CCIOA has an interesting provision, contained in Section 210(4), which allows developers to withdraw property included in an association only if: (1) a portion of the real estate is subject to withdrawal; and (2) a unit in such portion of real estate has not yet been sold to a purchaser. 

Although this Section seems clear with respect to limiting situations in which a developer can withdraw land from a community, a recent Colorado Court of Appeals case proves that one can claim non-clarity and ambiguity with almost anything.

In Vista Ridge Master Homeowners Association, Inc. v. Arcadia Holdings at Vista Ridge, LLC the developer (Arcadia) attempted to withdraw lots from the community claiming they were not part of a “portion of real estate” subject to withdrawal.  In fact, “Filing 9”, which consisted of 94 separate Lots, was identified by the prior developer in the Declaration as being subject to withdrawal.  Some of the 94 lots had already been sold to third parties.  However, out of the 94 Lots Arcadia owned 70 (none of which had yet been sold) and attempted to withdraw those 70 lots from the association by recording a declaration amendment without owner approval. 

The association challenged Arcadia’s right to withdraw the 70 lots on the basis that all of Filing 9 was identified in the declaration as being a portion of real estate subject to withdrawal.  The Association further argued that because lots had already been sold in Filing 9, Arcadia could no longer withdraw any of the 94.

Arcadia argued that Section 210(4) is ambiguous because the term “portion” is arbitrary.  Therefore, the 70 lots it owned was another portion of real estate (as identified in the amended declaration) that could be withdrawn. 

The trial court did not agree with Arcadia and ruled in favor of the association, awarding a monetary judgment for past-due monthly assessments plus attorney fees and interest to the association.  Arcadia appealed this decision to the Colorado Court of Appeals, which upheld the trial court’s ruling and found that the language of Section 210(4) is unambiguous. 

What can we learn from this case?  Do you think the bigger lesson here is to read the statutes as they are written in their simplest forms?  Should we also take away from this that judges are not keen on letting developers (or other entities?) circumvent the law through arguments over meanings of simple words?  Do you agree with the outcome of this case and takeaway?

Elina B. Gilbert
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