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Committee Activity 2018

January 2018

Stroh Ranch Development v. Stroh Ranch Business Circle

The case involves a declarant who consented to the annexation of real estate into a common interest community in 1999. Disputes arose overassessments on the property over the following years, which prompting the association to record a lien in 2017. The lien appeared to be proper under both the community's recorded covenants and the Colorado Common Interest Ownership Act (“CCIOA"), which our legislature adopted in 1991 based on the 1982 uniform act. The declarant responded by suing the association under Colorado's spurious lien statute, which allows property owners to make expedited challenges to frivolous liens that were neither approved by the owner nor authorized by law. After a short hearing, a district court judge granted the petition. He examined the 1999 annexation form and concluded that it did not comply with the requirements that the Colorado Supreme Court's would recognize seventeen years later in Ryan Ranch Community Association v. Kelley, 380 P.3d 137 (Colo. 2016).

CAI previously participated in the Ryan Ranch case, in which the court ultimately ruled against an association seeking to enforce covenants stating that units identified on a plat would be automatically annexed to a community upon recording of a deed. In that case, the court largely agreed with the property owners' argument that units could only be annexed by recording a declaration amendment in strict compliance with all statutory requirements, including a mathematical calculation of reallocated common interests. The court invalidated the common practices of “annexation by deed" and automatic reallocation of common interests by reference to other recorded documents.

The Stroh Ranch case asks the court of appeals to decide how broadly the Ryan Ranch opinion should be applied. The district court has interpreted Ryan Ranch to mean that all annexations recorded since 1991 are subject to challenge at any time by disgruntled property owners, and that any community association that attempts to enforce its covenants may be subject to penalties for recording a spurious document.

We do not think this is reasonable or what the supreme court intended when it announced Ryan Ranch last year. Although many community association lawyers were disappointed by the outcome of Ryan Ranch, the case was limited to a fairly unique fact pattern, wherein two developers had reached a side agreement to exempt nine units in a community from annexation or payment of assessments. The association argued that their agreement was superseded by the community's annexation-by-deed covenants, but the court disagreed and suggested that annexation requires strict compliance with CCIOA procedures for declaration amendment. 

The effect of the Ryan Ranch holding on other communities remains unclear. The supreme court ruled that certain methods of annexation are invalid, but it never suggested that it intended to open the door for the judiciary to examine the documents of every declaration recorded in the twenty-seven years since CCIOA's passage. On the contrary, the court remanded the case for determination of whether the statute of limitations precluded such review. The case settled before this question was ever answered.

Brief: Pending
Prior Opinions:
Brief Authors: Jerry Orten, Esq., CCAL Fellow, Aaron Goodlock, Esq. and Jonah Hunt, Esq. of the Orten, Cavanagh & Holmes law firm. 
CAI Amicus Review Panel: Mr. Robert Diamond, Esq., Chair of Amicus Committee, Mr. Henry Goodman, Esq. (MA), Ms. Laurie Poole, Esq. (CA), Mr. James Strichartz (WA)

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