February 3, 2010

Junior Lien Bill Heard in Senate Committee

On Monday, February 1st, the Colorado Senate Committee on Business, Labor and Technology heard testimony on Senate Bill 93 which we discussed in our January 25th posting on HOA Legi-Slate.  In short, the bill would require an association - or an investor who was assigned the association's lien rights - to accept payment of the lien by the purchaser of the property following a public trustee foreclosure sale.  Payment of the lien would act to extinguish the redemption rights on the lien.   

Testimony on the bill included assertions that associations are essentially auctioning off these lien rights to the highest bidders and are making money hand-over-fist.  There was also testimony that the investors who purchase these lien rights are unscrupulous in driving down the purchase price of properties at foreclosure sales - thereby reducing their costs to redeem.
 
In addition to considering the remedies outlined in the legislation, Senators kicked around the idea of extinguishing the redemption rights of all junior lienors and to require them to protect their liens by bidding at the foreclosure sale.  Obviously, requiring an association to bid on property at a foreclosure sale to protect the association's lien would be a horrendous result.  The bill was ultimately tabled by the Committee and Senator Lundberg was directed to meet with stakeholders to hammer-out a mutually acceptable solution.  
 
Tell us what you think:
 
  1. Do you think the ability of associations to assign lien rights is an important collections tool?
  2. Would you support the termination of redemption rights which would require associations to bid on the property at a foreclosure sale to protect the value of the association's lien?


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January 25, 2010

Senate Bill Addresses Junior Liens

On January 20th, Senate Bill 93 was introduced in the Colorado General Assembly by Senator Lundberg.  This bill would require all junior lienors to accept tender of payment of the junior lien amount from the purchaser of the property at a public trustee foreclosure sale.  In the association context, if a purchaser tenders payment to an association to satisfy the association's lien -  that payment must be accepted, would extinguish the association's lien and eliminate the association's right to redeem the property or assign the lien.    

Under the current version of the legislation, associations are required to:
  1. Submit with the notice of intent to redeem, a signed statement of the amount payable to the association on the association's lien; 
  2. Accept payment of the lien amount which is tendered by the purchaser within 10 business days following the public trustee foreclosure sale;   
  3. Execute a release of lien upon receiving tender of payment.
 
This bill, as currently written, would likely impact the feasibility and time-frames of associations assigning their lien rights to investors.
 
We will keep you updated on the status of SB 93 as it progresses through the legislative process.

 

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January 18, 2010

Legislative Session Off to Quick Start on Issues Important to Associations

It has been less than one week since the Colorado General Assembly convened for the 2010 legislative session and at least four bills of interest to associations have already been introduced.

House Bill 10-1084: Introduced in the House by Representative Acree, this legislation promotes the ability of individuals to go onto the unoccupied property of another to trim or water vegetation and to remove accumulated weeds, brush, trash, or debris from the property. 
 
House Bill 10-1086:   Introduced in the House by Representative Curry, this bill prevents attractive nuisance claims from being brought against landowners for injuries and damages related to the use of land for recreational purposes by the public and from facilities relating to water rights. 
 
House Bill 10-1118:   Introduced in the House by Representative James Kerr, this legislation gives Boards of County Commissioners the authority to regulate distressed real property.   
 
Senate Bill 10-045:  Introduced in the Senate by Senator Morse, this bill requires lenders to work with homeowners to attempt to find mutually acceptable agreements to avoid foreclosures. 
 
To learn more about these bills and to stay in the loop on the latest legislation of interest to associations, check out our Legislative Tracking Report on a routine basis.
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January 18, 2010

2010 Colorado Legislative Tracking Report

2010 Colorado Legislative Tracking Report

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January 13, 2010

Ready, Get Set, Go!

The Colorado General Assembly convened today for the 2010 legislative session. To what extent associations will be the subject of legislation remains to be seen.  However, we do know this much - bad press and complaints to legislators about associations drive legislation.  Do you think associations will be front and center again this legislative session?  Tell us what you think.  
 
HindmanSanchez remains committed to providing you with up-to-date information on legislation affecting associations.  Keep your eye on HOA Legi-Slate for updates and information as it becomes available.

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January 12, 2010

Units in Foreclosure Present Problems for Condominiums

What happens when utilities are turned off in the winter and the area experiences a freeze?  Pipes burst of course.  What happens when you own a unit in a condo and the unit above you is in foreclosure, the property has been abandoned, the utilities have been turned off and the area experiences a freeze?  Pipes burst and the homeowners around and under the unit are forced to contend with flooding.  7 News reported on an elderly couple who were left to deal with the aftermath of such a water intrusion.

