By: Jennifer L. Keenan

So you’ve gone through months, if not years, of hard work with board members, committee members, and the owners to finally amend the declaration for your community, and owners have finally approved those amendments. Celebration time, right? Well maybe, or maybe not so fast.

Unfortunately, many communities (particularly condominiums) have declarations that require a percentage of, or sometimes all, mortgagees (i.e., lenders) to approve amendments. This is in addition to owner approval. How does an association obtain this mortgagee approval, and what are the requirements?

OPTION ONE: Send Consent Form to Lender and Cross Your Fingers.

One option is to try to obtain mortgagee approval by sending the mortgagees a consent form, a copy of the proposed amendment, and a request for their approval. However, mortgagees are notorious for ignoring and/or substantially delaying such requests.

OPTION TWO: Mail and Publish Per Statute. If Lender Doesn’t Respond With a No, It’s Counted as a Yes!

A second option is available pursuant to C.R.S. §38-33.3-217(1)(b) of the Colorado Common Interest Ownership Act (“CCIOA”). This section provides that the mortgagee approval requirements of the declaration shall be satisfied if the association takes the following steps:

1. Sends a dated, written notice of the proposed amendment to each mortgagee at its most recent address in the county real estate records;
2. Attaches a copy of the proposed amendment to the notice;
3. Sends the notice by certified mail; and
4. Publishes the notice in a newspaper (in the community’s county) two times, at least one week apart, with information on how to obtain a copy of the proposed amendment.

Any first mortgagee that does not give the association a negative response within 60 days after the notice date will be deemed to have approved the proposed amendment.

OPTION THREE: Go to Court.

A third option is also available pursuant to C.R.S. §38-33.3-217(7) of CCIOA, which permits court sanctioned amendments to declarations. Essentially, you will be asking the court to approve your proposed declaration amendments. This is a good option for an association that can’t meet owner approval requirements because of apathy, not objection. The following steps must be accomplished to take advantage of the court petition process:

1. All owners must receive at least two notices (by any means consistent with the Colorado Revised Nonprofit Corporation Act) of the proposed amendment;
2. The Association must hold at least one member meeting (called and held in accordance with the Association’s governing documents) to discuss the proposed amendment;
3. At least half of the owners required under the existing Declaration must vote for the proposed amendment;
4. A Petition must be prepared and filed with the court requesting that the court approve the amendment.
5. A hearing is scheduled on the Petition within 45 to 60 days after filing the Petition;
6. A notice of the Petition and notice of the hearing must be sent to owners, mortgagees, and the declarant within 10 days after the hearing date is set; and
7. The court is required to grant the Petition unless 33% of the owners, 33% of the lenders, the declarant, FHA or VA objects to the amendment.

As you can see from step 7 above, 33% of the lenders have to object to the amendment, or the petition is granted (assuming the other requirements are met). This is very different from having to obtain lender approval.

Altitude Community Law P.C. can assist you with any of the above procedures for obtaining mortgagee approval of your declaration amendments, or we can help you determine which of the above options is best for your community. If you have any questions on the above or regarding obtaining mortgagee approval of amendments to the Declaration, please contact any of our attorneys at (303) 432-9999.

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