Spring 2012

• Confusion in the Crosswalk: The Difficult Intersection of Mechanics Lien Law and Foreclosures in Real Estate Construction Projects
   
• Recent Developments in Whiting Oil And Gas Corporation v. Atlantic Richfield Company and the Rule Against Perpetuities
   
• Colorado Court of Appeal Westpac Decision: Merger of Title Doctrine
   
• High Altitude Discussion List – How Are We Doing?
   
• The End of Private Transfer Fees?  FHFA Ban is Made Final
   
• Did You Know . . . That the CBA's CLE Legal Connection is a Great Source of Breaking News and Information?
   
• Did You Know . . . ThatColorado's Real Estate Title Standards Provide a Wealth of Information About Many Common – and Not So Common – Title Questions?

• Did You Know . . . You Can Attend Monthly Real Estate Section Council Meetings by Phone
   
• The 30th Annual Real Estate Symposium is Coming to Steamboat, July 19-21, 2012!
   
• Committee Reports
  • Colorado Bar Association Board of Governors
  • Legislative Policy Committee  
  • Title Standards Committee
  • Trusts and Estates Section
  • Real Estate Commission Forms Committee
  • Interprofessional Committee
  • Colorado Housing Council
  • Membership Committee
  • Community Service Committee
  • Ethics Committee
  • Courts & Civil Rules Committee
  • Eminent Domain Committee

• Additional Information
   
• Legal Writing Opportunities
   
• 2011-2012 Real Estate Section Council Contact Names and Numbers

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CONFUSION IN THE CROSSWALK: THE DIFFICULT INTERSECTION
OF MECHANICS LIEN LAW AND FORECLOSURES
IN REAL ESTATE CONSTRUCTION PROJECTS

By B. Joseph Krabacher, Sherman & Howard, L.L.C.

The law on mechanics liens in the context of lien claims against structures located on land encumbered by a mortgage or deed of trust, has been described by a prominent commentator as “one of the most difficult points to grasp in the entire body of mechanics lien law”.¹ The recent Colorado Court of Appeals decision in Ferguson Enterprises, Inc. v. Keybuilder Solutions, Inc., et al..² illustrates how difficult it is for general contractors and subcontractors to determine whether they will be protected by the mechanics lien laws for work performed on construction projects when the project is subject to pre-existing deeds of trust for acquisition and construction purposes.

Before analyzing the specifics of Ferguson Enterprises, Inc., it is instructive to review the general rules that apply mechanics liens against structures located on mortgaged land under Colorado's General Mechanics Lien statute.  The basic rules are as follows, summarized from the statute and case law: 

1. A deed of trust or mortgage that secures a loan for acquisition or other non-construction purposes will always be prior to a lien under the General Mechanics Lien law as to the land (as distinguished from the improvements).³

2. If there is a recorded deed of trust that secures a loan for “new” construction, the deed of trust will have priority over a competing mechanics lien as to the improvements to the extent that the deed of trust is recorded prior to attachment of the mechanics lien, and the loan proceeds are used for construction purposes.⁴  “New” construction means the construction of new improvements not previously existing, as distinguished from the expansion, repair and remodeling of existing improvements.

3. If the work performed by the contractor is for “new” construction, and the limited exception set forth in Item 2 above does not apply, the contractor will have priority on the improvements (but not the land).⁵

4.If the work performed by the contractor is not for “new” construction, the contractor will not have priority with respect to the improvements or the land.⁶

5. A lien claimant will have lien priority over a construction loan only where the construction loan deed of trust is recorded after commencement of the work.⁷

6. A lien claimant may be able to take advantage of the relation back doctrine to establish that the commencement of the work (by any contractor) occurred prior to the recording of the construction loan deed of trust.⁸

It is within this context that theFerguson Enterprises, Inc. case was decided.  The project was owned by three different successive owners, Zion (the original developer), FlatIron (the original lender which foreclosed), and Water Tower (which acquired title from FlatIron after the foreclosure).

Zion had hired an architect and just one week after FlatIron was issued a certificate of purchase in its foreclosure, the architect recorded the master plan for the project.  Water Tower took title approximately five months after FlatIron was issued a public trustee's deed.  Water Tower closed a construction loan from Colorado Community Bank (“CCB”) about a week later, and first started work on the project approximately a month after it took title by hiring a project manager.

About five months later, in November of 2008, the first contract was signed by Water Tower with the lien claimants. The lien claimants subsequently performed work but ultimately did not get paid.  After recording mechanics liens, Ferguson Enterprises, Inc. filed a lien foreclosure action in October of 2009.  In the meantime, Water Tower had defaulted on the Colorado Community Bank loan and CCB started its foreclosure in December of 2009, and ultimately received a certificate of purchase and public trustee's deed in 2010.

