Introduction and Legislative interest in HOAs

  • The priority issues at the legislature were:
    • Political positioning toward the 2012 General Election
    • State budget – forecasts provided some optimism
  • Over 630 bills and resolutions were introduced in 2012
  • A special session was called to address bills that were viewed as important but defeated due to last minute politics
  • Many bills failed to move out of the opposite chamber
  • Many bills were tracked by the Colorado Legislative Action Committee (CLAC)
    • Legislative envoys of CLAC were assigned to each priority bill
  • The CLAC is a committee of CAI National
    • CLAC Delegates are appointed by CAI National
    • CLAC has 20 Delegates
      • 3 are Delegates of each Chapter (Rocky Mountain and Southern Colorado)
      • 14 Delegates are at large
      • The Rocky Mountain Chapter of CAI Colorado posts all of the CLAC members on its website
      • The Southern Colorado Chapter of CAI Colorado posts its 3 delegates to the CLAC members on its website
  • Legislative interest in Colorado Common Interest Communities continues
    • In the legislature
    • At the Department of Regulatory Agencies (DORA)
    • In the CLAC

HOA Records – HB12-1237 (Williams/Harvey)
Key Elements and Aspects

  • The effective date of the bill is January 1, 2013
  • The bill amends the Colorado Common Interest Ownership Act (CCIOA)
  • The bill was promoted and lobbied by the CLAC because existing law on HOA records was not clear enough
  • The bill addresses record keeping and inspection of records:
    • The bill makes clearer the law on HOA records
    • Proper purpose, as a condition of inspection or copying, is eliminated
    • Deliberations and votes (emails) for action taken outside a meeting must be kept and allowed to be inspected
    • Some records may be excluded
    • Reasonable charges (for labor and material) are allowed for copying
  • The bill is based on recommendations of a commission on uniform state laws
  • The bill responds to complaints to the HOA Information Office
  • The bill responds to concerns of owners and legislators
  • CLAC’s envoy team was instrumental in advocating for HOA interests on this bill

Records Required to be Kept for Inspection

  • Only records listed in the bill (and as set forth below) must be retained and provided to the members
  • Records of all actions taken by board members outside of meetings:
    • Emails, written communications and votes
  • Governing documents (declaration, articles of incorporation, bylaws, rules and regulations and policies and procedures)
  • Records as indentified in the governing documents
  • Contact information on board members
    • names
    • physical mailing addresses
    • email addresses
  • Records that must be disclosed as required under SB 05-100 (from 2005) including:
    • basic disclosures
    • extended or annual disclosures
  • Receipts and expenditures
  • Records of claims and settlements of construction defects
  • Minutes of member, board and committee meetings
  • Resolutions of the board related to rights of classes of owners
  • List of owners
    • with a physical mailing address
    • with a vote allocation (this requirement does not apply to timeshares)
  • Financial statements for the past 3 years
  • Tax returns for past 7 years
  • Annual report as filed with the Colorado Secretary of State
  • Assessment records for each unit to permit preparation of a statement of account
  • Reserve study, if any
  • Current written contracts
  • Contracts over the past 2 years
  • Architectural approvals and denials (drawings of professionals are not required to be released without the consent of the owner of the drawing)
  • Ballots and proxies of owners (for one year)
  • All general communications to unit owners (for the past 3 years)

Inspection and Copying

  • Records maintained (above) are available for inspection and copying during normal business hours or the next regularly scheduled meeting of the board, on request with at least 10 days notice
  • Proper purpose is no longer a condition that is enforceable
  • A written request may be required
  • The written request may be required to describe the record sought
  • Copying charges may cover labor and material but may not exceed the estimated cost of production and copying

Uses of Membership Lists Remain Restricted

  • No commercial use
  • No sale to third parties
  • No use unrelated to a unit owner’s interest
  • No solicitation of money use unless the money is to be used to solicit owner votes

Records that May be Withheld

  • Architectural drawings, plans, etc. (consent of the owner of the plans may be required)
  • Contracts, leases, bids or other records under negotiation
  • Communications with legal counsel or otherwise protected communications
  • Disclosures which would violate other law
  • Records from or that give rise to executive sessions
  • Individual owner records (other than the owner's own records)

