Colorado Homeowners Association Law Blog

House Bill 1237 (“HB 1237”), the HOA records bill, has been prepared to be sent to Governor Hickenlooper for action. Based upon the bipartisan support the bill has enjoyed, we fully expect the Governor to sign HB 1237 into law. Once that happens, the bill will become effective on January 1, 2013. 

In addition to the advice Suzanne Leff gave in her blog on Monday, this short series of blog entries will provide guidance to managers, management companies and HOA board members on what you need to know to be prepared to comply with the new law. 

Beginning on January 1^st, here is a list of the records which HB 1237 requires associations to maintain and produce to owners upon request:

With the passage of HB 12-1237 during the final hours of the 2012 legislative session last week, associations moved one step closer to new requirements concerning the official records that they must make available to owners upon request. We fully expect this bill to clear the final hurdle on its way to becoming law. Once HB 12-1237 is signed into law by Governor Hickenlooper, associations will have until January 1, 2013, to implement new records policies and practices.

It's not too early for associations to start reviewing their mandatory inspection and copying of records policies and making necessary updates before the effective date of HB 12-1237. All associations should have clear policies that do the following:  

1. Ensure availability of all documentation expressly declared a "record" by statute plus any additional records defined in an association's governing documents
2. Exclude specific documents from owner review

The biggest change most associations will make to their policies involves the removal of any requirement that owners state a "proper purpose" before getting access to records. Under HB 12-1237, associations must maintain certain records, and owners are entitled to access that information. Associations can help minimize the impact of owner requests for records on other association business by adopting clear policies, keeping records up to date, and making documents easily accessible.

Following an implosion in the House last night over legislation on civil unions that ultimately killed over 30 other bills, CAI's Colorado Legislative Action Committee ("CLAC") became concerned about whether time would run out on this last day of the legislative session to take up the the HOA records bill - HB 1237.  With the sands in the hourglass running low, we are pleased to report that the House has just concurred with the Senate amendments to HB 1237 and voted to repass the bill!  That means HB 1237 will be prepared and sent over to Governor Hickenlooper for action.  Since the bill was unanimously passed by the House and Senate on 3rd reading and is not controversial in nature, we expect Governor Hickenlooper to sign HB 1237 into law which will become effective on January 1, 2013. 

CLAC will be partnering with the Rocky Mountain and Southern Colorado Chapters of CAI to present classes on the new law.  Managers, management company representatives and boards of HOAs will want to attend these classes to be prepared to comply with HB 1237 by the first of the year.  Keep an eye on this blog and the Rocky Mountain and Southern Colorado Chapter websites for information on these classes as they are scheduled. 

We will also be providing a synopsis of HB 1237 on this blog in the near future!

HB 1237 (the HOA records bill) just unanimously cleared the Senate on 3rd reading!  The bill will now be sent back to the House for concurrence.  We believe the bill will clear this final legislative hurdle in the House before the legislative session adjourns next Wednesday and will then be sent to Governor Hickenlooper to be signed into law. 

Stayed tuned for the latest updates on HB 1237 and a comprehensive review of the bill once it makes it through the legislative process. 

After getting bogged down on the Senate calender as we approach the end of the legislative session next week, House Bill 1237 (the HOA records bill) was just heard this afternoon and passed by the Senate on second reading.  HB 1237 is expected to be heard by the Senate on 3rd reading as early as tomorrow morning.  The bill was amended in the Senate today to:

1.  Clarify the provision of the bill addressing records relating to actions taken outside of a board meeting;

2.  Clarify that email addresses of board members must be produced to owners upon request;

3.  Clarify the ability of owners to use a normal records request to obtain basic records from the association - even if there is pending or threatened litigation.  However, attorney client privileged documents, documents which fall under the attorney work product doctrine and documents relating to executive session are still protected from production;

4.  Clarify that contracts for work performed within the "immediate preceding 2 years" must be produced upon request.  However, contracts that are under negotation are not required to be produced to owners.

