Commentary and Analysis Regarding Colorado Law

Many small business clients find granting employees or key service providers a stake in the business an attractive concept as a tool for encouraging employee retention and quality work product. However, stock options and other grants of equity in small businesses often meet significant tax challenges that derail business owners’ good intentions.

One traditional type of equity grant, a grant of stock options, is used in many startup-friendly industries to help fledgling businesses compete with their more-established, full-pocketed competitors that offer higher salaries. But one hurdle is that stock options, when vested or when exercised, are often considered taxable income to the recipient.

On April 7th, Governor Polis signed Senate Bill 86 into law, drastically increasing Colorado’s homestead exemption to $250,000 for most individuals and $350,000 for older and disabled Coloradoans, in addition to broadening what constitutes a homestead in Colorado, granting using cars, trailers, RVs, tents, and other non-traditional residences as home exemptions for those dwellings. The bill also created a number of new exemptions for various forms of personal property, including exemptions for: 

• $2,500 of cash held in bank accounts;
• Firearms, hunting and fishing equipment;
• Economic impact payments;
• Health savings accounts; and
• Cash held in life expectancy set-aside accounts or similar reserve fund, escrow or impound account,

You may be wondering: what does that mean for Coloradoans? What is the homestead exemption? How do I take advantage of it? Am I considered “elderly or disabled”? 

Barefoot Lakes

Lyons Gaddis represents Brookfield Residential and its affiliates in connection with the 1,300 acre Barefoot Lakes master planned community located adjacent to the St. Vrain River and immediately east of I-25 in Firestone, Colorado. With over 1,000 homes already built or under construction, when completed, Barefoot Lakes will contain a new residential community consisting of over 3,500 single-family homes, 100 acres of lakes, miles of trails, new regional water and wastewater utility systems, new regional roadways, and 350 acres of parks, trails, and open spaces for public use. Lyons Gaddis attorneys Cameron Grant, Suzan Fritchel, Jeff Kahn, and Sean Stewart assisted Brookfield Residential with entitlements on the project, including the annexation of the property to Firestone, preparation and approval of Planned Development zoning, subdivision platting, and third-party negotiations crucial to project success. Several of the unique components of this complex land use and development project are summarized below:

Current and future landowners of real property within unincorporated portions of Weld County will soon have a new comprehensive plan along with new zoning and subdivision codes to consider when planning for potential uses and possible division of their lands. On November 9, 2020, the Weld County Commissioners heard the final reading of County Ordinance 2020-13, to enact a new Weld County Code Chapter 22, for the Weld County Comprehensive Plan (for ease of reference, the “Comp Plan”). Then on November 16, 2020, the Commissioners heard the final reading of Ordinance 2020-16, to enact an amended Code Chapter 23, regarding Zoning, and an amended Code Chapter 24, regarding Subdivisions.

Obviously, Weld County personnel and elected officials have devoted a lot of time and effort in crafting the new Comp Plan in response to an anticipated doubling of the population of Weld County over the coming decades and the desire for orderly growth. The new Comp Plan sets out several goals, the major ones being to steer future industrial and commercial development to areas closer to major highways and intersections, and to steer larger developments to areas within three miles of municipalities. The County has created a Comprehensive Plan Map which illustrates the vision of areas appropriate for various types of future development. Comprehensive Plan Map  

Colorado has four statutory deeds: General Warranty Deed, Special Warranty Deed, Quit Claim Deed, and Bargain and Sale Deed. Historically, General Warranty Deeds were the most prevalent and preferred since they grant the broadest protection for buyers as their sellers are warranting the title to the real property since the beginning of time. Special Warranty Deeds limit the warranty of title to the period that the seller owned the real property. Quit Claim Deeds give no warranty of title – the buyer gets only what the seller had at the time the deed is signed. Bargain and Sale Deeds also offer no warranty of title but do transfer the title to the seller at that point in time as well as title that the seller acquires after the date of the Bargain and Sale deed.

Then in 2019, Colorado enacted a new statute that allowed deeds to be subject to “Statutory Exceptions” which are composed of

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on a proposed Bill called the “Helping Open Properties Endeavor Act of 2020,” establishing a loan fund to avoid a wave of property foreclosures. 

HOPE Act: Early Thoughts on a Possible Rescue Plan for Real Estate

April 15, 2020
1031 Exchange and Opportunity Zone Investment Deadlines Extended
by Cameron A. Grant

On April 9, 2020, the Internal Revenue Service issued Notice 2020-23 extending certain deadlines provided by the Internal Revenue Code for taxpayers either engaging in Section 1031 like-kind exchanges or making investments in Qualified Opportunity Zone Funds.

Lyons Gaddis Covid-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on the transfer of C-BT water by the NCWCD. 

Lyons Gaddis Covid-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on the new PPP Loan Program and recommendations for managing your loan proceeds. 

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on the CARES Act as it relates to tenants, landlords and borrowers.

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on the new procedures for remote notarization in Colorado.

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on clients dealing with contract rights and obligations in the wake of the spreading coronavirus. Parties to a contract should confer with counsel regarding the particulars of your contract and your specific situation.

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on commercial real estate owners and their property managers who are seeing their tenants experience a complete or partial shutdown of their businesses in response to recommended or mandated social distancing measures in the wake of the spreading coronavirus.  Landlords and tenants should review their Lease documents and, if needed, seek legal advice regarding your rights and obligations in your particular situation.