The Court of Appeals, in a decision issued December 22, 2011, affirmed the six basic rules above, but ultimately remanded the case to the trial court to determine whether the architect had a lien that arose in 2007 when it recorded the master plan.  The question on remand being whether or not there was a structure or improvement to which the architect’s lien could have attached, and if so, the lien claimants inFerguson Enterprises, Inc. would be entitled to priority based upon the relation back doctrine and would have priority as to the structure or improvement (but not the land).

The Court of Appeal's holding was made despite a valiant attempt by the CCB to convince the Court that the relation back doctrine does not apply where there is a change of ownership and where, as here, the architect’s contract was with a prior owner who was foreclosed by the original lender.  The Court of Appeals determined, however, that it was the same project that the architect had worked on, and if it adopted CCB's position, an owner could easily defeat a mechanics lien by transferring the property to a third party.  

Then the Court of Appeals evaluated the impact of the public trustee foreclosure on the mechanics lien, and specifically C.R.S. §38-38-501, which states that junior liens are extinguished in a foreclosure absent redemption by the junior lienor.  After reciting well-established statutory and case law establishing that the issuance of a certificate of purchase voids all junior liens unless a redemption occurs, the Court was unable to determine whether or not the lien claimants could apply the provisions of C.R.S. §38-22-103(2) combined with the relation back doctrine to assert a lien against the structure or improvements, if in fact there were structures or improvements to which the architect's lien would have had priority.⁹ Given that the record was inadequate to make a determination as to whether or not the architect would have had a lien as to structures or improvements, the case was remanded. 

One might wonder what happens if the trial court determines that there were structures or improvements and the lien claimants are determined to have a valid lien against those structures or improvements.  The foreclosure statutes would provide that the mechanics liens, having priority and not being junior liens, would survive the foreclosure. Then the lender or the mechanics lien claimant would need to complete a judicial foreclosure or entire sale of the property.

In Atkinson v. Colorado Title & Trust Co. 59 Colo. 258, 151 P. 457 (1915), the Colorado Supreme Court (almost a century ago), stated in the context of improvements consisting of basement walls and foundations which could not be removed from the land and continue to retain any value, that the only way the improvements could be effectively reached to satisfy the lien would be to sell the property as a whole and pursue “some equitable course”, presumably an allocation based upon the relative fair market values of the underlying real estate and the improvements.  This raises a host of issues including how that valuation would conducted, what assumptions might be applied to determine that valuation, and what the process would be to determine the valuation, none of which have been addressed under any reported cases in Colorado

¹ Jack Greenwald, Colorado Liens and Claims Handbook, §2.3.3 (4^th ed. 2010)

² Ferguson Enterprises, Inc. v. Keybuilder Solutions, 2010 Colo. App. LEXIS 2234 (Colo. App. December 22, 2011).

³ C.R.S. §38-22-103(2) (2012); Darien v. Hudson, 134 Colo. 213; 302 P.2d 519 (1956).

⁴ Joralmon v. McPhee, 31 Colo. 26, 71 P. 419 (1903); 1^st Choice Bank v. Fisher Mechanical Contractors, Inc., 15 P.3d 1100 (Colo. App. 2000).

⁵ C.R.S. §38-22-103(2) (2012); Powder Mountain Painting v. Peregrine Joint Venture, 899 P.2d 279 (Colo. App. 1994).

⁶ Lew Hammer, Inc. v. Dash, Inc., 599 P.2d 948 (1979).

⁷ C.R.S. §38-22-106(1) (2012); Howard v. Fisher, 86 Colo. 493, 283 P. 1042 (1929).

⁸ C.R.S. §38-22-106(1) (2012); Sontag v. Abbott, 140 Colo. 351, 344 P.2d 961 (1959).

⁹ Ragsdale Bros. Roofing, Inc. v. United Bank, 744 P.2d 750 (Colo. App. 1987) (Section 38-38-501 does not cut off a contractor's lien on the building, but does cut off liens on the land).

