We are past the half-way point of the 2011 Colorado legislative session, which began in early January and ends in early May. Several hundred bills have been proposed, and many have already been “postponed indefinitely” or voted down in committee or in a legislative chamber. Below are summaries of certain significant bills affecting Colorado real estate law or the commercial real estate industry that continue to be debated as of the date of publication of this post. Given the many bills under consideration, this list is not intended to be a comprehensive overview.
Real Estate Finance – Lenders Must Pursue Collateral First (HB 11-1139). This bill would prohibit consumer loan creditors, credit unions, savings and loan associations, state banks, industrial banks and mortgage lenders from attempting to collect a debt from a borrower personally unless (a) the creditor first attempts to collect the debt from the collateral, and (b) the proceeds from the collateral are insufficient to pay the debt.
Ballot Measures – Constitutional Initiatives and Referenda Require 60% Voter Approval (Senate Concurrent Resolution 11-001). This resolution would put to the voters via referendum in November 2012, a proposed amendment to the Colorado Constitution that would: (a) beginning in 2013, increase the amount of votes needed to pass a ballot measure for a Constitutional amendment from a simple majority to 60%, except as to measures that repeal Constitutional ballot measures passed prior to 2013, (b) require that a certain number of signatures for Constitutional initiatives be obtained from each congressional district in the State, and (c) increase the voting requirement in the legislature to amend or repeal a successful statutory initiative or referendum from a majority to two-thirds for a three year period after passage. The scope of this measure clearly goes beyond real estate. However, it may be of particular concern to the Colorado commercial real estate industry, which has had to defend against various initiatives over the years. This referendum would make future Constitutional initiatives and referenda more difficult to pass, although it would provide greater protection to successful statutory ballot measures. The concurrent resolution to establish this referendum has passed the House with minor modifications to the approved Senate version. It now is back in the Senate for a vote on the modified version. My colleague Bob Fisher provides more information about this resolution in a post below.
Agricultural Land Taxation – Split Assessment for Agricultural Land with Residence (HB 11-1146). This bill would allow tax assessors to divide a parcel for assessment purposes into agricultural land and up to two acres of residential land unless the residence is “integral to agricultural operations.” The phrase “integral to agricultural operations” would be defined by the Colorado property tax administrator.
Property Disclosures – Commercial Properties Must Disclose Energy Data (SB 11-130). This bill would require owners and operators of commercial properties, defined to exclude multifamily properties sold or leased on a unit-by-unit basis, (a) to upload to the Environmental Protection Agency data necessary to generate an energy performance rating, and (b) disclose the building’s energy performance rating (if one is generated by the EPA) to a buyer, tenant, or lender at the time of conveyance and upon request by such parties. The bill would only cover commercial buildings in excess of 50,000 square feet during 2012, but would cover all commercial buildings thereafter.
Also, a bill restricting private transfer fees is expected to be introduced this session but has not been introduced yet. Further information on these and other bills affecting real estate may be obtained by visiting www.statebillinfo.com.
Photo by cliff1066™ (Flickr).
Developers often secure FHA approval for their condominium projects, enabling buyers to obtain FHA loans. Whether or not those approvals remain in place is left to the owners’ association for the project. As investors continue to snap-up condominium units one at a time or in bulk, it is important to review the status of the FHA approval for the project. As highlighted in a recent Denver Post article, the FHA backs nearly one-third of all mortgages in the United States, up from 5% in 2005. The article also reports that nearly two-thirds of Denver metro-area condominium projects have rejected or expired FHA approvals. As the article suggests, this could be the result of many factors, including FHA’s limit on the number of renters in a project. Even for those projects with intact FHA approvals, investors should talk to the association to understand the association’s plans for renewing the registration and assuring that all the FHA requirements (such as the limit on renters) are satisfied. The association’s plans (or lack thereof) with respect to FHA registration could have serious implications for the investor’s ability to rent the condominium units or sell them to consumers. 