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TheTatteredPatchworkofLocal
Ordinances
CAIRockyMountainChapter2016SpringShowcase
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PRESENTERS
EdFronapfel,MSCE,PEOwner
HeidiStorz,Esq.Partner
MariPerczak,Esq.Shareholder
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INTROSLIDE
PRESENTER
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Denver
Aurora
ColoradoSprings
CommerceCity
Lakewood
Littleton LoneTree
Parker
MapSource:http://mapsof.net/uploads/static-maps/colorado_county_map.png
WheatRidge
LovelandFortCollins
Westminster
LocalCDOrdinancesHaveCroppedUpAllAlongtheFrontRange(2014)
Arvada
Arvada
ForcedArbitration
WithBuilder-SelectedArbitrationService??
NotEvenInDeclaration– RequiresHomeownerstoGotoRecordedPlattoFigureThisOut
Aurora
ForcedRepairsbyBuilder• HomeownerorHOAhasnorighttorejectabuilder’sproposeddeficientorunsaferepair
ForcedArbitration
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformation
ColoradoSprings
RequiredDisclosuresofUnknownInformation• RequiresHOAstodiscloseinformationthat isnotreadilyavailablepriortofullyinvestigateitsconstruction defectclaims
ForcedRepairs• Builderisunilaterallyentitledtomakeallrepairs– includinghazardousorinappropriateones
TakesControlOutofBoard’sHands• RequireshomeownervoteformattersthattheBODshouldhandle
CommerceCity
ForcedRepairsbyBuilder• HomeownerorHOAhasnorighttorejectabuilder’sproposeddeficientorunsaferepair
ForcedArbitration• Usingbuilder-selectedarbitrationservicesandbuilder-selectedarbitrationrules
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformation
Denver
EliminatesImpliedWarrantyofHabitability
Releasesbuildersfromtherequirementtoconstruct incompliancewithmanufacturers’instructions
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
FortCollins
MakesitaCriminalActtoAttempttoModifyanHOA’sDeclarationRegardingArbitration
TakesControlOutofBoard’sHands• RequireshomeownervoteformattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknownInformation• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
Lakewood
ForcedArbitration
ForcedRepairsbyBuilder• HomeownerorHOAhasnorighttorejectabuilder’sproposeddeficientorunsaferepair
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
Littleton
ForcedArbitration
ForcedRepairsbyBuilder• HomeownerorHOAhasnorighttorejectabuilder’sproposeddeficientorunsaferepair
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
LoneTree
ForcedArbitration
TakesControlOutofBoard’sHands• RequireshomeownervoteformattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknownInformation• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
Loveland
TakesControlOutofBoard’sHands•RequireshomeownervoteformattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknownInformation•Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
Parker
ForcedArbitration
WheatRidge
ForcedArbitration
ForcedRepairs• HOAcannotrejectabuilder’sunsafeordeficientrepairs
TakesControlOutofBoard’sHands• Requireshomeownervote formattersthattheBODshouldhandle
RequiresHOAstoMakeDisclosureofUnknown Information• Beforemakinganoticeofclaim,HOAsmustdisclosethecostofrepairs;theeffectuponmarketabilityofunits;andotherinformationthattheHOAlikelydoesnotknowatthattime
CriticalIssuesRaisedbyTheseOrdinances
Defining“ConstructionDefect”• Denver
AbsoluteBuilderRightstoRepair• Aurora• CommerceCity• Lakewood• Littleton• WheatRidge
StrategicEffortstoEliminateBuilderLiability• AllMunicipalities
Absolute“RighttoRepair”
SpoliationofEvidenceofConstructionDefects
RepairofDefects•CureofProblem•CorrectionofResultantDamages
OtherConcerns
SpoliationofEvidenceofConstructionDefects
• Ifrepairsareunsuccessful,orthepartiesendupinlitigationafterrepairs,evidenceofdefectswouldhavebeendestroyedduringrepairsperformedbybuilder
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Two-ProngstoRepairstoConstructionDefects
• Correctionofdefectivecondition– Nothird-partyoversighttoensurerepairsaremadeincompliancewithcodeorotherrequirements
• Repairofresultantdamage– Noqualitycontrolorthird-partyoversighttoensurecorrectionofresultantdamage
– Noincentivetodoso(resultantdamagecanbehiddenduringrepairprocess)
– NomethodforownersorHOAtorequiresuchrepairs
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Absolute“RighttoRepair”OtherConcerns
• Samecontractorwhocauseddefectsinthefirstplacecouldmakerepairs– NoopportunityforHOAorownerstovetcontractor
• Consequencesofpoor/incompleterepairs:– Increasedmaintenancecosts– Reducedservicelifeofbuildingorcomponent– Change/damageaestheticalappearance– Reducevalueofproperty
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Absolute“RighttoRepair”OtherConcerns
• Norequirementtocorrectlife-safetyissues• NocompensationtoownersorHOAfor:– Priorrepairs– Investigation/engineeringcosts– Attorneyfees– Lossofuse
• Noprotectionfromfilingofsubcontractorliens?
