The Colorado Common Interest Ownership Act (CCIOA) allows developers to reserve special declarant rights when building a common interest community, but what happens to those rights when a development faces foreclosure? In a recently published article in the Colorado Real Estate Journal, Moye White partner Tasha Power discusses the rights and liabilities of lenders when they foreclose on projects that have reserved such rights.
Special declarant rights – which may include the right to complete improvements, exercise development rights, maintain sales offices and use easements – will transfer with the sale of a development to a successor developer through a document indicating the transfer that is signed by the purchaser. The successor declarant also assumes certain obligations and liabilities formerly held by the prior developer.
But a lender usually is not a successor developer and likely will sell foreclosed property to another developer. In such situations, Power explains, “CCIOA provides a mechanism for lenders (or other purchasers) who do not plan to complete the development to retain the special declarant rights for a subsequent purchaser without assuming liability of the prior declarant.”
Read Power's full article, featured on page 31.
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