An option for proposed Declaration Amendments
Special, Restricted Ability of Courts allowed for under CCIOA
A part of the Colorado Common Interest Ownership Act (CCIOA) allows Colorado District Courts a special, restricted ability to amend Declarations by Court order.
This Court petition process is available to common interest communities subject to C.R.S. Section 38-33.3-217(7). This unique procedure became law May 19, 1999.
When to consider the Court petition process?
Consider the Court petition process to approve a proposed Declaration amendment if:
- the required approvals of the owners have not been obtained, and/or
- required approvals of first lien lenders have not been obtained – the Court petition process should only be considered in the absence of first lien lender approvals if the existing Declaration requires first lien lender approvals
If either or both owner and lender approvals are required and have not been obtained then the Court petition process is an option for the Association.
Other options also exist, so check with the attorney for the Association.
How does an HOA qualify to seek Court approval of a proposed Declaration Amendment?
The statute allows an Association to apply to a District Court to amend its Declaration, by Court order, after it has taken the following steps:
- a proposed amendment to the Declaration must be prepared
- all owners have received at least two notices (by any means consistent with the Colorado Revised Nonprofit Corporation Act) of the proposed amendment from the Association
- the Association must hold at least one member meeting (called and held in accordance with the Association’s governing documents) to discuss the proposed amendment
- at least half the owners required under the existing Declaration must vote for the proposed amendment (i.e., if approval of 90% of the owners is currently required, then the procedure of petitioning a Court for approval of the proposed amendment can be begun once 45% of the owners have voted for the proposed amendment)
Lender Approval of the Proposed Amendment is not a prerequisite.
Lender approval of a proposed Declaration amendment is not required to begin the petition process to the Court, even if lender approval is required by the existing Declaration.
Action of the Board, after prerequisites are met.
With the criteria listed above met, the Association, acting through its Board of Directors, may file a petition with the Court. The Association then requests that the Court approve the proposed Declaration amendment.
Due Process, After the Petition is filed.
After the petition is filed, the Court sets a hearing date on the petition.
After the hearing is set the Association sends written notice of the petition and of the hearing to all owners. This notice is also to be send to the Developer/Builder (Declarant). Notice of the hearing is also to be sent to any lender who is entitled to notice of a Declaration amendment under the Declaration or under underwriting guidelines or requirements of the lender or FNMA, FHLMC, FHA, VA or GNMA.
The Court Order approving the Amendment.
The Court must grant the petition and approve the proposed Declaration amendment if the Association has complied with statutory requirements and objections allowed by statute are not filed with the Court.
The Court is not allowed to approve the proposed Declaration amendment if:
- objections are filed by more than 33% of the owners
- objections are filed by more than 33% of the eligible lenders
- the Declarant objects
- if the proposed Declaration amendment would eliminate any Declarant rights or privileges or if the Declarant is entitled to vote on the proposed amendment, or
- FHA or VA objects
- if the Community has been approved by FHA or VA to allow owners to be able to obtain FHA insured loans or VA guaranteed loans
Questions on this statute or the process to be followed?
Contact an experienced and qualified HOA attorney.