Records that Must be Withheld

  • Personnel, salary or medical information of specific individuals
  • Personal information on owners
  • Personal identity information
  • Bank account information
  • Telephone numbers
  • Email addresses
  • Driver's license
  • Social security numbers

Associations are not obligated to Compile or Synthesize Records

Recommendations to HOAs and Managers on the New HOA Record Law

  • Become familiar with the new HOA records law (HB 1237)
  • Update the association’s records inspection policy, consistent with the HOA records law
  • Consider a policy on email communications (an optional vs. required policy)
  • Consider a combined HOA Records and Email Communications Policy (which is not a required policy).
  • Consider association decisions (action) being taken only at meetings (vs. by email or chain)
  • If email discussions are to continue, a record of those deliberations and votes must be kept
  • Email addresses used by board members may open their personal and business email records to inspection and subpoena (in a lawsuit)
  • Consider board member email addresses provided by management
  • Consider board members only using the address provided for HOA decisions
  • Consider posting all or some of the documents that can be inspected (other than contracts) on the association’s website
  • Consider a records retention policy (an optional vs. required policy)

Other 2012 Legislation
Passed - Regulation of Notaries Public– HB12-1274 (Swerdfeger/Jahn)

  • Modifies the Secretary of State's regulation of notaries public by:
    • disallowing the use of a seal embosser
    • allowing electronic filing of applications and renewals
    • clarifying the disciplinary and non-disciplinary actions that may be taken
    • disallowing the use of a seal embosser
    • updating the information a notary public includes on his or her official notary seal

Passed - Protecting Consumers Who Engage Roofing Contractors – SB 12-38
Tochtrop/Priola)

Key Elements of the Bill

  • The bill requires residential roofing contractors to sign a written contract with customers that details:
    • scope of roofing services and materials
    • approximate dates of service
    • costs of the services (of over $1,000)
    • roofing contractor's contact information
    • identification of the roofing contractor's surety and liability coverage insurer and their contact information
  • and more

Passed - Obligations of Residential Nonprofit Corporation to its Members – SB12-24 (Harvey/Holbert)

Note:  Residential nonprofit corporations operate retirement communities.  These communities are not common interest communities, where a member is an owner.  These communities are based on membership, with initiation fees, monthly fees, etc.  Since these communities are operated similarly to common interest communities, legislation that relates to these communities is monitored by the CLAC.  Recent legislation is seeking to bring protections to the members, protections similar to those provided under CCIOA.

Key Elements of the Bill

  • Provides for refund of entrance fee upon a transfer of membership
  • Provides for open meetings of the board or committees
  • Provides members are entitled to agendas of board and committee meetings.
  • If there is no agenda, members are entitled to a general description of the purpose of the meeting and subject matters to be discussed
  • Board is to inform members, annually, of the method by which meeting agendas are prepared, including location of meetings
  • Board must give 30 days’ notice of any change in the manner or means by which meeting information is provided

Defeated - Deceptive and Fraudulent Re-sales of Timeshares is Prohibited – HB 12-1116 (Murray/Nicholson)

Key Elements of the Bill

  • The bill requires entities that provide timeshare resale services to disclose the following information to the owner of the resale time share and makes failure to disclose a deceptive trade practice:
    • contact information for the time share resale entity and any agent or third-party service provider who will perform any time share resale services for the entity
    • a legal description of the resale time share
    • a description of the method or documentation by which the transfer of the resale time share will be completed
    • if the owner of the resale time share will retain any interest in the resale time share, a description of the interests retained by the owner of the resale time share
    • a listing of any fees, costs, or other consideration that the owner of the resale time share must pay or reimburse for performance of the time share resale service
    • a statement that the time share resale entity and its affiliates and agents will not collect from the owner of the resale time share any fees, costs, or other consideration until the entity provides the owner a copy of the recorded deed clearly demonstrating the transfer of the resale time share and a written acknowledgment from the association of time share owners or other responsible person that the time share resale entity has complied with the association's policies governing the transfer of resale time shares, if any
    • and more
  • The bill would  also have defined the following activities as deceptive trade practices in the advertisement or sale of a time share or the provision of a resale time share service:
    • making false or misleading statements in connection with a time share resale service
    • making false or misleading statements concerning the method or source from which the name, address, telephone number, or other contact information of the owner was obtained
    • making false or misleading statements concerning the identity of the time share resale service entity or that entity's affiliates or the terms and conditions upon which the time share or the time share resale services are offered

