June 15-July 5, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 45
tion the seller put in its file when
it purchased the property.
The buyer’s rights following its
review of the association docu-
ments is binary: Accept them
as is or terminate the contract
(§7.4).
Trap:
There is no procedure
for objection and resolution for asso-
ciation documents as there is for
title documents.
Trap:
The buyer’s
right to terminate may be “based
on any unsatisfactory provision in
any of the association documents, in
buyer’s sole subjective discretion”
(§7.4).
The buyer need not be
reasonable, but the termination
must be in good faith under §29.
Trap:
Is the poor financial condition
of the association an “unsatisfac-
tory provision in any of the associa-
tion documents”?
Might the seller
argue that the buyer may not
terminate the contract if that is
the stated reason? The contract
termination must occur before
the “association documents
objection deadline,” a date cho-
sen by the parties. In a rather
convoluted provision, the buyer
gets an extension to 10 days after
receipt of the association doc-
uments (but not later than the
closing), if the association docu-
ments were not delivered by the
agreed-upon “association docu-
ments deadline.”
Trap:
Section 7.4
does not clearly allow the buyer to
terminate the contract if it does not
receive the association documents by
the association documents deadline.
The clause can be construed to
require the buyer to wait until
closing and, if it has not received
the association documents by
then, deliver the buyer’s notice to
terminate. Equally troublesome
is that the clause could leave the
seller hanging until closing when
the buyer finally gives its notice
of termination.
Aclause at the end of §7.4, puts
an interesting twist on the buy-
er’s right to terminate. It waives
any right to terminate under §7.4
of the contract after the appli-
cable deadline, “notwithstanding
the provisions of §8.6 (right of
first refusal or contract approv-
al).” Presumably the quoted
clause is intended to say that a
waiver of the right to terminate
under §7.4 does not eliminate the
buyer’s right to terminate under
§8.6. Connecting §7.4 and §8.6 in
this way makes sense, since it is
not unusual for association docu-
ments (especially for an older
condominium) to contain a right
of first refusal and it should be
clear the buyer may terminate
under both provisions.
Trap:
Sec-
tion 7.4 does not address a similar
problem that arises if any of the
association documents are title docu-
ments or off-record matters.
Does a
waiver of the right to terminate
the contract under §7.4 prohibit
the buyer from objecting or ter-
minating the contract under §8.4
as to any of those association
documents? Does the failure to
object or terminate the contract
under §8.4 as to any of those
association documents, prohibit
the buyer from terminating the
contract under §7.4?
Tip:
The
buyer would be wise to add a provi-
sion that allows it to terminate the
contract under each of §7.4, §8.4 and
§8.6 independently and regardless of
any overlap.
Section 15.3 of the contract
addresses certain fees that may
be charged by the association
upon a transfer of the property,
including the cost to produce a
“status letter” regarding assess-
ments due, any “record change
fee,” including any “ownership
record transfer fee,” and, in §15.5,
any “private transfer fee.”
Trap:
As the words used in §§15.3 and
15.5 are not defined in CCIOA and
are not likely to be the same words
used in the association documents,
the parties need to figure out what is
intended as to each item.
Section 16.3 addresses the pro-
ration of assessments. A number
of issues that might be the subject
of dispute between the seller and
the buyer are addressed in these
provisions and any of a num-
ber of disputes might arise when
the buyer and seller endeavor
to apply them. Current regular
assessments and dues paid in
advance are credited to the seller.
“Cash reserves held out of the
regular association assessments
for deferred maintenance” are
not credited to the seller unless
the governing documents pro-
vide otherwise.
Trap:
In order
to properly affect the intent of this
clause, the parties need to know how
the reserves are accounted for by the
association and customize the clause
accordingly.
For example, the
cash reserves might not be “held
out.” They might not be sole-
ly for “deferred maintenance.”
The governing documents may
have a rule that applies unless
the seller and buyer agree oth-
erwise in the contract.
Trap:
The
clause that addresses an amount
for reserves or working capital does
not say how or by whom the buyer
might become obligated for reserves
or working capital.
