Limitations on the Ability to Withdraw and De-Annex Property from a Common Interest Community

On February 28, 2013, the Colorado Court of Appeals issued its opinion with regard to the ability of an owner (and in this case, a real estate investment owner) to withdraw and de-annex lots from a common interest community.  Specifically, in Vista Ridge Homeowners Ass’n., Inc. v. Arcadia Holdings at Vista Ridge, LLC, 300 P.3d 1004 (Colo. App. 2013), the Court denied Arcadia’s appeal of a lower Colorado District Court ruling which invalidated Arcadia’s attempt to withdraw and de-annex 70 single-family lots which it owned from the 94-lot Vista Ridge Filing No. 9.

The decision ultimately turned on the meaning of a “portion” of the property, as intended by CCIOA, and as applied to the specific language in the Vista Ridge Declaration.  Subsection 210(4) of CCIOA governs when a declaration subjects “all or a portion of the real estate” to a right of withdrawal, and imposes parallel restrictions depending on whether the real estate is divided into portions:

C.R.S. §28-33.3-210(4) (emphasis added).  Whereas the applicable Declaration described the lots as “Lot 1 through 94, Vista Ridge Filing No. 9,” the Court found this sufficient description of a separate portion of the Vista Ridge development, and therefore subject to Subsection 210(4)(b). In so finding, the Court concluded that CCIOA prohibited Arcadia from de-annexing the 70 lots that it still owned from the Filing No. 9 plat.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.