Court Opinion

ID: 5178388
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:25:53.589015+00
Date Added: 2024-06-11T08:26:28.319095
License: Public Domain

JUSTICE MÁRQUEZ,
dissenting.
¶53 The majority holds that the consent-to-amend provision in Section 16.6(h) of the Declaration is consistent with the Colorado Common Interest Ownership Act (“CCIOA”), §§ 38-33.3-101 to -402, C.R.S. (2016), and is therefore enforceable. Maj. op. ¶ 41. I respectfully disagree. Although CCIOA contemplates the possibility of de-clarant consent, the consent-to-amend provision in Section 16.6(h) evades the limitations and prohibitions of section 38-33.3-217 of CCIOA by effectively allowing the Declarant to grant itself permanent veto power over a supermajority of unit owners and thus unilaterally control the Association’s ability to amend the Declaration, even after the De-clarant’s control period ends. Because such a result is inconsistent with the legislative intent in section 38-33.3-217 to require no more than sixty-seven percent of unit owners’ votes to amend a declaration, I respectfully dissent.
¶54 I begin by reviewing the applicable provisions of CCIOA and the Declaration before us. I then discuss why the majority’s analysis of section 38-33.3-217 is unpersuasive and has troubling implications.
I.
¶55 Section 38-33.3-104 states that the provisions of CCIOA “may not be varied by agreement,” and the rights conferred by CCIOA “may not be waived.” In addition, “[a] declarant may not act under a power of attorney or use any other device to evade the limitations or' prohibitions of this article or the declaration.” § 38-33.3-104. CCIOA, including section 38-33.3-104, was based on the Uniform Common Interest Ownership Act of 1982 (“the 1982 Uniform Act”). DeJean v. Grosz, 2015 COA 74, ¶ 11, — P.3d -. The substantively-identical provision of the 1982 Uniform Act includes a comment emphasizing that this provision is intended to prevent declarants from controlling the votes of the unit owners:
In order to prevent declarants from evading these requirements by obtaining powers of attorney from all unit owners, or in some other fashion controlling the votes of the unit owners, this Section forbids the use by a declarant of any device to evade the limitation or prohibition of the Act or of the declaration.
1982 Uniform Act, § 1-103 cmt. 2 (emphasis added). See generally Silverview at Overlook, LLC v. Overlook at Mt. Crested Butte Ltd. Liab. Co., 97 P.3d 252, 256 (Colo. App. 2004) (analyzing comments to the 1982 Uniform Act).
¶56 In my view, the consent-to-amend provision in Section 16.6(h) is such a prohibited “device” to evade the limitations and prohibitions of CCIOA, specifically, section 38-33.3-217.
¶57 Section 38-33.3-217 sets an upper threshold on the percentage of unit owners’ votes required to amend a declaration:
[T]he declaration ... may be amended only by the affirmative vote or agreement of unit owners of units to which more than fifty percent of the votes in the association are allocated or any larger percentage, not to exceed sixty-seven percent, that the declaration specifies. Any provision in the declaration that purports to specify a percentage larger than sixty-seven percent is hereby declared void as contrary to public policy.
*798(Emphases added.) Stated differently, section 38-33.3-217 prohibits any provision in a declaration that prevents a supermajority (or more) of unit owners from voting to amend the declaration.
¶58 Section 13.1 of the Declaration at issue here states that its provisions “may be amended ... by vote or agreement of Owners of Units holding at least 67% of the votes in the Association.” This provision also requires the consent of the Declarant, provided that “Declarant’s right to consent under this Section 13.1” expires after the last unit is sold to an owner other than the Declarant. Here, the Declarant sold the last unit to a non-declarant owner in 2012.
¶59 Section 16.6 of the Declaration sets forth detailed provisions requiring binding arbitration of all construction defect claims. It requires the Association to have written consent of a supermajority of eligible unit owners before initiating a judicial proceeding, to submit to negotiation and mediation and, if negotiation and mediation fail, to submit to final and binding arbitration. Section 16.6 also prohibits recovery of attorneys’ fees and other costs, and limits damages to actual damages.