Again, mak-
ing this clause work so it affects
the parties’ intention requires
an understanding of how the
reserves or working capital are
treated by the association. For
example, the seller may have
deposited an amount with the
association that is still held in
reserve; in that case, the buyer
might be willing to reimburse
the seller for that amount. If that
amount has been spent by the
association, however, and the
fruit of the expenditure is reflect-
ed in the purchase price, the
buyer might not want to reim-
burse the seller.
Trap:
The word
“assessed” in §16.3 is not defined
in the contract or in CCIOA, and
can cause disputes.
For example,
how do the amounts get allo-
cated under §16.3 if the associa-
tion simply “bills” the unit own-
ers. If the association’s board
resolves to start billing the unit
owners sometime in the future,
is the amount “assessed” when
the board’s resolution is passed
or when the billing starts. The
variations, of course, are endless.
Trap:
While §16.3 requires the
seller to request that the association
deliver a status letter to the buyer,
it does not say what happens if
the association does not do so.
The
logical solution would be for the
buyer and seller to agree to a
post-closing adjustment once the
association bills the buyer and,
perhaps, have some money held
in escrow to cover any amounts
payable by the seller.
The final treatment of associa-
tions appears in §19, where the
contract endeavors to address
the role of the association (if
there is one) with respect to the
receipt of insurance proceeds,
the maintenance or replacement
of damaged property and any
claims the seller might have for
reimbursement from the associa-
tion.
Tip:
Given that the provisions
of the contract regarding the asso-
ciation’s fees, assessments, reserves
and what happens if a casualty
occurs depend heavily on how the
association documents treat these
matters, the buyer should consider
a procedure under which it can
adjust the provisions of the contract
to fit the circumstances after it has
reviewed the association documents.
The procedure could mirror that
used to address title matters.
s
Law
closely with the firm’s manage-
ment to design a space that both
raises the bar and surpasses
expectations for how a wealth
management company’s work
environment can enhance its
company culture. Crestone envi-
sioned a center for networking
and gathering for employees,
clients, neighbors and the com-
munity at large. The new design
was so successful at accomplish-
ing this that a broader rebrand-
ing effort was catalyzed.
“This has been a fun project
with a highly creative client,”
said Sunset, principal at Semple
Brown. “The opportunity to
work with Crestone on fulfilling
their vision has been an exciting
one for our team. The design for
this high-energy, community-
oriented space subtly enhances
the company’s inclusive work
culture, while showcasing Boul-
der’s spectacular mountain and
city views.”
The space features a blend of
full-height glass offices, open
bench-style work areas and
state-of-the-art meeting rooms
designed to encourage daily col-
laboration. An open and invit-
ing “gathering style” kitchen
area with an operable glass wall
opens onto a 2,000-sf rooftop
terrace shaded with greenery,
garden planters and an open
trellis that serves as an alternate
outdoor workspace for Crest-
one employees by day, and an
enhanced entertainment venue
and dining area for corporate
partners and community events
at night.
The contractor for Crestone’s
new space is Arvada-based
Sand Construction.
s
skilled fields. The companies
also agree to form a partner-
ship with Colorado Mesa Uni-
versity through mentorship,
internship opportunities and
community involvement.
Updates…
n
Gov. John Hickenlooper,
Colorado’s “bike czar” Ken Gart
and Luis Benitez, director of the
recently launchedColoradoOut-
door Recreation Industry Office,
donned Spandex for a recent
visit to Colorado’s Grand Val-
ley May 15. The delegation met
with several local business lead-
ers and elected officials through-
out the Grand Valley, taking the
opportunity to explore on bike
between meetings.
The trip confirmed the gov-
ernor’s commitment to making
the state of Colorado’s outdoor
recreation industry a top prior-
ity for economic development
– and sealed the Grand Valley’s
place among the frontrunners
for outdoor recreation industry
growth.
“The Grand Valley is on the
path to become the outdoor des-
tination in the state of Colorado
– a place where you can bike,
ski, moto, fish and paddle the
Colorado River all in the same
weekend,” said Sarah Shrader,
founding member of the Out-
door Recreation Coalition of the
Grand Valley and owner of Bon-
sai Design. “We are thrilled to
have the governor’s support.”
s
Semple Brown
REBCO