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RECENT DEVELOPMENTS IN
WHITING OIL AND GAS CORPORATION V. ATLANTIC RICHFIELD COMPANY
AND THE RULE AGAINST PERPETUITIES

By Daniel A. Sweeter, The Sweetser Law Firm PC

In the case of Atlantic Richfield Company v. Whiting Oil and Gas Company the Colorado Supreme Court is addressing the application of the common law Rule Against Perpetuities and Colorado’s statutory Rule Against Perpetuities to commercial contracts.  The case concerns the exercise of an option to purchase oil and gas interests by Whiting’s predecessor in interest, Equity Oil Company.  The duration of the option was, pursuant to the provisions of a contract between ARCO and Equity, twenty-five years.  As the option, by its terms set forth in the contract, was not certain to be exercised within twenty-one years after the end of an identified life in being, ARCO declined to allow Equity to exercise the option claiming that it violated the common law Rule Against Perpetuities.  Whiting, as Equity’s successor in interest, sued in the District Court for Rio Blanco County seeking specific performance of the option and ARCO counterclaimed seeking an order quieting title of the oil and gas interests in ARCO’s name and a declaratory judgment that the option could not be exercised.  The trial court found that the option did violate the Rule Against Perpetuities but elected to reform the option so that it became enforceable in accordance with the reformation provisions of Colorado’s Statutory Rule Against Perpetuities, located at §15-11-1101, et seq., C.R.S.  The statute provides that, upon the petition of an interested person, a court “shall reform the disposition” of any non-vested property right created before May 31, 1991 which would otherwise be in violation of the common law Rule Against Perpetuities by “inserting a savings clause that preserves most closely the transferor's manifested plan of distribution and that brings that plan within the limits of the rule against perpetuities applicable when the nonvested property interest . . . was created.”  §15-11-1106(2), C.R.S.

ARCO appealed the decision, arguing, primarily, that the reformation provision was not applicable to commercial transactions and that, regardless, any application of the reformation provision to commercial agreements would render the provision unconstitutionally retroactive.  The trial court’s decision was upheld by the Colorado Court of Appeals.  The Colorado Supreme Court granted certiorari on the following two issues:  (1) “Whether the Statutory Rule against Perpetuities Act's reformation provision, Section 15-11-1106(2), C.R.S, (2009), authorizes a court to reform a nondonative, commercial option created prior to the effective date of the Act in order to bring it into compliance with the common law rule against perpetuities”; and (2) “Whether the reformation provision is unconstitutionally retrospective, where such reformation deprives a party of its vested interest in real property.”

The case has been fully briefed by the parties and the Colorado Bar Association was granted leave to file a brief as Amicus Curiae.  Oral argument is currently being scheduled by the Court.

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COLORADO COURT OF APPEALS' WESTPAC DECISION:
MERGER OF TITLE DOCTRINE

By Nicole R. Nies, Mastin Hoffman & Crews, LLC

The Colorado Court of Appeals recently affirmed a Pitkin County District Court decision granting a preliminary injunction and holding that the merger of title doctrine does not extinguish a prescriptive easement where the sole owner of the servient estate holds title to the dominant estate in joint tenancy with his spouse.  This issue was one of first impression in Westpac Aspen Investments, LLC v. Residences at Little Nell Development, LLC, et. al., 2010 Colo. App. 0363 LEXIS (Colo. App. October 13, 2011). In the trial court, the plaintiff (Westpac Aspen Investments, LLC) sued the defendants  (the Henns) for injunctive relief requiring the Henns to remove a fence and gate blocking access to an express easement and to quiet title to a prescriptive easement across the Henns' property.  The Henns argued that because, in 1989, the Henns owned the Westpac property (the dominant estate) in joint tenancy and Mr. Henn individually owned the Henn property (the servient estate), any easement was terminated under the doctrine of merger and any subsequent use did not qualify for a new prescriptive easement.  The Court of Appeals concluded that for merger purposes, common ownership does not exist where the servient estate is owned individually and the dominant estate is owned in joint tenancy.

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HIGH ALTITUDE DISCUSSION LIST – HOW ARE WE DOING?

By Michael J. Repucci, Johnson & Repucci LLP

One of the many important initiatives undertaken by Section Chair Tom DeVine this year is the development and rollout of the Real Estate Law Section’s own discussion list.  The High Altitude Discussion List officially launched in early December 2011.  In an effort to further bolster the many benefits that Section membership provides, the Discussion List is available only to Real Estate Law Section members.  The Real Estate Section has been pleasantly pleased with the number and frequency of interesting and helpful topics the Section membership has posted.  Many of the postings exhibit considerable effort in the thoroughness of responses, including legal citations and offers to assist other Section members offline with forms, discussion and support.

In its early days, the High Altitude Discussion List generated a considerable amount of e-mail traffic due to the decision of the Section Council to make the Discussion List an “opt-out” rather than an “opt-in” endeavor. While a small number of Section members elected to opt-out of the Discussion List in its early days, through innovative programs like the Discussion List’s daily digest services and careful screening of posts in order to block Out of Office Auto Reply messages, the Discussion List now enjoys a remarkable number of subscribers.

Since there is a learning curve when it comes to discussion lists, it is helpful to review a few practice points.

