Newsletter – April 2023
The real estate market, like other financial markets, has been thrown into turmoil by interest rate hikes and inflation. Given the difficulties in the current market, it is challenging for individuals to find affordable housing, and just as challenging for multifamily owners to provide it. To address the difficulties in the State of Colorado, new legislation has been proposed that will bring a significant change to multifamily real estate. This proposed bill, sponsored by Representative A. Boesenecker and Representative E. Sirota of the Colorado House, will grant the State (Yes, the State!) the right of first refusal for all multifamily sales. It passed through the house with 43 in favor, and only 21 against. It is currently in front of the Senate, and if it passes the Senate, it will take full effect.
This bill poses a serious threat to the principles of a free market economy, which has been the driving force behind the American economy for nearly 250 years. The proposed legislation will require sellers to notify the government of their intent to sell, giving the State 14 business days to exercise their ROFR and 60 days to write an offer. If the offer is rejected, the seller is mandated to detail why the previous offer was declined and allow the government to counter the offer with more desirable terms. If the seller neglects to notify the State, they will suffer financially punitive measures in the form of a fine with a minimum requirement of $50,000.00 or up to 30% of the asking price of the asset. In other words, you must tell the government that you plan to sell your private investment, or it will impose upon you its elected power. This mandate is contrary to the principles of a free market economy, with the government taking control of the flow of offers and sales in real estate. To add insult to injury, there is an onerous close period of 120 days that limits the seller’s autonomy. Such a mandate is unconstitutional and poses a far-reaching threat to free market ideals and freedoms in every aspect of life.
While it may not seem so serious in the world of real estate, this bill opens the door to more government intervention in our daily lives. If they can dictate what you sell and who you sell it to, they aren’t too far away from telling you who you can see and where you can go. Constant vigilance is required to guard against loss of freedoms, and the real estate market is no different. Don’t forget the wise words of President Ronald Reagan, “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”