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Commentary and Analysis Regarding Colorado Law

ALERT: COVID-19 and Contract Issues

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.

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ALERT: Landlords and Property Managers: Response to Tenant Shutdowns

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.

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ALERT: Force Majeure and Commercial Leases

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

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Eviction law update: Changes to Eviction Notices

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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):

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The Road to OZ Passes Through Colorado

OZ
QUAF
Map

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

By Cameron A. Grant on January 26, 2020

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Good Fences Make Good Neighbors … Until They Don’t.

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boundary marker

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.  

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Supreme Court Reverses State Litigation Requirement in Takings Cases

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

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Creating a Condo Association in a Commercial Setting

Condos

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.

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Oil and Gas Notifications in Colorado Real Estate Contracts

Suzan Fritchel

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

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Planes, Trains and Automobiles (and Dirt) . . . all eligible for a tax deferred 1031 exchange (maybe)

Planes Trains and Automobiles

This photo, which I think is a marketing promo of a happy tax payer and his 1031 Exchange Accommodator, lists three types of property that might lose 1031 exchange protection under the tax bill making its way through the Senate and House chambers this week.  As noted in Retail Real Estate Law, the recent Senate-House compromise removed personal property from like-kind treatment under Section 1031 of the Internal Revenue Code.  So, today, you could complete a 1031 exchange with your plane, your train or even your automobile (provided that you adhere to the strict requirements established in Section 1031 and its associated regulations) but that may not be the case following approval of the revisions to the Tax Code in the coming weeks. 

For most of us, real estate is the like-kind property with which we deal on a regular basis.  That appears to be unaffected by the current tax bill.  Whether or not we lose the ability to exchange personal property, it seems that a refresher on 1031 exchanges is in order. 

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Water Woes and Wars Shape Development in Northern Colorado


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If you can’t bring LA to the water, you bring the water to LA…
– Roman Polanski’s Chinatown dramatizes the so-called “California Water Wars”.

I have yet to see Jack Nicholson roaming the plains of Northern Colorado but the factors that drove and challenged growth in Southern California in the late 1930s now take shape in Northern Colorado. 

It takes more than land and a strong market to create a successful development, at least around here.  In Northern Colorado, water is the key ingredient and that resource is in short supply.  The City of Longmont holds a lot of cards.  The Towns of Firestone, Frederick and Mead have the land and the demand.  Longmont’s City Council recently discussed Councilman Brian Bagley’s three point plan to protect Longmont’s eastern border from encroaching municipal neighbors.  A key prong in that plan is to protect Longmont’s store of water rights from being leased or sold to those towns.

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Courts Weigh in on Fracking in the West

Cameron Grant


Submitted by Cameron Grant.

Just when you thought you had heard enough about fracking, western courts are getting into the action.  First, the Colorado Supreme Court is set to take up the issue of local v. state control in the case between the City of Longmont and the Colorado Oil and Gas Association.  Next, the Wall Street Journal reports that a federal judge in Wyoming blocked  Interior Department rules setting stricter standards for hydraulic fracturing on public lands, the second set of major regulations from the Obama administration to be faulted in court in as many months.  It seems that we will have some judicial guidance on the fracking issue in the near future.  Stay tuned . . .

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Why am I not Benefiting from all this Oil and Gas Drilling?



Submitted by John Gaddis

Even with the ups and downs of oil prices, the oil and gas boom in Colorado is continuing. However, if you own land that has an existing oil and gas lease but there is no development of the minerals on your property, what do you do? Does a landowner have any recourse to require the lease holder to explore, develop and produce the minerals? Can the landowner seek to cancel the existing lease and negotiate a new one?

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Fracking Ban May Lead to Takings Claims


Submitted by Cameron A. Grant

Recently the Denver Post reported that Boulder County could be liable for $1 billion in petro “takings” if local governments adopt and enforce bans on the drilling practice called fracking.  On June 24th, voters in the City of Loveland rejected a measure that would have extended a moratorium on drilling in the city limits.  Clearly, the issues surrounding oil and gas development in Colorado are heating up.  Sensational claims continue to be made during this energetic election season.  The potential threat of petro takings is one such claim.

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Do Not Overlook the Real Estate When Buying a Business, Part 1

Cameron Grant 01

Four Reasons that a Survey is Important When Buying a Business with Valuable Real Estate


This is the first of a two-part article addressing the real estate component of a business purchase.  Almost invariably, my clients looking to purchase a new business focus on gross revenues, strategies for decreasing costs, expanding customer base, manufacturing processes and other forward-looking elements of the deal.  Rarely do they focus on one of the most basic and often significant factors – the company real estate.  Whether it is a leased retail location, shared manufacturing facility or a long owned office building, a buyer should not overlook the bricks and mortar.  In Part 1 of this article, I will discuss the importance of a survey when evaluating a business purchase involving valuable real estate.  In Part 2, I will discuss issues involving leases, their evaluation, assignment and assumption.

My clients often ask whether a survey is needed as part of a new business purchase.  If the business does not own real estate or if the real estate is neither valuable nor critical to the business operation, then no, a survey may not be important.  If, however, the company owns valuable real estate or real estate critical to the business operation, then a survey is absolutely an important part of a due diligence process.  In these cases, we strongly suggest that our clients obtain a new survey or update the seller’s existing survey.  This exercise will give you a picture of the property you are about to purchase.  That picture will be an important tool as you determine whether you will control the business real estate.  The following list identifies four pieces of crucial information provided by a survey:

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Serving The Entire State Of Colorado
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Longmont Office

515 Kimbark Street, Second Floor
Longmont, CO 80501
Phone: 303-776-9900 
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Louisville Office

363 Centennial Parkway, Suite 110
Louisville, CO 80027
Phone: 720-726-3670 
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Fort Collins, CO 80525
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