As a community association manager you may start to see selling owners requesting additional documents as part of their upcoming closing on their unit. This is because the Colorado Real Estate Commission approved a new Contract to Buy and Sell Real Estate (Residential) effective January 1, 2019 (“Buy Sell Contract”).
The new Buy Sell Contract added to and modified the list of documents that sellers must disclose to buyers. Associations and their management companies are required to comply with requests under the Buy Sell Contract to produce these documents as part of the closing process.
The changes to the Buy Sell Contract incorporate and reference the annual disclosure requirements found in Section 209.4 of the Colorado Common Interest Ownership Act (“CCIOA”). As community associations are already required to comply with the annual disclosure requirement, this may make it easier on associations and management companies to comply with the new requests. Nevertheless, it is a good idea to review the Buy Sell Contract’s disclosure list to ensure the Association is maintaining the proper documents. Also, this is a good opportunity to review internal processes, procedures and fees for responding to these types of document requests.
Below is a list of the additions and changes to the list of disclosure documents, but for a full list of all required disclosure documents, see Section 7.3 of the Buy Sell Contract or visit the Colorado Department Regulatory Agencies, Division of Real Estate Contracts and Forms website.
The Buy Sell Contract’s has added the following document to the list of required disclosures:
• Responsible governance policies adopted as required under Section 209.5 of CCIOA.
• A list of all Association insurance policies as provided in the Association’s most current annual disclosure under Section 209.4 of CCIOA, including, but not limited to: property, general liability, director and officers professional liability and fidelity policies.
o The list must include: company names, policy limits, policy deductibles, additional named insureds and expiration dates of the policies.• Any written notice from the Association to a selling owner of a “construction defect action” under Section 303.5 of CCIOA within the past six months and the results of whether the Association approved or disapproved such action.
The Buy Sell Contract’s changes the following documents in the list of required disclosures:
• Minutes of the annual members’ meeting and any board or manager meetings provided as part of the most current annual disclosure under Section 209.4 of CCIOA as well as minutes for meetings held subsequent to the annual disclosure.
o If none of the preceding member, board or manager meeting minutes exist then the most recent minutes, if any.• Most recent Association financial documents, consisting of:
o Operating budget for current fiscal year;
o Most recent annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the Association’s last annual disclosure;
o Results of the most recent available financial audit or review;
o List of the fees and charges that the community association manager or Association will charge in connection with the Closing, including, but not limited to, status letter fees, rush fees, transfer fees, document access fees;
o List of all assessments required to be paid in advance, reserves or working capital due at Closing; and
o Reserve study, if any.Community association managers should also note that the Buy Sell Contract now requires sellers to request status letter s at least 14 days prior to the Closing Date. As a result, management companies may see status letter requests coming in earlier than before.
Have questions? Feel free to contact any of our attorneys at 303-432-9999.