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StrategicEffortstoLimitorEliminateBuilderLiability
• LimitsonPowersofBODtoTransactAssociationBusiness
• RequiredDisclosures• Non-negotiatedarbitrationprovisions• AbilitytocontrolHOAlongaftercompletion
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LimitsonPowersofBODstoTransactAssociationBusiness
• CCIOApermitsAssociationstoinstitutelitigationonbehalfoftheAssociationortwoormoreownersregardingmattersaffectingthecommon-interestcommunity– Colo.Rev.Stat.Sec.38-33.3-302(1)(d)
• Manyofthelocalordinancesremovethispowerandrequireamajorityvoteofhomeownerswithinspecificrestrictivetimeperiods– Thesetimeperiodsservenofunctionbuttoprovideonemore
stumblingblockforHOAstoseekremediesfordefectsandprovideadditionalgroundsforbuilderstoescapeliability
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RequireDisclosuresofUnknownInformation
• Undermanyoftheseordinances,Associationsmustdisclose:
– Natureofactionandthereliefsought– ExpensesandfeesBODanticipateswillbeincurred, including potentialliability
iftheHOAisnottheprevailingparty– Estimatedcostofrepairingdefect,or, ifunrepaired, impactonunitvalue– Impactuponmarketabilityofunits, including impactonabilitytorefinance– Mannerof funding thecostsoftheaction– Anticipateddurationandlikelihood ofsuccess– Whetherbuilderhasofferedto,andmade,repairs– Stepstakenbybuilder toaddressdefect(including inspections)– Datebywhichclaimsmustbefiled tobetimelyunderSORandSOL
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DisclosuresMustBeGiven60DaysBeforeNoticeofClaim
• Disclosuresarerequiredtobemade60daysbeforeservinganoticeofclaim
• IfanAssociationisclosetoadeadlineforstatuteoflimitationsorrepose,this60-day“waitingperiod”couldendupservingasabartotheAssociation’sclaimsunderthestatuteoflimitationsorrepose
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Non-NegotiatedArbitrationClauses
• LocalordinancesprohibitamendmentstoDeclarations/CC&Rsrelatedtoarbitrationprovisions– Onejurisdiction(FortCollins)actuallymadeitacrime toattempttoamendaDeclaration
• Asaresult,builderscanputwhateveronerousrequirementsitdesiresintotheDeclarations,andtheHOAwillhavenoabilitytoavoidcomplyingwiththem– Insomeinstances,theserequirementscouldultimatelyserveasaneffectivebartoallconstructiondefectclaims
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ExemplarOnerousArbitrationClauses
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AbilitytoControlHOABusinessLongAfterTransition
• SomeordinancesprohibitamendmentofDeclarationarbitrationprovisionswithoutbuilderconsent– Irrespectiveofwhethertransitionhasoccurred,builderisoutofbusiness,buildernolongerownsunits,andisnolongerontheBOD
• AllowsthebuildertoexertcontroloveroperationoftheHOAlongafterthepropertyiscompleteandtheyhaveleftthecommunity
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Questions?
ThankYou!
CAIRockyMountainChapter2016SpringShowcase
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