Chapter 15 - § 15.5 • THE FEDERAL CONDOMINIUM AND COOPERATIVE PROTECTION AND ABUSE RELIEF ACT

• Jurisdiction: Colorado

§ 15.5 • THE FEDERAL CONDOMINIUM AND COOPERATIVE PROTECTION AND ABUSE RELIEF ACT

The Condominium and Cooperative Protection and Abuse Relief Act⁴⁰ is a federal law with an aggressive title but few teeth. The Act recommends conversion of rental housing be discouraged "where there are adverse impacts on housing opportunities of the lowand moderate-income and elderly and handicapped tenants involved."⁴¹ It also recommends that state and local governments should require notice of pending conversions, as does Colorado, and a purchase opportunity for tenants,⁴² as Colorado does not. One provision that could have an actual effect on conversions applies to termination of self-dealing contracts in conversion projects. The statute applies only to "conversion projects"⁴³ for which a contract for operation, maintenance, or management was entered into after October 8, 1980, the effective date of the Act.⁴⁴ To be subject to termination, the contract must be one that

• Provides for operation, maintenance, or management of a condominium or cooperative association in a conversion project, or of property serving the condominium or cooperative unit owners in such project;
• Is between unit owners or the association and the developer or an affiliate of the developer;
• Was entered into while the association was controlled by the developer through special developer control⁴⁵ or because the developer held a majority of the votes in the association; and
• Is for a period of more than three years, including any automatic renewal provisions that are exercisable at the sole option of the developer or an affiliate of the developer.⁴⁶

The Act is limited, however, because it requires that termination occur only during a two-year period beginning with the date on which (1) special developer control over the association is terminated; or (2) the developer owns 25 percent or less of the units (whichever occurs first).⁴⁷ The Act, with its abundance of limitations, has very narrow application to "self-dealing" contracts in conversion projects. Additionally, state and local governments may exempt themselves from it.⁴⁸ A provision that has some application to condominium leases allows a court to declare that a lease is unconscionable.⁴⁹ That provision has been found constitutional,⁵⁰ but any action under the statute had to be brought within four years of October 8, 1980.⁵¹

When there is litigation pursuant to the Act, costs may be recovered. The "amounts recoverable . . . may include...