By: James T. Johnson and Kimberly A. Martin

In May of this year, Governor Hickenlooper signed into law House Bill 11-1146, which amends the statutory definition of “agricultural land” for property tax purposes.  Historically, land underlying a residence located on a parcel of property that otherwise was classified as “agricultural land” was also classified as agricultural land for property tax purposes.  This classification resulted in the residence being qualified for more favorable “agricultural” property tax treatment as compared to the residential classification.  

Under House Bill 11-1146, now excluded from the classification of “agricultural land” is up to two acres of land upon which a “residential improvement” is located if the residential improvement is not “integral to an agricultural operation” conducted on the land.  Any such excluded land will be classified as “residential land” for property tax purposes, but the remainder of the property would retain its agricultural classification.  If the residence is integral to the operation of a farm or ranch, the classification does not change.  Further, vacant land or any other land upon which a residence is not located, whether or not subdivided, is not affected by this legislation. 

House Bill 11-1146 will apply to the 2012 property tax year and all subsequent tax years.  For a more complete discussion of this new law, see our Client Alert on the topic.

In May, Governor Hickenlooper signed into law Senate Bill 11-234 – Concerning Residential Real Property Transfer Fee Covenants.  The bill is targeted at prohibiting fees payable upon the transfer of residential real property to individuals and entities where such fees do not touch and concern the real property.  The common law likely already prohibited such fees.  Nevertheless, the bill became effective immediately, the General Assembly having determined that such was necessary “for the immediate preservation of the public peace, health and safety.”  Apparently, the General Assembly identified a rising popularity trend for such fees, and it wanted to thwart their growth in Colorado.

The bill does essentially four things.  First, it prospectively prohibits fees payable upon the conveyance of residential real property, except for transfer fees that touch and concern residential real property, including payments to lenders, brokers, lessors, governmental and quasi-governmental entities, homeowner’s associations, and certain non-profit entities.  Second, it narrows the circumstances under which prohibited fees established prior to the effective date of the bill are payable.  Third, it provides penalties for recording documents requiring the payment of such fees.  And fourth, under certain circumstances, it provides a quick mechanism for removing covenants requiring the payment of such fees. 

For a more complete discussion about the bill, please see my Client Alert on the topic.  Any individuals or entities that have either considered or implemented a transfer fee should be aware of the enforceability issues raised by this bill. 

Light Rail with DevelopmentRecent stories in the business section of the Denver Post have featured real estate development around light rail stations.  First, there was the story of the Denver Federal Center, and a few days later an article on the Denver Design District.  This appears to be a continuation of the theme that transportation will drive future development in Denver.  As reported in an earlier post, Regional Transportation District is taking a more flexible approach with transit oriented developments.  All of this seems like great news.  However, as reported in today’s Denver Post, FasTracks is at least $2 billion short in funding, and RTD’s board voted 13-1 against placing a sales tax increase on the November ballot.  It is not surprising that a sales tax increase in this climate is not feasible politically.   Given that many of the newly planned developments in the Denver area seem to be linked to transit, this shortfall in FasTracks funding may slow down some of it.    However, given the general state of the economy, not all of it may come to fruition that quickly anyway.

Photo by vxla (Flicker)

 

With early signs of an economic recovery, developers, investors, and lenders have cautiously started exploring new deals. With new deals come new contracts, and with new contracts it is important to take another look at some of the “standard” provisions to which many of us have grown accustomed.  One such provision which has become standard in many real estate and lending contracts is the mandatory arbitration provision.  Instead of treating it as an afterthought, parties to the contract should carefully consider whether arbitration makes sense for them.

To begin, it is important to understand some of the potentially beneficial characteristics of arbitration:

  • In an arbitration the parties have the ability to agree on an arbitrator, rather than having a judge assigned to their case at random;
  • While arbitration files remain confidential, court records are generally open to the public unless specifically filed under seal;
  • In an arbitration, the parties can set the discovery and procedural rules ahead of time instead of being bound by the rules of civil procedure (though blindly choosing standard arbitration rules could result in a process at least as expensive as a court proceeding without the tried and true benefits of standard discovery practices); and
  • A binding arbitration provision might allow a large institutional party dealing with many customers to avoid class action law suits.

That said, arbitration comes with a cost. In an arbitration, the parties are responsible for paying the hourly rate of the arbitrator and certain default arbitration rules might even require the use of three arbitrators for high-dollar disputes (regardless of the complexity). Additionally, some arbitration firms charge heavy administrative fees. Therefore, depending on the dollar amounts involved, arbitration might not make sense. 

One final point to consider is that the court system might be better suited for certain types of disputes.  Many courts have special rules and procedures for evictions, suits on promissory notes, and replevins.  In these cases it will likely be much easier to go through the courts rather than trying to reinvent the wheel in an arbitration.

Therefore, prior to including an arbitration provision it is important to consider both the characteristics of arbitration as well as the nature of the parties’ deal. This will allow the parties to make an informed decision about whether arbitration is the best option for them. If it is, then it becomes vital to craft the arbitration provision carefully so that the ground rules for the arbitration are in place before a dispute arises.

Numerous Colorado registered entities have recently received solicitations through the mail offering report-filing services.  Official-looking letters titled “Periodic Report” are being issued and sent by “Corporate Controllers Unit” and seek to have Colorado registered entities pay an “Annual Fee” of $225 to have a “Periodic Report” filed on their behalf.  These letters contain a form requiring the name and address of the registered entity, registered agent, and person submitting the form.  In addition, the letters include a disclaimer towards the bottom of the page which states that “[t]his product or service has not been approved or endorsed by any Governmental Agency and this offer is not being made by an agency of the Government.”  A copy of this letter may be found here.

If your Colorado registered entity receives one of these letters, please be advised that the service offered is unnecessary.  The form contained in the letter is not required to be filed with the Office of the Colorado Secretary of State (the “Secretary”).  Additionally, please note that beginning in 2012 the Secretary will no longer mail notifications for when annual reports become due, but instead will send e-mail notifications to the e-mail address listed on file with the Secretary for the registered entity, and the cost of filing an annual report is only $10.  You can review the record and status of a Colorado registered entity and, if necessary, file an annual report at the Secretary’s website.  Also, information concerning the importance of having your registered entity’s e-mail address on file with the Secretary may be found here.

If you have any further questions or concerns regarding this possibly deceptive report-filing solicitation, additional information and resources may be found here.