§ 29-4-1203 — Right of first offer - eligibility - process - notice - definition

(1) Definition of qualifying property. As used in this section, unless the context
otherwise requires, qualifying property means a multifamily residential or mixed-use rental property consisting of not more than one hundred units and not less than
fifteen units and excluding existing affordable housing and a mobile home park as
defined in section 38-12-201.5 (6). For the purpose of determining whether a
property consists of at least the minimum number of units set forth in this
subsection (1) for a qualifying property, an accessory dwelling unit does not count
as a unit.

(2) Local government's right of first offer. (a) In accordance with this part
12, the local government for the jurisdiction in which a qualifying property is located
has a right of first offer to make an offer to purchase the qualifying property before
the qualifying property is listed for sale to third parties.

(b) The local government's right of first offer concerning the qualifying
property is limited to preserving or converting the qualifying property to long-term
affordable housing or a mixed-income development directly or through another
entity to which the local government assigns its rights pursuant to subsection (2)(d)
of this section or transfers the qualifying property. If a qualifying property is
classified as mixed-use, the local government's offer must include any commercial
portion of the qualifying property, but only the residential portion of the qualifying
property is subject to affordability requirements.

(c) The local government, in exercising its right of first offer, may partner
with a nonprofit entity, a private entity, a quasi-governmental entity, or another
governmental entity to co-finance, lease, or manage the qualifying property for the
public purpose of maintaining the qualifying property as long-term affordable
housing or a mixed-income development if the local government or its assignee
maintains ownership of the qualifying property either directly or through a special
purpose entity or affiliate.

(d) At any time, the local government may assign the right of first offer
regarding a qualifying property to a local or regional housing authority or the
Colorado housing and finance authority, subject to the requirements that the
qualifying property is used to preserve or be converted to long-term affordable
housing or a mixed-income development and that all other provisions of this part 12
apply to the assignee. The assignee must immediately notify the residential seller
of any assignment pursuant to this subsection (2)(d), and the notice must include
the assignee's address to receive any notices that the residential seller is required
to send in accordance with this section. The local government remains liable for
obligations pursuant to this part 12 accruing prior to the assignment and upon
assignment, the assignee assumes all liability of the local government regarding
the exercise of the right of first offer and is responsible for performing all
requirements pursuant to this part 12, in each case accruing from and after the
assignment, with respect to a qualifying property as if the assignee were the local
government.

(e) (I) The governing body of a local government has the right to waive the
right of first offer provided in this section.

(II) (A) If the governing body of a local government has waived its right of
first offer, it shall post a notice in a conspicuous location on its website indicating
that there is a waiver and that residential sellers with qualifying properties within
its jurisdiction do not have an obligation to comply with this section.

(B) The notice posted in accordance with subsection (2)(e)(II)(A) of this
section must be effective for at least three months after it is posted and must
explicitly state the date it expires, if any.

(C) Failure to post notice pursuant to this subsection (2)(e)(II) does not
otherwise affect the local government's right of first offer.

(f) Notwithstanding anything in this section to the contrary, at any time prior
to the residential seller and the local government entering into a contract for the
purchase of the qualifying property by the local government, the residential seller
may reject the local government's offer and otherwise terminate negotiations with
the local government.

(g) If the local government waives or is deemed to have waived its right of
first offer in accordance with this section or if a residential seller rejects the local
government's offer in accordance with subsection (2)(f) of this section, the
residential seller has no obligation to provide initial or additional notice, as
applicable, to the local government or otherwise offer or re-offer, as applicable, the
qualifying property to the local government pursuant to any provision of this
section unless a transaction for the sale of the qualifying property does not close
within twelve months of either the local government's waiver or deemed waiver or
rejection by the residential seller of the local government's offer, whichever is
earlier; except that, if the contract for sale to a third party has a duration longer
than twelve months, then the twelve-month period is extended to match the term of
the contract.

(3) Notice requirements generally. (a) (I) Any notices required to be
provided to the local government pursuant to this section must be delivered to the
clerk of the governing body of the local government by electronic mail; except that,
if there is not an electronic mailing address available for the clerk, then by hand
delivery, United States first class mail, or overnight delivery.

(II) Notwithstanding subsection (3)(a)(I) of this section, if the local
government assigns its right of first offer and the assignee provides notice of the
assignment to the residential seller pursuant to subsection (2)(d) of this section,
then upon and after receipt of notice of the assignment, the residential seller shall
send by electronic mail any required notices pursuant to this section to the address
specified by the assignee; except that, if there is not an electronic mailing address
provided by the assignee, then by hand delivery, United States first class mail, or
overnight delivery.

(b) Any notices provided to the residential seller pursuant to this section
must be delivered to the physical address provided by the residential seller in
accordance with subsection (5)(a)(II) of this section or, upon election by the
residential seller, by electronic mail to the electronic mailing address provided by
the residential seller to the local government.

(c) Any notice provided pursuant to this section is deemed delivered on the
date it is sent by electronic mail, the date it is hand delivered, the date after the day
it is deposited for delivery by overnight delivery, or the date that is two business
days after the day it is deposited in the United States mail, as applicable.