If you hit “Reply,” your message goes to the entire list.  This is a reality we all learned in the early days of the Discussion List when several Section members sent e-mails to the entire Section membership requesting to be taken off the Discussion List.  Over time, however, the Section membership has learned that there is a simple and effective way to unsubscribe from the Discussion List, either permanently or during temporary periods when away from the office at trial or on vacation.

To unsubscribe DO NOT reply to any Discussion List message.   Instead, simply scroll to the bottom of the Discussion List message and follow the “unsubscribe” link.  Unsubscribing from the Discussion List will not remove you from the Real Estate Section.  You will remain a member of the Section.

If you wish to receive a digest of messages from the Discussion List (a daily summary of all messages rather than each individual message as it is contributed), send a message with the word “Digest” in the subject line to lyrisadmin@cobar.org and you will thereafter receive only daily digests.

The Discussion List is proving to be another valuable tool provided by the Real Estate Section to link members across the State, from the San Luis Valley to Grand Junction and from Steamboat to Denver, and allow for thoughtful, timely and helpful insights into the practice of real estate law in Colorado.  If you originally unsubscribed from the service, you might want to give it a try again by sending a message with the word “Subscribe” in the subject line to lyrisadmin@cobar.org.  If you are a subscriber, keep the questions and comments coming for everyone to enjoy.

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THE END OF PRIVATE TRANSFER FEES?  FHFA BAN IS MADE FINAL

By Michael J. Repucci, Johnson & Repucci LLP

In the fall of 2009, the Real Estate Law Section Council formed a transfer fee task force committee to study transfer fee covenants and recent legislation passed by a number of other states to address the enforceability of the covenants.  A transfer fee covenant is a relatively recent legal creation that purports to impose a fee that is analogous to a real estate transfer tax but that is payable to a private party (typically, the real estate developer) rather than a governmental entity.  While American courts have typically upheld the enforceability of covenants to pay money in those situations where a lot assessment is imposed against real property in a common interest development to fund the operation of the association and the maintenance of common facilities, the typical transfer fee covenant requires payment of money directly to a person or entity who is not utilizing the proceeds to fund association expenses.  It was against this background that the Real Estate Law Section Council became actively involved in crafting new Colorado legislation that effectively banned certain types of private transfer fee covenants.

At approximately the same time as Colorado was working on its own transfer fee legislation, the Federal Housing Finance Agency issued its proposed guidance to restrict Government Sponsored Enterprises (like Fannie Mae and Freddie Mac) from investing in mortgages that relate to real property upon which transfer fee covenants have been imposed, stating:

“FHFA regards such purchases as inconsistent with the Enterprises' public missions to promote liquid, efficient and stable housing finance markets. FHFA does not consider mortgages encumbered by private transfer fee covenants to be prudent or safe or sound investments for the Enterprises or the Banks. Consequently, Fannie Mae and Freddie Mac should not purchase or invest in any mortgages encumbered by private transfer fee covenants or securities backed by such mortgages. The Banks should not purchase or invest in such mortgages or securities or hold them as collateral for advances.”

After considerable public comment, FHFA issued its final rule-making in March 2012 banning Fannie Mae and Freddie Mac from purchasing or investing in mortgages encumbered by private transfer fee covenants, essentially sounding the death knell for that once burgeoning industry.  Learn more by clicking on this link: http://realtormag.realtor.org/daily-news/2012/03/16/ban-private-transfer-fee-big-win-for-buyers

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DID YOU KNOW . . . THAT THE CBA'S  CLE LEGAL CONNECTION IS A GREAT SOURCE
OF BREAKING NEWS AND INFORMATION?

By Nicole R. Nies, Mastin Hoffman & Crews, LLC

The Colorado Bar Association CLE (also known as CLE in Colorado, Inc.) publishes a fantastic content driven online newsletter titled The CBA CLE Legal Connection. The Legal Connection provides resources, timely legal updates (including case law and legislative updates) and continuing legal education to Colorado lawyers. You can access and subscribe to the Legal Connection at: http://cbaclelegalconnection.com/subscription-options/. Because the Legal Connection is a content driven publication, updates are sent out only when there is timely or relevant information to report (as opposed to a daily newsletter) and subscribers can limit their subscriptions to a specific practice area.

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DID YOU KNOW . . . THAT COLORADO'S REAL ESTATE TITLE STANDARDS PROVIDE A WEALTH OF INFORMATION ABOUT MANY COMMON – AND NOT SO COMMON -TITLE QUESTIONS?

