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69E244363B2CCCA687258A7F005B9376 Hearing Summary


Date Dec 8, 2023      
Location HCR 0112

Unlawful Restrictions in Land Records Act - Public testimony & commission discussion

09:40:16 AM  
Cyndi Stoveall,
Colorado Bar Association (CBA) Real Estate Section,
reported that the
section had met with a number of groups, including land title associations,
and clarified that the redline draft shared with the commission with proposed
changes was an unofficial draft based on those conversations. The majority
of changes are meant to dovetail the act's language to Colorado statutes.
Suggested changes are regarding clerks and recorders, recording of scrivener
affidavits, and provisions of the Colorado Common Interest Ownership Act
for an association to record an amendment to the declaration. Substantive
changes include to require the form of amendment recorded to be in substantially
the form set forth in section 106, the act offers the form as an alternate.
Second, would be to include in the act a second form to be used when an
association is recording the amendment. A third change is to section 103
to allow an individual owner of a lot or a unit within a larger common
interest community to, if the association is not willing to record an amendment,
record an amendment consistent with the form in section 106 with respect
to the individual's lot only. Commissioner Snyder agreed that there is
issue when an association does not want to act but individuals want to
proceed with amendments for their properties and would like to find a means
to address this for Colorado while keeping the act uniform. Commissioner
Gardner concurred.
09:49:37 AM  
Barry Hawkins,
chair of the Uniform Law Commission drafting committee on the act,

only speaking for himself, said that he alone cannot state whether a state's
variation of the act is substantially uniform or would be considered substantially
uniform. In general, most state variations to conform to state laws or
situations are fine, and in most cases can be done on a negotiated basis
so that they do not interfere with substantial uniformity. For example,
making the form mandatory rather than optional is something that the drafting
committee debated and decided not to, but should not be a problem if a
state chooses to do so. A mandatory form might be helpful to individual
property owners acting without legal counsel. But a mandatory form or even
an optional form would not necessarily be helpful or appropriate for common
interest communities as they have more unique and complicated situations
and will probably need legal assistance. There are no one size fits all
for governing situations. Allowing an individual homeowner in a common
interest community to record a form on their home will have no effect in
law and may be problematic to create this expectation. If the community
does not want to remove the unlawful restriction from its records the homeowner
may have to try to change the board membership or possibly sue it. In addition,
there is also a problem with the definition of owner as having a full-fee
interest to comport with Colorado law in that it would imply that everyone
who has an ownership interest in the property must be in agreement in filing
the amendment. The purpose of the act is remedial and designed to try to
weed out unlawful and unenforceable restrictions in a more convenient way
and make it possible for any owner to file the document on the land records
to remove the offending language. This puts the burden of the owner who
wants to keep the restrictions on the property to go to court to undo the
09:56:09 AM  
Commissioner Snyder
clarified that the intent was to let any one of the parties, no matter
the type of tenancy, to effect this change through the filing. Commissioner
Mielke asked if it might be appropriate to add a provision regarding the
payment of attorney fees by the offending party should an individual need
to take a community or individuals to court. Commissioner Hawkins replied
that this was considered but it was decided that it was not necessary in
that it is much easier, when brought to its attention, for the community
to remove the illegal and unenforceable restrictions rather than get in
a dispute regarding the clean-up of the language. Commissioner Snyder added
that the board may be liable under federal law if the restrictions are
10:03:42 AM  
Commissioner Hawkins
stated a specific concern within the proposed mandatory form is that it
requires a description of the unlawful restriction, which may then require
the Department of Justice to take action against those restating and republishing
the unlawful restrictions. The form should require a bare bones reference
to the restriction by volume and page, or documentation of the date of
the restriction being removed but not a description of the offending language.
There is also a concern with the proposed new language in section 107 (b),
line 14 regarding protection for recorders. Recorders do not want to read
these documents and want them to be processed similar to quick claim deeds
in order to eliminate any liability. Ms. Stoveall, answered that the intent
of section of 107 was to broaden the protection of recorders. Regarding
the mandatory form requiring a description of the offending language, she
stated that it is meant to simply state that the document contains an unlawful
description and that the unlawful description is removed without restating
10:10:21 AM  
Commissioner Snyder asked how one knows what needs to be removed and who will physically remove it. Commissioner Gardner concurred, wondering how individuals would know which words, starting and ending at what lines, should not be repeated going forward if there is no sort of reference included on the form.  Commissioner Hawkins answered that no one is actually going to physically remove any historic language, but the document is going to act as a release, stating that the document is amended by the filing of this amendment to remove from further use and repetition any unlawful restrictions and the filed document can only apply to unlawful restrictions under Colorado and federal law. It would be permissible to reference the restrictions by the line and page number.
10:20:35 AM  
Ms. Stoveall
clarified that proposed changes to the form incorporates by reference the
document where the unlawful restriction is located by date and reception
number in the clerk and recorder office, and also indexes it under the
owner's name or the name of the common interest community. This identifies
the document but not the actual language. Colorado already has two statutes
that authorize the removal of record of documents in the chain of title
that contain unlawful restrictions, in section 169 regarding single owners
and in section 170 regarding common interest communities. These existing
statutes set a very high bar by requiring a ruling by a high court to do
so. The uniform act allows a more proactive manner to allow current owners
to record amendments. The common interest form was meant to make it clear
that all the unlawful restrictions are removed and to prevent tinkering
with any other provisions within the documents referenced. Commissioner
Snyder questioned if there were a way to physically remove the offending
language from all pertinent documents. Ms. Stoveall clarified that the
uniform law only applies to title documents. Commissioner Hawkins added
that the act has the practical effect of allowing title companies to remove
the language from other documents that it sends out.
10:29:01 AM  
Commissioner McGihon
noted that it appears that the common goal is to make this act work for
Colorado and suggested that Commissioners Gardner and Snyder and the CBA
form a working committee to continue to work on concerns. Commissioner
Snyder added that the restrictions have been unenforceable since the 1950s
and would like to make the removal of unconscionable language more enforceable.
And to possibly make a stronger statement up front as to why this is being
done and to have Colorado also meet a moral standard to remove this language.
The commission thanked the witnesses for their testimony and time on the
review of the act.

The effective date for bills enacted without a safety clause is August 7, 2024, if the General Assembly adjourns sine die on May 8, 2024, unless otherwise specified. Details