Recently, SB181 was introduced in the Senate to provide some oversight for the receivership process in Colorado. Briefly, a receivership is the court ordered appointment of a rental manager for a property. The receiver (rental manager) is a disinterested person who manages the rental of the property, collects the rents and disburses the rents according to a court’s orders.
In summary, the proposed bill provides that a court must rule on any motion or complaint for the appointment, removal, replacement, or retention of a receiver within one (1) month of the filing of the motion or complaint, and that a court order granting the same motion or complaint must be granted only upon showing of “clear and convincing” evidence.
The “clear and convincing” standard is one that requires the party seeking relief (i.e., the association) to present evidence that must be highly and substantially more probable to be true than not. This standard is greater than the common standard of proof in civil actions, which only requires that the proposition forwarded be more likely true than not. Requiring this standard would potentially make obtaining a receivership a much more difficult task for associations.
In addition, the proposed bill provides that receivers must post a bond and submit periodic reporting to the court and parties at least annually. Our office already works carefully with our receiver partners to ensure that the extraordinary remedy of receivership is done thoughtfully in order to collect the debt owed to the association. The receivers that we work with already provide reporting on a nearly monthly basis to the courts. Additionally, the receivers have taken the approach of holding meetings with and regularly communicating with many of the judges in order to make sure that the judicial branch understands the receivership process. While receiverships are an extraordinary remedy that some courts are hesitant to approve, they can be very successful.
We will continue to monitor its progress in the legislature. If the law is enacted, it will apply to both receiverships in effect before and after the effective date of the bill. If you have questions about receiverships or the status of this bill, please do not hesitate to contact one of our attorneys at 303.432.0999