By Nicole R. Nies, Mastin Hoffman & Crews, LLC

The Colorado Real Estate Title Standards are drafted and adopted by the Title Standards Committee of the Real Estate Section of the Colorado Bar Association. Title standards in Colorado were first adopted in 1942 by the Denver Bar Association, and in 1946, the Colorado Bar Association took over drafting and adoption responsibilities. The Title Standards have historically been in question and answer format discussing specific title and conveyancing issues. Some of the more recent Title Standards are drafted in a narrative format in an attempt to provide somewhat broader coverage of the issues addressed. The goal of the Title Standards is to describe "marketable title," which can sometimes vary from "insurable title." "Marketable title" is usually sufficient for a seller to meet its contractual obligations to sell property. The Title Standards do not carry the force of law, but can provide guidance in evaluating specific situations and one should consider referring to them in legal argument.

The Colorado Real Estate Title Standards are currently available at several locations. Attorneys Title Guaranty Fund, Inc. publishes them in brochure form. The most recent version was published in 2010. The Title Standards are also available in Bradford's C.R.S. on Real Property Law in the back of the book. Finally, the Title Standards are available on the Colorado Bar Association's website at: http://www.cobar.org/repository/Real%20Estate/2010_TitleStandards.pdf.  Plans are in the works to circulate the 2011 Supplement to all Section members that attend this year’s Real Estate Symposium in Steamboat.

[Thanks to Geoffrey P. Anderson, Sweetbaum Sands Anderson, PC, for this information.]

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DID YOU KNOW . . . YOU CAN ATTEND MONTHLY REAL ESTATE SECTION
COUNCIL MEETINGS BY PHONE?

By Michael J. Repucci, Johnson & Repucci LLP

If you have ever wondered whether you could listen in on the Real Estate Section’s monthly meetings, wonder no more.  All of the Section’s meetings are open to Section members.  The meetings are generally held on the third Tuesday of every month and start promptly at 3 pm.  Attendance can be in person at the CBA’s Denver offices at 1900 Grant Street, or by telephone at 720-496-1667, Code 3038245309. Beginning this month, agendas will be posted on the High Altitude Discussion List in advance of the monthly meetings.  Drop in or listen in and get involved in your Section!

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THE 30TH ANNUAL REAL ESTATE SYMPOSIUM IS COMING TO STEAMBOAT,
JULY 19-21, 2012!

The Section Council encourages everyone to make plans to attend the 30th Annual Real Estate Symposium at the Steamboat Sheraton.  Detailed brochures and agendas are in the final stages of printing, but here are some program highlights:

• Different Approaches to Buying and Selling Contaminated Property
• Public Private Financing - Deal Structure Options
• Legislative and Case Law Update
• License Law for Dirt Lawyers
• 2013 CREC Contract Forms
• Common Water Law Issues Encountered in Real Estate Closings
• Lurking Special Districts in a Distressed Market
• Railroad Rights of Way in Colorado
• The Life Cycle of a Client File: Creation, Retention, Destruction
• Interstate Land Sales Act Update
• Key Provisions, Strategies and Methodologies in Negotiating Leases
• Ethics - Ten Tips to Truncate Tenuous Ethical Temptations
• Back by Popular Demand! The 10-Minute Drill!

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COMMITTEE REPORTS

Colorado Bar Association Board of Governors. 
Peter J. Griffiths, Land Title Guarantee Company (pgriffiths@ltgc.com), currently serves as the Real Estate Section Representative to the CBA Board of Governors.  There is no new report this newsletter.

[Thanks to Peter J. Griffiths, Land Title Guarantee Company, for this update.] 

Legislative Policy Committee. 
Each legislative session of the Colorado General Assembly, members of the Real Estate Section Council review, and in some cases recommend sponsoring, proposing changes to, supporting or opposing proposed legislation affecting real property.  Any such actions by the Real Estate Section Council (“RESC”) require the approval of the Legislative Policy Committee of the Colorado Bar Association (“CBA”) and, in some instances, of either the Board of Governors of the CBA or the Executive Council of the CBA.  For more information on the policies and procedures of the Legislative Policy Committee visit the CBA website:http://www.cobar.org/index.cfm/ID/456/dpadm/Department-of-Legislative-Relations/. 

The Real Estate Section Council in conjunction with the CBA’s Legislative Policy Committee is monitoring a number of bills pending in the 2012 legislative session that may have some effect upon real estate practitioners.  More details on the pending bills that are actually approved and signed by the Governor will be provided in the summer newsletter coming out prior to the Symposium in July.

James G. Benjamin, Benjamin, Bain & Howard, LLC (jgbenjamin@bbhlegal.com), currently serves as the Real Estate Section Liaison to the Legislative Policy Committee.