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses on landlords and tenants who are dealing with closures and other challenges in response to recommended or mandated social distancing measures in the wake of the spreading coronavirus

If you own and rent-out real estate, chances are you have had to deal with a difficult tenant.  Recent changes in the eviction laws may affect how you remove a tenant who has breached your lease agreement. Importantly, in Colorado, the only way to legally remove a tenant who is in default of a lease and refuses to deliver possession of property (residential or commercial property) back to the landlord, is to go through the court eviction process.  In an eviction action, the court determines who is entitled to legal possession of the property, and what damages are due because of the breach of a lease. Eviction court procedures must be strictly followed or the case could be dismissed – leaving a landlord with lost time and money.  Recent changes in the law have, in some circumstances, lengthened the notice/cure period a landlord must provide a tenant before an eviction action can be started.

There are two types of notices in an eviction action: 1) Demand for Compliance or Possession (which gives the tenant a right to cure during the demand period); and 2) Notice to Quit (tenant has no right to cure).  The Demand for Compliance or Possession (“Demand”) is typically used when a tenant has failed to pay rent on time. The Demand gives the tenant the right to cure the rent within the notice period, and if the tenant fails to cure, a landlord may proceed with an eviction action.  With regard to the Demand itself, the new law changed the notice periods as follows (HB 19-1118 (C.R.S. § 13-40-104), effective May 20, 2019):

The Road to OZ Passes Through Colorado
Tax Windfall, Opportunity Zones and Real Estate Investment

By Cameron A. Grant on January 26, 2020

Some of the most contested lawsuits pit neighbor against neighbor, arguing over who owns what small strip of seemingly valueless land. Sometimes one neighbor argues the fence is a foot over the lot line; other times, a neighbor puts up a fence in the middle of the night. Tensions flare, and weeks later, everyone is at the lawyers’ offices armed for bear.  Many months and thousands of dollars later, a District Court Judge decrees where the true lot line rests.  Maybe a fence moves, maybe it doesn’t, maybe a deed gets recorded.  Whether you win or lose, everyone spent a fortune and no one is happy.  

From the outside, boundary disputes seem like the most petty, unreasonable lawsuits you could imagine. However, sometimes they’re legitimate. Most Colorado towns were founded in the 1800’s.  Original surveys were often made using large, heavy chains to measure distances. Old surveys frequently marked boundaries as starting at the “large cottonwood tree” or “the stone fence post,” features that have long-since vanished. Survey chains were particularly bad at measuring over uneven  terrain, let alone foothills or mountains. Further uncertainty comes with modern surveying tools, such as GPS and laser scanning, called lidar.  Applying such accurate modern techniques to the verbiage of legal descriptions from the 1800’s is sometimes comical. Some towns, such as Leadville, find errors so great that one person’s house might be located on another person’s lot.  

Following the ruling in Knick v. Township of Scott, Pennsylvania, a property owner may bring a claim in federal court for a violation of the Takings Clause of the Fifth Amendment as soon as the government takes private property for public use without paying for it, overruling established precedent that a property owner must exhaust state court remedies before suing in federal court.  https://www.scotusblog.com/case-files/cases/knick-v-township-scott-pennsylvania/ #supremecourt #takings #landuse #realestatelaw

If you own a commercial building and are looking to get the most value out of your investment, one option to consider is creating a commercial condominium association.  This article will explore some of the benefits of commercial condos, and provide a brief overview of the process to create a condo association.  A condominium is a form of ownership of real property within a common interest community where portions of the real estate are designated for separate ownership, and the remainder is designated for common ownership. Colorado permits this form of ownership pursuant to the Colorado Common Interest Ownership Act, C.R.S. § 38-33.3-101 et seq. (“CCIOA”). According to CCIOA, no zoning ordinance, or other real estate use law or regulation may impose any requirement upon a condominium which it would not impose upon a physically identical development under a different form of ownership.  In other words, merely converting the ownership of the real estate to a condominium should not require additional governmental approvals or intervention.

In a commercial context, such as an office or industrial building, this form of ownership can create flexibility and value for an owner by creating individual saleable assets (units). Creating condos allows a building owner to avoid having to sell the property as a whole, and/or avoid going through a costly and time-consuming subdivision process to subdivide the land.  Additionally, the owner (called the “declarant”) has complete control over the condo process and result; including the control to define the specific offices, buildings, floors, and common areas, and control to determine the terms of the association and the management. Once the project is finalized, the declarant even has the control and flexibility to sell off some of the units, and retain ownership of others. Condos also offer an attractive form of ownership for potential buyers. Each unit owner becomes an owner in the association, allowing for the right to vote on important management issues, and the sharing of common expenses – typically determined by the square footage of a unit in relation to the building as a whole.  Potential buyers may appreciate that the common elements, such as structural building components, landscaping, and parking areas are all maintained by the association.  Business owners may also recognize that when they purchase a condo they are building equity in their business, rather than throwing money away for rent.

Colorado real estate practitioners have seen the addition of oil and gas notification provisions in the real estate approved forms for the purchase and sale of real property.  In bold face type, the buyer is warned that the surface estate may be owned separately from the underlying mineral estate and that the purchase of the surface may not include the minerals.  The buyer is further advised so that there may be a surface use agreement in place, that there may be oil and gas activity on the property or on adjacent property and that it is advisable to seek out additional information from the COGCC.  As of January 1, 2016, these disclosures were mandated by statute to be part of all residential purchase and sale contracts, i.e., not only in those approved by the Colorado Real Estate Commission.  For recommended language, see:  http://codes.findlaw.com/co/title-38-property-real-and-personal/co-rev-st-sect-38-35-7-108.html