What can condominium associations do to try to minimize the risks of this happening?
  1. Determine whether the association has any contact information for the owners who abandoned the unit and attempt to make contact with them to ensure the unit is winterized. 
  2. Inform the attorney handling the lender's foreclosure when a unit has been abandoned and ask that immediate steps be taken to winterize the unit.
  3. Review the Declaration to determine if there is a provision which allows the association to enter the unit for inspection or emergency purposes.  If so, seek legal guidance to determine whether the association has the authority to take remedial steps.
 
As reported recently on HOA Legi-Slate, the Governor is planning to have a bill introduced soon to deal with abandoned properties in foreclosure.  Whether the legislation will address problems which arise in condos is yet to be determined.
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December 30, 2009

New Year Resolutions for Boards

In addition to your personal new year resolutions - consider making resolutions for positive change in the communities you serve!  Here are some ideas: 

  1. Take Stock of 2009.  As a board, sit down and discuss what went well and not so well during the past year.  Talk about what your board can do to improve in governing the association and commit to making positive changes.
     
  2. Create Goals for 2010.  Instead of flying by the seat of your pants, create goals for your board.  Once your board has agreed upon goals for 2010 -  identify benchmarks in reaching your goals, create timelines for benchmarks and identify who will be responsible for reaching them.  Goals might include:  building a sense of community; changing, adding or improving services to residents; facing tough financial challenges head-on and dealing with them.  
     
  3. Dust Off Governing Documents and Use Them.   Locate the most recent version of the governing documents for your association, put them in a binder (or a paper bag if necessary), take them to every board meeting, consult them and comply with them.  As a director - it's your fiduciary duty to comply with your governing documents.  Enough said.
 
All of us at HindmanSanchez wish you a Happy New Year and look forward to partnering with you to create positive change in 2010!
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December 23, 2009

Governor Ritter Unveils Abandoned Homes Legislation at Pre-Christmas Press Conference

On Tuesday, December 22nd, Governor Ritter appeared at a press conference held at the Clements Community Center in Lakewood to unveil legislation that will permit lenders to expedite the public trustee foreclosure sales of abandoned properties.  Representative Dianne Primavera, Representative Jeanne Labuda and Senator Michael Johnston will sponsor the legislation.

The intent of the legislation is to cut down on the problems associated with abandoned properties which are being foreclosed upon.  Governor Ritter noted that the negative consequences associated with these properties include blight, being a magnet for criminal activity and a reduction of property values in the neighborhoods where these properties are located. 
 
Chad Otto, President of the Grant Ranch Master Homeowners Association, was introduced by Governor Ritter and spoke on the challenges that community associations face with abandoned properties.  Mr. Otto described the difficulties associated with collecting unpaid assessments from the owners of these properties.  He also addressed the problems associated with maintenance of lawns, shrubs and structures.  Mr. Otto concurred with Governor Ritter's conclusion that the best way to protect property values is to get owners into these abandoned homes as quickly as possible.
 
This legislation will be introduced during the upcoming legislative session which begins on Wednesday, January 13, 2010.  We will keep you up-to-date on this legislation as it proceeds through the legislative process.
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December 17, 2009

4 Necessary Revisions to Your Collection Policy

Times are tough and collecting delinquent assessments has become even more difficult in many situations. As countless homeowners struggle to pay assessments, we are seeing more and more judges looking for ways to give owners “breaks” and looking at association policies with much greater scrutiny.

Over the past year we’ve recommended that these revisions be made to collection policies to better protect associations:

 

  1. Indicate owners are responsible for payment of tracking fees, processing fees or other fees charged to the association by management companies, if any;
  2. Make sure your interest and late fees do not equal more than 45% per annum as this is considered usury in Colorado;
  3. Provide that if an owner communicates via email, text, fax, phone or any other method, the owner authorizes the association and its agents to communicate via the same method in the future;
  4. Provide that owner consents to credit reports being pulled in the event the owner’s account is turned over for collection by the association to an attorney or agency.

If you’d like specific language for any of these additions or our assistance in modifying your collection policy, please contact one of our attorneys at 303-432-9999 or send us an email to hoalaw@hindmansanchez.com.

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December 15, 2009

Higher Costs, Tougher Standards In Store For 2010 FHA Mortgage Financing

Last week HUD Secretary Shaun Donovan announced applicants seeking FHA financing are going to face higher costs and tougher credit standards.  What does that mean for home buyers?  Changes being proposed include higher down payments – currently 3.5% but could go as high as 5%; seller concessions cut to 3%; mortgage insurance premiums as high as 3% and a minimum acceptable FICO score not much lower than 620 (which is the score currently used by both Fannie Mae and Freddie Mac.)

In addition, Wells Fargo also announced changes to its’ FHA Condo criteria which went in to affect on 12/8/09.  One item to note is “no more than 50% of the units are occupied by units other than the primary residents.”  Does your condo association currently have a process to track rentals?  How will your association answer this question on the form?  There are many other questions that my be difficult to answer or a "wrong" answer could result in a loan being denied?  If you'd like to know more about the new FHA guidelines see our checklist.

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