27B834A7621A544D87258A4E0054E761 Hearing Summary

Larry Hudson, Land Title Association of Colorado, representing title insurance and title agencies across the state. The association has been following the act hoping to find a way to properly remove, redact, or eliminate unlawful restrictive covenants that have been in land records for a very long time. He noted that the American Land Title Association worked with the ULC on the act. His association has observed other states try to address this issue, but the ULC act provides a better avenue moving forward.

Commissioner Gardner asked if there were concerns with a homeowner misusing the act and removing lawful restrictions. Mr. Hudson replied that he has not, to date, heard those concerns but there seems to be safeguards in the act, especially for preventing lawful restrictions to not be removed along with unlawful ones. Additional concerns may arise as others become aware of the act and tweaks to the Colorado bill may be needed. Mr. Hudson confirmed that his association supports the act.

Commissioner Snyder related that the El Paso County Clerk and Recorder recently removed some unconscionable restrictions, but it took four to five years to do so. The uniform act covers both individual homeowners and homeowner associations and formalizes a process to remove these restrictions much quicker. Believes that there is a federal law now that prohibits the republication of these unconscionable restrictions. The act provides a more efficient, consistent, and equitable way to remove these restrictions from the land records so that they are no longer published.

Adam Aldrich, CBA Real Estate Section, said that upon initial review of the act the section is not ready to support the act, but is open to having ongoing discussions about it to address some of their concerns. One concern is the potential abuse by an owner in the unilateral recording of documents and how that could affect the title moving forward. Currently homeowners do not have the ability to change title documents. Another concern is that even if a restrictive covenant is removed it would still remain in the historical documents in the chain of title documents. Not certain of the practical effect of the act. The section has not taken a formal vote on the act.

Commissioner Snyder noted the act proposes to cure and remove these restrictive covenants by affidavit. Mr. Aldridge stated that the section's understanding was that the affidavit would be published but that the historical documents would remain as is. He pointed out that there are statutes in title 38 addressing how to remove restrictive covenants that might be amended to make the process more efficient. The commission asked that the section work with the land title association and Commissioners Snyder and Gardner and other stakeholders on the act. Mr. Aldrich recognized the commission's desire to address removing unconscionable restrictions and mentioned that the section has a task force devoted to that very issue.

 

Commissioner Gardner shared an early experience with unconscionable and unenforceable restrictions and the effect on the potential homeowners that they are directed at. There has to be a way to remove the language in current documents and stop repeating the language in future deeds. Commissioner Mielke concurred that the act is needed and timely. The commission thanked the witnesses for their testimony.

Commissioner Gardner moved the Unlawful Restrictions in Land Records Act be drafted as a commission bill. Commissioner Snyder seconded and the motion passed without objection. Commissioners Gardner and Snyder agreed to sponsor and will decide in which house to start the bill.