¶60 Most importantly here, Section 16.6(h) (the “consent-to-amend provision”) states that the entirety of Section 16.6 “shall not ever be amended without the written consent of Declarant ... without regard to whether Declarant owns any portion of the Real Estate at the time of such amendment.” The question here is whether the consent-to-amend provision in Section 16.6(h) can permanently override Section 13.1, which allows for amendment of the Declaration with , at least sixty-seven percent of unit owners’ votes. In my view, Section 16.6(h) violates section 38-33.3-217 of CCIOA because the consent-to-amend provision allows the De-clarant to reserve for itself a perpetual veto power that prevents a supermajority of unit owners from artiending the Declaration.
II.
¶61 The majority reasons that section 38-33.3-217(l)(a)(I) concerns only the percentage of unit owners’ votes and does not preclude additional, non-pereentage-based requirements for amendment of a declaration. Maj. op. ¶ 21 (citing Vallagio at Inverness Residential Condo. Ass’n v. Metro. Homes, Inc., 2015 COA 65, ¶ 37, — P.3d -). But the majority’s narrow focus on the word “percentages” ignores the reality that Section 16.6(h) effectively gives the Declarant permanent veto power over the unit owners, despite supermajority support among unit owners for amending the Declaration. Such control over unit , owners contravenes the legislative intent of section 38-33.3-217.
¶62 Section 38-33.3-217 bars declarants from preventing the amendment of a declaration by capping the upper vote threshold to amend at sixty-seven percent of unit owners. But under Section 16.6(h) of this Declaration, the Declarant can thwart the vote of the supermajority of unit owners by withholding its consent. Indeed, even if one hundred percent of unit owners voted to amend a provision of Section 16.6, Section 16.6(h) renders such a vote ineffective without the Declar-ant’s consent.
¶63 Such a result essentially negates the purpose of section 38-33.3-217 because it evades any upper limit on the threshold to amend. In my view, the consent-to-amend provision in Section 16.6(h) is precisely the sort of “device” fashioned to “[control] the votes of the unit owners” that section 38: 33.3-217 .was designed to forbid. See 1982 Uniform Act, § 1-103 cmt. 2. The consent-to-amend provision consequently runs afoul of section 38-33.3-104 by varying (here, effectively nullifying) unit owners’ rights to amend the declaration conferred by section 38-33.3-217 of CCIOA.
¶64 The majority points to section 38-33.3-217(7)(I)(C) and section 38-33.3-217(l)(b)(I) as evidence that section 38-33.3-217 contemplates the consent of the declarant or third parties. Maj. op. ¶¶ 21-23. However, the question here is not whether a declarant may include a right to consent to proposed amendments in the declaration. Rather, the question is whether a declarant may lawfully permanently override a supermajority vote by unit owners to remove a consent-to-amend provision. Sections 38-33.3-217(7)(I)(C) and *79938-33.3-217(l)(b)(I) do not speak to that question and are therefore inapposite.
III.
¶65 The majority’s holding today has troubling implications. Although the eonsent-to-amend provision at issue here applies only to bar changes to provisions governing construction defect claims, maj. op. ¶ 41, the logic of the majority’s opinion is not so limited. The majority suggests its holding is limited to the facts of this case, see maj. op. ¶ 41 n.6, but its logic will permit declarants to control homeowners’ associations’ affairs into perpetuity simply by drafting self-serving provisions and then including a consent-to-amend provision that allows the declarant to demand consent to the amendment of any provision in the declaration. In short, the majority’s holding effectively allows declar-ants to end-run the provisions of section 38-33.3-217.
¶66 Because the consent-to-amend provision of Section 16.6(h) evades the limitations of section 38-83.3-217(l)(a)(I) and thus violates section 38-33.3-104, I respectfully dissent.
I am authorized to state that JUSTICE COATS joins in this dissent.