[Thanks to James G. Benjamin, Benjamin, Bain & Howard, LLC, for this update.] 

Title Standards Committee. 

The Title Standards Committee of the Real Estate Law Section of the CBA is appointed by the RESC and the RESC is represented by a liaison to the Committee.  “The charge of the committee is to consider current title problems and draft and propose title standards or legislation for their solution.”  Real Estate Title Standards (revised and effective July 1, 2008).  The resulting Colorado Real Estate Title Standards address, “the impact of certain specified title issues on the marketability of title” and provide instructions, “as to the duties of an examining attorney and scope of a title search.”  Id.  The 2010 Colorado Real Estate Title Standards are available on the CBA website at http://www.cobar.org/repository/Real%20Estate/2010_TitleStandards.pdf. 

Julia Waggener, Waggener & Foster, LLP (jwaggener@waggenerfoster.com), currently serves as the Real Estate Law Section Liaison to the Title Standards Committee.  Suggestions for title problems for consideration by the Committee should be sent to Diane Davies (ddavies@faegre.com).  There is no new report this newsletter.

[Thanks to Geoffrey P. Anderson, Sweetbaum Sands Anderson, PC, for this update.] 

Trusts and Estates Section.

The Trusts and Estates Section, through its various standing committees, continues to work with the Real Estate Section on a number of different projects and legislative proposals of common interest to both sections.

The Trusts and Estates Section has been discussing the establishment of a Legislative Liaison Committee to better coordinate the Sections response to legislative matters affecting the Section during the legislative session where prompt action is required.  Active legislation currently under consideration by the Section’s Statutory Revisions Committee include bills dealing with Designated Beneficiary Agreements, Conservator/Guardian oversight, reporting abuse of at risk adults and civil unions. Senior Law Day is set for July 28.  The Section has expressed its support for the work of the Real Estate Section on the amicus brief in the Atlantic Richfield case dealing with retroactive reformation in respect to the Rule Against Perpetuities statute in Colorado.

David W. Kirch, David W. Kirch, P.C. (dkirch@dwkpc.net), currently serves as the Trusts and Estates Section Liaison to the Real Estate Law Section Council.

[Thanks to David W. Kirch, David W. Kirch, P.C., for this update.]

Real Estate Commission Forms Committee.
The RESC is represented by a liaison to the Real Estate Commission Forms Committee which recommends changes to the forms adopted by the Real Estate Commission in response to new laws, changes in practice and consideration of public protection.  Input of the Council is frequently sought for revisions to forms before they are finalized and approved by the Real Estate Commission. 

The few bills that would have mandated changes to the Colorado Real Estate Commission’s contracts and other forms were killed.  As a result, the Forms Committee was able to review each and every suggestion, comment and criticism of the forms.

The Forms Committee poured through all the suggested modifications and fixes to the Contract to Buy and Sell forms.  A number of the recommendations we had already identified as needing to be addressed, others were astute observations that led to further fixes and adjustment to the forms.

For example, one of the areas in the contract forms of interest to many lawyers is the “Title” area; in particular, OEC, or Owner’s Extended Coverage within Section 7 of the CBS form.  The existing and prior versions did not explicitly state the procedure. 

Section 7 was envisioned to function as follows:

#1 Buyer checks the check box for OEC.

#2 Buyer is aware (due to the “Note”) that the Title Company may or may not issue a Commitment containing one or more OEC provisions.

#3  If the Buyer did not get all the OEC provisions requested, the Buyer has an opportunity to decide whether to submit an “Objection”, Terminate or accept the proposed coverage without further change.

The suggestion was to make this process more clear.  The Forms Committee believes this will be accomplished through some slight language or word changes, more clear numbering and formatting to make it quite clear that the Buyer has the right once the Title Commitment comes in to (1) object to the title and see if it can be fixed to Buyer’s satisfaction or (2) Buyer may terminate (or) (3) waive the fact the Buyer did not get everything requested, but go forward with the transaction and accept what was offered.

More uniformity, but not identical, time periods are built into the contract form if there are delays in the title work, endorsements, HOA documents, etc.

Re-labeling the “Loan Conditions Deadline” to “Loan Objection Deadline” as confusion has arisen with lenders noting various loan “Conditions.”  The Forms Committee wanted to make it clear that the “Loan Objection Deadline” is the deadline for the Buyer to determine whether the loan terms, ability to likely obtain the loan and a comfort level that the lender will deliver the loan proceeds is the time the Earnest Money will go hard, despite whether the Buyer eventually gets the loan or not, whether through the Buyer’s fault or someone else.