Defeated - Uniform Residential Landlord & Tenant Act– SB12-70 (Aguilar/Wilson)

Key Elements of the Bill

  • Creates obligations of good faith
  • Details the effect of an unsigned or undelivered rental agreement
  • Prohibits certain provisions in rental agreements
  • Establishes a landlord's obligation to
    • make disclosures
    • deliver possession
    • maintain a premises
  • Establishes a tenant's obligation to
    • maintain a dwelling unit
    • allow a landlord access
    • to use and occupy
  • Addresses rules and regulations adopted by a landlord
  • Provides a tenant with remedies for a landlord's noncompliance
  • Provides a landlord with remedies for a tenant's noncompliance
  • Prohibits retaliatory conduct and more

2013 Legislation Expected

Enforcement of CCIOA and Governing Documents.  Based on owner complaints to the HOA Information Office and Resource Center, as well as complaints owners make to their legislators about their problems enforcing their rights under the governing documents and applicable parts of CCIOA, legislation to ease enforcement of those rights is expected in 2013.

Manager/Management Company Credentialing or Licensure?  The Community Associations Institute (CAI) through its Colorado Legislative Action Committee decided not to pursue a bill to regulate managers in 2012.  CAI made this decision after the state, through its Department of Regulatory Agencies (DORA), concluded that the best course of action is to regulate management companies, not managers.

The state published that report as a part of a “Sunrise Review” on whether licensing of community association managers in Colorado is necessary.  To see a copy of the Sunrise Review Report, visit our website.

A Sunrise Review Application submitted by CAI in the fall of 2011 recommended the licensing of community association managers.  Currently, community association managers are unregulated.  The state disagreed.

In its report issued March 2, 2012, DORA examined whether managers pose potential harm to the residents and owners in community associations.  DORA also examined the financial costs associated with potential regulation.

In the spring of 2012, CLAC concluded that state regulation of management companies would not provide protection to all Coloradoans living in homeowners’ associations.

DORA’s conclusion that “for the most part, community association’s contract with ‘management companies’ not individual community managers” does not accurately reflect the fact that many Colorado associations retain the services of managers who are not affiliated with a management company.

A bill, on possible regulation or licensure of managers and/or management companies, is possible in 2013, but is not probable.

Notice Requirement (to all Members) of Board Meetings.  As a result of complaints received, some sort of notice of board meetings to members or limitations on board meetings may be sought.

Transparency.  This topic may also generate a bill, based on complaints filed with the State office.

Governance Policies.  Since governance policies were required of some HOAs in 2005, the legislature has returned to this topic several times.  As such, a bill on this topic may also be introduced in 2013.  Nine policies are now required to be maintained by most HOAs (those not exempt from this requirement).  These are:

  1. Collection of Assessments
  2. Conduct of Meetings
  3. Records Inspection
  4. Investment of Reserves
  5. Reserve Studies and Funding
  6. Covenant and Rule Enforcement
  7. Dispute Resolution (ADR)
  8. Conflicts of Interest
  9. How Policies are Adopted and Amended

Political Context of Common Interest Communities and HOAs  

Legislators hear frequently about issues in HOAs and their interest in responding to constituent complaints remains high and is not typically partisan.

Many legislators have served on the board of directors of an HOA.

Political Recommendations to HOAs

HOAs, their board members and management should reach out to their state legislators, in the State House of Representatives and in the State Senate.  A relationship with your legislators is critical, before it is needed.  Then, when an issue arises, it can be better addressed.

To find your state legislator, visit Project Vote Smart’s website at http://www.votesmart.org and follow the directions.  After you find out who they are, contact your state legislators!  Perhaps your HOA can invite your legislators to a board meeting, member meeting, community picnic or other event.

If an issue arises with either of your state legislators, refer the resident and/or the legislator to the CLAC.  The CLAC and its lobbyists, have extensive relationships with legislators.  The CLAC has created several suitable circumstances in which to articulate our policy positions, build mind-share and work with legislator champions to advance and protect the interest of those whom we serve.

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