A Right of First Refusal to Purchase Qualifying MF Residential Property by a Local Government
Updated: May 4
What will be the personal, business, and real estate market financial impact of Colorado HB23-1190; if the Colorado Government is tying up private properties sales for 10, 60, and 120 calendar days while deciding whether or not, to exercise their Right of First Refusal (ROFR) or assigning their ROFR to a qualifying Partner, to purchase your property?
By Cheryle Powell – SperryCGA, Rocky Mountain Associates, April 19, 2023
The proposed House Bill HB23-1190, if passed, would introduce additional government regulation and intervention in the selling of residential, multifamily, and mixed-use properties. The bill requires notices to be given by the seller to local governments and by local governments to the seller and to residents of the property. Upon receiving notice of intent to sell or of a potential sale of property, a local government has 10 calendar days to preserve its right of first refusal and an additional 60 calendar days to make an offer and must agree to close on the property within 120 calendar days of the execution of an agreement for the sale and purchase of the qualifying property.
The requirement for local government to provide notice and match an acceptable offer could potentially disincentivize private investment in multifamily properties in Colorado. Additionally, the 90-day delay in accepting offers could cause financial strain on property owners who are waiting for the sale to close. The bill may lead to a decrease in property values and limit the ability of owners to sell their properties at fair market value.
Owners of these properties will be subject to Government oversight, involvement, and compliance throughout the entire sales process. It will slow down and complicate the process of selling such properties, it may (Will) limit fair market value, it may (Will) limit buyers, it may (Will) dis incentivize real estate investments, and may (Will) increase your legal fees arguing the legal definition of “ECONOMICALLY SUBSTANTIALLY IDENTICAL OFFER” made by your local government or assigned partner.
It is important to note that I am in favor of more affordable housing and preventing displacement of residents in certain areas. However, this Bill, as currently drafted, will create unintended consequences that negatively affect Colorado Real Estate Market and the Colorado Affordable Housing Movement.