As a side note, some folks have speculated that HB 1237 was not taken up by the Senate earlier because of substantive concerns with the bill. Some folks have even speculated that the bill would likely be killed in the Senate.  While there have been some amendments in the Senate to clean-up provisions of the bill, HB 1237 has enjoyed bipartisan support in both the House and Senate.   

Once HB 1237 has been passed on 3rd reading by the Senate, it will be sent back to the House for concurrence.  We fully expect the House to approve the Senate amendments and vote for final passage of the bill.  HB 1237 will then be sent to Governor Hickenlooper to be signed into law. 

We will continue to provide you with important updates on the bill as it proceeds through the final phases of the legislative process.  Once the bill has been signed into law, we will provide you with comprehensive information on steps homeowners' associations, managers and management companies should take to comply with the new law which will go into effect on January 1, 2013. 

Colorado law provides that an association is entitled to a super-priority lien “super lien” for assessments which would have come due during the six months immediately preceding the filing of a foreclosure action by an association, or a party holding the first Deed of Trust.

As we reach the end of our journey in outlining the 8 traits of highly effective HOA directors, it’s appropriate to recap the first 7 traits that make these individuals outstanding participants in the governance of their homeowners’ associations (“HOAs”). So here’s a recap from the beginning: 

Trait #1: It’s all about the HOA and not about their personal agenda. 

A highly effective director understands that he/she has a fiduciary duty to act in the best interests of the association as a whole and is able to put aside his or her personal interests or agenda on any given issue. A highly effective director is also able to put the interests of the association ahead of the interests of neighbors or friends.

Trait #2: A highly effective director never attends an association meeting without having the governing documents of the association close at hand and routinely consults the documents for guidance.

A highly effective director understands that he/she has a duty to comply with and enforce the governing documents of the association. A highly effective director understands and is committed to consulting the governing documents of the association prior to making decisions. These directors always have the declaration, bylaws, SB 100 policies, and the rules and regulations of their association available for review at all meetings.   

Yesterday our own Congressman from Colorado, Ed Perlmutter (D, 7th District), sent an outstanding letter to Carol Galante (Acting Federal Housing Commissioner and Assistant Secretary for Housing with HUD) addressing some very real problems with the current FHA certification requirements.  Congressman Perlmutter called on Acting Commissioner Galante to revisit the FHA certification requirements relating to:

" ● No more than 15 percent of the units in a development may be 30 days or more delinquent on their association assessments, including REO

● Extending the certification approval beyond two years

● Clarifying the mandatory association legal certification and lowering the penalty below $1 million and 30 years in prison

● Denial of FHA-insured loan for units in buildings with more than 25 percent commercial space

● Requiring an owner occupancy rate of 50 percent, including REO."

CAI's Colorado Legislative Action Committee ("CLAC") met with the Congressman earlier this year to discuss our concerns that the current FHA certification requirements are making it extremely difficult for condomiminium associations to obtain project approval from HUD which has chilled the sale of condominium units in Colorado.  CLAC's ongoing efforts were assisted by communications to the Congressman's staff by Aaron Acker, the HOA Information Officer for Colorado. 

As a member of the powerful House Financial Services Committee, Congressman Perlmutter's call on Acting Commissioner Galante to act will be extremely helpful in CAI's efforts to make FHA certification of condominium projects more reasonably obtainable. 

Please join CLAC in thanking Congressman Perlmutter for his outstanding efforts on this matter by emailing him with your thanks!

As we enter the homestretch in outlining the 8 traits of highly effective HOA directors, I have to say that I’m thrilled at the number of hits this series of blog entries has received. I suspect the issue of governing effectively is a hot topic because it’s just not that easy to govern HOAs in these tough economic times. Directors are looking for the “secret to success” and unfortunately there’s no silver bullet. However, we hope that at least a few of the traits we have outlined in this series will resonate with directors who may be struggling and help point them in the right direction. 

The 7^th trait of a highly effective director requires these individuals to not only deal with the issues of the day – but to look strategically toward the future.