The “Appraisal” (report) deadline was clarified that it was really a non-event.  That is, it is for the benefit of the Buyer only and the Buyer could waive the lender’s receipt of the appraisal report after the deadline.

Clarification was added to assure the Indemnification provision in Section 10.4 (where the Buyer was responsible to pay for all work done) does not apply to the repairs the Buyer requested be done and the Seller agreed to undertake via an Inspection Objection or Inspection Resolution.

The draft is proposing the removal of the requirement that Closing Instructions be entered into no later than the time the Earnest Money Deposit is received by the Title Company.  It is proposed that the contract form still retain check boxes whether Closing Instructions are or are not attached.

Due to problems experienced with REO sales, certain practices by some title companies that would not be judged as competent investigation or production of a title commitment showing a bona fide title search performed according to industry standards and compliant with the DOI, Division of Insurance requirements, i.e. containing “generic” or junk exceptions, the contract form proposes to allow the Buyer to select the title insurance company (but pay for the title insurance premiums).

Time permitting, the Listing Contracts will be addressed for changes and clarity including review of the suggestions submitted and received by the Forms Committee.

Ancillary forms will by contain conforming changes and other modifications.

It is anticipated that the proposed revisions will be submitted to the Commission and able to be made public in the latter part of June, 2012.

The Forms Committee welcomes any suggestions, the earlier the better. Please send any recommendations to Kent Levine at Kent@Kent-law.com.

Kent Jay Levine, Kent Jay Levine, P.C. (Kent@Kent-law.com), currently serves as the Liaison to the Forms Committee.

[Thanks to Kent Jay Levine, Kent Jay Levine, P.C., for this update.] 

Interprofessional Committee.

The Real Estate Law Section is represented by liaisons to the Interprofessional Committee, whose purpose is to promote a better understanding among real estate professionals and whose members also (besides the CBA, represented by the Real Estate Law Section) include the Colorado Division of Real Estate, Colorado Association of REALTORS, the Land Title Association of Colorado and the Colorado Division of Insurance.  

With the 2012 legislative session in full swing, the Committee has been discussing real estate related legislation for 2012. Additionally, the Committee recently discussed pending updates to certain Rules of the Colorado Real Estate Commission, including an amendment to D-14 (concerning errors and omissions insurance for real estate licensees), an amendment to E-22 (concerning the prohibition of inducements for settlement services), the repeal of E-28 (concerning fees from home warranty companies), and an amendment  to E-46 (concerning affiliated business arrangement disclosures). The Colorado Real Estate Commission's rulemaking hearing on these matters is scheduled for June 5th at 9:00am. Copies of the proposed amendments are available on the Division of Real Estate website at: http://www.dora.state.co.us/real-estate/rulemaking/CREC/index.htm.

The Real Estate Law Section’s current liaisons to the Interprofessional Committee are Candyce D. Cavanagh, Orten Cavanagh Richmond & Holmes (ccavanagh@ocrhlaw.com), and Peter J. Griffiths, Land Title Guarantee Co. (pgriffiths@ltgc.com).

[Thanks to Candyce D. Cavanagh, Orten Cavanagh Richmond & Holmes, for this update.] 

Colorado Housing Council.

The Real Estate Law Section is represented by liaisons to the Colorado Housing Council, whose purpose is to see to it that the public is better served in its housing needs through the advancement of communication among industry members, delivery of programs and information to the public, cooperation with legislative and regulatory bodies, and coordination with major employers and federal, state and local agencies. The current liaisons from the RESC are Catherine A. Hance, Davis, Graham & Stubbs, LLP (catherine.hance@dgslaw.com), and Deanne Stodden, Castle Meinhold & Stawiarski LLC (dstodden@cmsatty.com ).

The Colorado Housing Council meets monthly on the third Wednesday of each month and has recently hosted programs on senior housing trends, LEED certification and energy efficiency issues, and insurance considerations for multifamily housing projects.  Each meeting also includes a presentation on current foreclosure data for the Denver metropolitan area and selected additional areas by Ryan McMaken of the Colorado Division of Housing.  Foreclosure sales continue to trend downward (to a 5 year low in February 2011), although there has been a slight uptick in filings compared to the first quarter of 2011.  Year over year filing increases have been seen most significantly in the metro area in Denver and Douglas Counties, whereas completed sales are down by approximately 50% in Denver County. 

The Colorado Division of Housing’s current Housing News Digest can be found at http://www.divisionofhousing.com/search/label/housing%20snapshot and foreclosure reports can be found at http://dola.colorado.gov/cdh/researchers/index.htm#Snapshots. The Colorado Division of Housing’s current Housing Snapshot report can be found at http://divisionofhousing.blogspot.com/2010/06/june-2010-housing-snapshot-now.html.