(4) Notice by residential seller, local government's intent, and
nondisclosure agreement. (a) Before a residential seller enters into an agreement
with a licensed broker to solicit and procure purchasers for a qualifying property or
otherwise lists a qualifying property for sale on the multiple listing service, the
residential seller shall provide notice to the governing body of the local government
in which the qualifying property is located that the residential seller intends to sell
the qualifying property.

(b) The local government has seven calendar days from the date of receiving
the notice required by subsection (4)(a) of this section to provide a written response
to the residential seller indicating that the local government either:

(I) Is interested in receiving due diligence information on the qualifying
property so that it can evaluate whether it wants to make an offer to purchase the
qualifying property, which response must contain a nondisclosure agreement in a
form acceptable to the residential seller that the local government has executed,
except as otherwise governed by law or court order; or

(II) Waives any right of the local government to purchase the qualifying
property.

(c) If the local government does not respond within the seven-day period
required by subsection (4)(b) of this section, it is deemed to have waived its right of
first offer with respect to the qualifying property.

(5) Residential seller's notice of terms. (a) If the local government provides
notice in accordance with subsection (4)(b) of this section, the residential seller has
five calendar days from receipt of the notice to provide a notice to the local
government that includes:

(I) The address and name of the qualifying property, if any, and the legal
description of the qualifying property;

(II) The residential seller's address and, if available, electronic mailing
address to receive notices from the local government;

(III) A rent roll for the qualifying property showing the amount of rent
charged to tenants at the qualifying property;

(IV) The vacancy rate, operating expenses and income, and common area
amenities at the qualifying property;

(V) Any marketing materials that the residential seller has prepared on or
before the date of such notice and anticipates using in connection with listing the
qualifying property for sale;

(VI) A current title commitment; and

(VII) The residential seller's executed version of the nondisclosure
agreement.

(b) Subject to and pursuant to the nondisclosure agreement executed in
accordance with subsection (4)(b) of this section, the local government may share
the information contained in the notices required pursuant to this subsection (5)
with its officers and employees for the purposes of evaluating or obtaining
financing for the prospective transaction. Agents of the local government and
prospective entities that the local government partners with pursuant to subsection
(2)(c) of this section or prospective assignees pursuant to subsection (2)(d) of this
section must each sign a nondisclosure agreement for the respective entity. An
entity that has executed a nondisclosure agreement may share the information
contained in the notices required pursuant to this subsection (5) with its officers
and employees for the purposes of evaluating or obtaining financing for the
prospective transaction. The information contained in the notice must be kept
confidential and is confidential information not subject to public disclosure.

(6) Notice by the local government. (a) A local government has fourteen
calendar days from the date of receiving the notice required by subsection (5)(a) of
this section to provide a written response to the residential seller that either:

(I) Makes an offer to purchase the qualifying property setting forth the price,
terms, and conditions of the offer; or

(II) Waives any right of the local government to purchase the qualifying
property.

(b) If the local government does not provide a response within the fourteen-day period set forth in subsection (6)(a) of this section, the local government's right
of first offer is deemed waived.

(7) Process after offer is made. (a) The residential seller has fourteen
calendar days after receipt of the local government's offer made pursuant to
subsection (6)(a)(I) of this section to notify the local government that it either
accepts or rejects the offer. During this period, the residential seller may initiate
negotiations in good faith with the local government, which may include discussing
alternative price, terms, or conditions for the purchase of the qualifying property. If
the residential seller does not provide notice of its acceptance or rejection of the
local government's offer in the fourteen-day period pursuant to this subsection
(7)(a), the offer is deemed rejected.

(b) If the residential seller accepts the local government's offer or accepts
an offer negotiated with the local government, the local government and the
residential seller have thirty calendar days after the date of the residential seller's
receipt of the local government's notice provided in accordance with subsection
(6)(a)(I) of this section to negotiate and execute a contract for the purchase of the
qualifying property by the local government. The contract must require the
transaction to close no later than sixty days after its execution, unless both parties
agree to other terms.

(8) Certificate of compliance. Within fourteen calendar days of receipt of
notice required by subsection (4)(a) of this section unless the local government
provides notice pursuant to subsection (4)(b) of this section and then within
fourteen calendar days of receipt of the notice required by subsection (5)(a) of this
section, the local government or its assignee shall execute and record a certificate
of compliance in the real property records of the county in which the qualifying
property is situated. The certificate of compliance must include the name of the
residential seller, a legal description of the qualifying property, and a statement
that the residential seller has complied with all the applicable provisions of this
section. The recorded certificate of compliance is prima facie evidence of the
residential seller's compliance with this section and may be relied upon by a
residential seller, any person claiming an interest in the qualifying property through
a residential seller, and a title insurance entity, as defined in section 10-11-102 (11).

Legislative History

Source: L. 2024: Entire part added, (HB 24-1175), ch. 286, p. 1910, � 1, effective August 7.