Under Colorado law, all common interest communities, even those pre-CCIOA communities created prior to July 1, 1992, are required to file annual reports and pay requisite fees to both the Colorado Secretary of State and the Colorado Department of Regulatory Agencies – Division of Real Estate. This article discusses the current requirements for each agency and the impact upon an association that fails to comply with these requirements.
Colorado Secretary of State
Most associations are formed as Colorado nonprofit corporations and subject to the Colorado Revised Nonprofit Corporation Act promulgated under Title 7, Articles 121 through 137 (“Nonprofit Act”) of the Colorado Revised Statutes (“C.R.S.”). The Nonprofit Act incorporates certain provisions of the Colorado Corporations and Associations Act found in Title 7, Article 90 C.R.S. (“Corporations Act”) thereby making those provisions applicable to nonprofit corporations.
Specifically, the Corporations Act requirements of filing an annual Periodic Report with the Colorado Secretary of State and maintaining a registered agent for service of process are applicable to a nonprofit corporation.
§7-90-501 C.R.S. requires a reporting entity, which includes a nonprofit corporation, to annually submit a Periodic Report and pay the requisite fee to the Colorado Secretary of State. The Periodic Report fee is currently $10.00 for 2014. The Periodic Report will state the entity’s name, state of formation, name and address of the registered agent, and principal office address.
The Periodic Report is due during the three month period beginning with the first day of the anniversary month of formation. For example, if the nonprofit corporation was formed on March 15th, the Periodic Report would be due each subsequent year between March 1st through May 31st.
If the Period Report is not filed when due, the entity becomes noncompliant and will incur an additional late filing penalty, which is currently $50.00 for 2014. If the Periodic Report is not filed within two additional months after becoming noncompliant, i.e. a total of five months from the entity anniversary month, the entity becomes delinquent and will incur additional fees to cure the delinquency, which is $100.00 for 2014.
§7-90-701 C.R.S. et seq. provides that an entity must continuously maintain within this state a registered agent for service of process. Any time a registered agent or the registered agent address changes, the entity will need to notify the Secretary of State either by filing a Statement of Change or making the change on its Periodic Report. Failure to maintain a registered agent will cause the entity to become delinquent.
Delinquency Grounds and Effect
§7-90-901 C.R.S. indicates that a Colorado entity may become delinquent for failing to 1) pay a fee or penalty when it becomes due, 2) file a Periodic Report, and 3) maintain a registered agent for service of process. §7-90-902 C.R.S. states that the Secretary of State will declare an entity delinquent after 60 days when the entity does not correct the issue or provide evidence that grounds for delinquency do not exist.
§7-90-903 C.R.S. states that after a declaration of delinquency is made by the Secretary of State, the delinquent entity cannot maintain a proceeding in any court within the state to collect its debts and a court may stay proceedings filed by the delinquent entity until such time as the delinquency is cured. Likewise, if the delinquency is not cured, the association may risk the dismissal of any court action that it is a party.
Recommendation: The Secretary of State has an email notification service to which an entity can subscribe to receive an email reminder which provides information that a Periodic Report is due, the last day to timely file the Periodic Report, and instructions on how to file the Periodic Report through the Secretary of State website. Additionally, any time the entity’s registered agent or the registered agent’s address changes, a Statement of Change should be filed with the Secretary of State.
Please contact our firm for additional details if you would like us to file the annual Periodic Report and submit the requisite fees on behalf of your entity with the Colorado Secretary of State.
Colorado Department of Regulatory Agencies – Division of Real Estate
§ 38-33.3-401 C.R.S. requires every unit owners’ association to register each year with the Division of Real Estate. Associations with annual revenues of more than $5,000.00 are also required to submit a registration fee, which is currently $27.00 for 2014 (plus $0.75 processing fee and 4.25% credit card processing fee).
Associations with annual maximum revenues of $5,000.00 or that are not authorized to collect assessments, are also required to register each year, but are exempt from paying the registration/renewal fee.
- The registration must contain the following information, and must be updated within 90 days of any change:
- Name of association as shown on the Colorado Secretary of State’s records;
- Name of the association’s management company or designated agent;
- Physical address of the association;
- Valid address; email address, if any; website, if any; and telephone number for the association or its management company or designated agent; and
- Number of units in the association.
The Division of Real Estate has an online system for HOA initial registration and renewal. In addition to the items specified in the statute above, the association will also need to provide its Colorado Secretary of State Identification Number and the recording date and information for the association’s Declaration of Covenants, Conditions and Restrictions.
The association’s registration with the Division of Real Estate is only valid for one year. If the association fails to register or fails to timely renew its registration, then it is precluded from imposing or enforcing a lien for assessments or pursuing an action to enforce covenant violations. Such actions are suspended and time limits are tolled until such time as the association is validly registered with the Division of Real Estate. (§ 38-33.3-401(3) C.R.S.)
Lapse of a valid registration does not extinguish an association’s lien that was filed when an association’s registration was current, but will delay the collection and enforcement proceeding until the registration is properly submitted. (§ 38-33.3-401(3) C.R.S.)
Recommendation: Every association should put procedures in place to ensure that both the annual registration form and fee payment are timely submitted to the Division of Real Estate.
Please contact our firm for additional details if you would like us to file the annual registration form and submit the requisite fees on behalf of the association with the Division of Real Estate.
An association’s failure to timely file annual registrations and pay requisite fees to both the Colorado Secretary of State and the Colorado Department of Regulatory Agencies – Division of Real Estate can cost the association additional time and money.
Association collection efforts and enforcement proceedings will be stayed until annual fees and registration reporting requirements are met. Additionally, an association will likely incur fines and penalties when annual reporting deadlines pass and the association is required to cure delinquent registrations and renewals.