[Thanks to Catherine A. Hance, Davis Graham & Stubbs LLP, for this update.]

Membership Committee.

The Membership Committee of the Real Estate Law Section is reaching out to local bar associations to gauge interest in jointly organizing real estate CLE luncheons and programs in the communities served by the local bar associations. The Membership Committee has plans to sponsor a CLE luncheon with the El Paso County Bar Association to be held in Colorado Springs during the Fall of 2012. Look for details about this program in the coming months.

Please contact Fred Otis of Otis Coan & Peters LLC (flotis@nocolegal.com) or Nicole R. Nies, Mastin Hoffman & Crews LLC (nicole@mastinlaw.com) if your local bar association is interested in organizing a joint real estate CLE program with the Membership Committee of the Real Estate Law Section.

[Thanks to Nicole R. Nies, Mastin Hoffman & Crews LLC, for this update.]

Community Service Committee.

The Community Service Committee continues to support and promote the Lawline 9 events for KUSA in Denver.  Let us know if you would like to volunteer for this wonderful community service event.  If you have not volunteered for Lawline 9 before, please do as you will be certain to enjoy your time on the phone bank.

[Thanks to Daniel A. Sweetser, The Sweetser Law Firm PC, for this update.] 

Ethics Committee.

If you didn’t notice this article in the January issue of The Colorado Lawyer, “Ethical Considerations in Using Blogs, Lawyer Websites, and Social Media,” you should read it now. It was written by Ethics Committee member Amy DeVan, who is Assistant Regulation Counsel with the Supreme Court’s Office of Attorney Regulation Counsel. It offers excellent advice if you are using the 21st century methods of attracting new clients. If you are not and never will, read the article anyway for its entertainment value. For example, learn why it may not be a good idea ethically to advertise for a new secretary in the “Adult Gigs” section of Craigslist!

[Thanks to Judy McNerny, Carpenter & Klatskin PC, for this update.]

Courts & Civil Rules Committee.

There is no new report this newsletter.

Eminent Domain Committee.

The Colorado Bar Association Real Estate Section’s Eminent Domain Committee continues to meet on a quarterly basis to study and keep bar members informed of developments in the field of eminent domain.  The Committee plans to create and publish a newsletter by the end of the year.  If you are interested in assisting with the newsletter or are generally interested in the Committee or its activities, please contact Richard Rodriguez at rrodriguez@dodpc.com or 303-779-0200.

Additional Information

For additional information regarding the activities and responsibilities of the members of the Real Estate Law Section Council, see the article on the Real Estate Law Section page of the Colorado Bar Association Website entitled “What Does the Real Estate Law Section Do for Me?”: http://www.cobar.org/index.cfm/ID/20155/subID/25076/REALES/.

LEGAL WRITING OPPORTUNITIES

Article Opportunities and Accolades – The Colorado Lawyer.  The Real Estate Law Section encourages all aspiring authors to contribute articles (or even just ideas for articles) for publication in the real estate column of The Colorado Lawyer.  Articles submitted need to provide a balanced discussion of new, developing or interesting areas relating to the practice of real estate law in Colorado or nationally.  To encourage your creative energy, the Real Estate Law Section will honor the best real estate article published in The Colorado Lawyer during 2011/2012 with a stipend of $500 to the contributing author or firm.  Articles should be submitted to Joseph Lubinski at Ballard Spahr (lubinskij@ballardspahr.com), Erik Foster at Moye White (erik.foster@moyewhite.com), or Cynthia Shearer at MDC Holdings (chshearer@mdch.com) for consideration.

Articles, Practice Pointers and Other Contributions Needed for Real Estate Law Section Newsletter.  All members of the Real Estate Law Section are invited to contribute to the Newsletter.  Please submit articles, practice pointers and other contributions to Michael J. Repucci, Johnson & Repucci LLP (mjrepucci@j-rlaw.com), Daniel A. Sweetser, The Sweetser Law Firm PC (dsweetser@sweetserlaw.com), or Nicole R. Nies, Rothgerber Johnson & Lyons, LLP (nnies@rothgerber.com).

Request for Input on Real Estate Section Web Page.  We are working to improve the Real Estate Law Section page of the Colorado Bar Association website and need your input and suggestions.  Are there links or other information you have expected to find on the page only to have your hopes dashed?  Have your discovered aspects of the site that you feel could be more user-friendly or informative?  Please e-mail your comments to Dana Collier Smith at dcolliersmith@cobar.org or to Michael J. Repucci (mjrepucci@j-rlaw.com ).  We welcome your suggestions and we will carefully review all of them.

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2011-2012 Real Estate Section Council Members

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