2010
With the home buyer tax credit ended and the housing market now largely on its own, how can we expect the real estate market to perform? In the near term, we’ll probably see home sales slide measurably lower. By the third quarter, it will be up to job creation and consumer confidence to bring in buyers.
One factor that should help the market is the improving availability of financing for second homes and high-priced properties that require a jumbo loan.
These segments of the housing market were essentially shut down last year as banks scrambled to boost their capital to well beyond government “stress test” levels. Even the most creditworthy buyers found it difficult to get financing.
Today, banks are steadily moving toward more normal lending activity, even in sectors that don’t have government backing—not surprising given the huge profits and improved capital situation in the banking sector. Commercial financing could improve, too.
But as the housing market shows signs of stronger health, bigger economic issues are now on the horizon, putting important variables outside of the control of our market.
The meltdown in Greece could impact the capital position of U.S. banks if that country defaults on its obligations and Germany and other big economies of Europe say no to providing additional bailout funds to Greece and other at-risk countries like Spain and Portugal. With global capital at risk, money in the United States for any mortgages other than those with government backing could once again disappear.
The devastating oil spill in the Gulf of Mexico is another big unknown. The full impact won’t be understood for years, but we can expect domestic oil prices to rise measurably or the United States to import more oil. In either case our economic growth will be impeded.
Thursday, July 22, 2010
Breckenridge Market Share increased 3 percent last winter
In an article posted by Robert Allen in the Summit Daily News, July 22, 2010, it was reported that the Town of Breckenridge's marketing stimulus makes an apparent difference.
Breckenridge's market share among ski towns increased 3 percent last winter as the ski resort regained its title of the most visited in the United States. After gloomy projections in October that winter lodging occupancy could fall as much as 20 percent, Breckenridge Resort Chamber president, John McMahaon said that the $250,000 the town council provided as a marketing stimulus nearly filled the gap. He said that recent branding efforts are having an impact.
Both McMahon and Breckenridge mayor John Warner spoke of the need for a sustainable marketing revenue stream. The $250,000 was pulled from the town's excise fund to make the town competitive with other ski communities. Warner and other town council memebers are pushing for a 1 percent lodging tax increase to help sustain marketing funding.
After two years of declines, 2010 year-to-date numbers are starting to climb.
With real estate values in a ski resort tied to area popularity and ski travelers booking lodging, this news bodes well for the Breckenridge real estate market.
For more information, go to http://www.breck4sale.com/, or email Susan Gunnin at gunnin@colorado.net.
Breckenridge's market share among ski towns increased 3 percent last winter as the ski resort regained its title of the most visited in the United States. After gloomy projections in October that winter lodging occupancy could fall as much as 20 percent, Breckenridge Resort Chamber president, John McMahaon said that the $250,000 the town council provided as a marketing stimulus nearly filled the gap. He said that recent branding efforts are having an impact.
Both McMahon and Breckenridge mayor John Warner spoke of the need for a sustainable marketing revenue stream. The $250,000 was pulled from the town's excise fund to make the town competitive with other ski communities. Warner and other town council memebers are pushing for a 1 percent lodging tax increase to help sustain marketing funding.
After two years of declines, 2010 year-to-date numbers are starting to climb.
With real estate values in a ski resort tied to area popularity and ski travelers booking lodging, this news bodes well for the Breckenridge real estate market.
For more information, go to http://www.breck4sale.com/, or email Susan Gunnin at gunnin@colorado.net.
Subscribe to:
Posts (Atom)