Debunking the Myths of SB 177: Installment Number 2

A week ago, I started a series of blog entries intended to debunk the myths being disseminated on Senate Bill 15-177 (“SB 177”) by a coalition of special interest groups led by the Metro Mayors Caucus and Denver Chamber of Commerce. This coalition has one goal and that is to destroy the rights of homeowners to adequately recover from builders for construction defects to their homes. 

The first debunked myth was that SB 177 will promote the construction of quality affordable housing. While it certainly didn’t take a rocket scientist to debunk that myth, the spin on affordable housing was just the tip of the iceberg for this coalition.

 

Myth Number 2: SB 177 Will Protect the Right of Homeowners and Builders to Rely Upon the Fundamentally Fair Arbitration Provisions in the Declaration

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DORA Makes Rules Permanent

Following the rule making hearing last week, and much input from industry stakeholders, on March 9, 2015, the Colorado Department of Regulatory Agencies (DORA) adopted the permanent rules regarding managing licensing, effective upon expiration of the temporary rules on May 6, 2015. You can find the revised rules here: http://cdn.colorado.gov/cs/Satellite/DORA-DRE/CBON/DORA/1251651466155. Posted In From Capitol Hill/Legislation
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Roll Out the Barrel!

House Bill 15-1259  ("HB 1259") was just introduced in the Colorado House of Representatives to permit the use of rain barrels to collect water to irrigate lawns and gardens.  While there's little question that this bill would affect water rights, from the HOA perspective, HB 1259 would also make it impossible for HOAs to prohibit the use of rain barrels "to collect precipitation from a residential rooftop . . ." 

The rooftops contemplated by HB 1259 include the roofs of single family homes and "an individual residence that is part of a row of residences joined by common sidewalls."  In many cases, row houses are created as condominiums in Colorado.  That means the roof of such a row house would not be part of the unit which the homeowner purchases.  Instead, the rooftops would be common elements that are commonly owned by all of the owners of condominium units in the association.  In this context, the condominium association (not an individual homeowner) should be the entity to collect and utilize the water on behalf of all of the owners in the community.

In the HOA context, there is also the question of liability to consider.  What happens if a child were to drown in a rain barrel located on the common elements of a condominium association?  There is no doubt the association would be sued.  Why should the HOA be held liable for such a horrific event if the association cannot regulate or prohibit the placement of rain barrels on common elements? 

While there is no doubt that HB 1259 is well intended, from the HOA perspective there would be many unintended and potentially costly consequences.   

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No News is Good News

You've probably heard the news by now--an HOA refused to allow Make-A-Wish to grant a young cancer patient's wish by constructing a playhouse in the girl's back yard. The reason? Outbuildings are against the covenants. Of course, the HOA ends up taking the heat with press coverage and outspoken support for the sympathetic young girl.

The story has quickly blown up, with multiple sources reporting the details. One source reports that the HOA board member names and telephone numbers have been removed from the association's website. Other stories give updates on the HOA's reconsideration of the matter and willingness to compromise after talking with Make-A-Wish and the construction contractor.

For now, it sounds like one young girl will get her wish. It remains to be seen whether other kids in the neighbor will be permitted to have their own playhouses constructed or what kind of pressure the volunteer board members will face from neighbors who do not appreciate the compromise in this case. Unfortunately, boards can come under fire even when following the rules and fairness to others guide their decision-making.

We've previously written about what to do if your HOA ends up in the news (because we all know that making the headlines is rarely, if ever, a good thing). But, on this Friday afternoon, I'm curious about how you and your association may have handled the playhouse wish differently to avoid the headlines from the start. Ideas?

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Manager Licensing Class Registration

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As you all know, the July 1st deadline for Colorado community association manager licensing is fast-approaching. We’re hearing a lot of “buzz” about the Colorado law portion of the licensing exam. Many managers have asked for a consolidated review of Colorado laws to help prepare for the test. With your requests in mind, we are excited to announce classes on the areas of Colorado law that community association managers need to know.

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Division of Real Estate Releases Changes to Proposed Rules

As you probably know, the Colorado Division of Real Estate is holding a hearing on permanent rule-making for manager licensure on Wednesday, March 4, 2015 at 10:00 am at the Ralph L. Carr Colorado Judicial Center in Conference Room 1D.

In advance of this hearing, the Division has released the following changes to the proposed rules which were originally published.  The first changes relate to proposed rule D10 which now allows management companies to be named as an "additional insured" on the fidelity coverage which associations are required to carry.  The level of fidelity coverage required to be carried has also been revised. You will also notice that the initial license renewal period (proposed rule D1), annual renewal (proposed rule D2) and reinstatement timeframe (proposed rule D5) have also been revised. 

Finally, minor revisions were made to proposed rule B1 relating to when continuing education is required. 

A big hat goes off to CAI's Manager Licensure Task Force for their diligent work on the issue of fidelity insurance coverage.  Your work has made a huge difference for management companies in Colorado!

 

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Debunking the Myths of SB 177: Installment Number 1

A coalition of special interest groups, led by the Metro Mayors Caucus and Denver Chamber of Commerce, are behind the introduction of Senate Bill 15-177 (“SB 177”). While this bill was brilliantly crafted to provide immunity to builders for their construction defects, the spin being put on this bill is equally brilliant. In order to debunk the spin which has taken on mythical proportions, I believe it is essential to shine a light on their myths – one myth at a time.

Myth Number 1: SB 177 Will Promote the Construction of Quality Affordable Housing

 

If SB 177 passes both chambers of the Colorado General Assembly and is signed into law, there is no question that it will promote the construction of all housing - including affordable housing. What developer wouldn’t want to build homes if they won’t be held responsible for their construction defects? However, it doesn’t take a rocket scientist to figure out that providing builders with immunity does not promote quality construction. 

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Topics to Study for State Law Portion of Licensure Examination Clarified

A big thanks goes out to the Colorado Division of Real Estate for clarifying those portions of Colorado law which community association managers should study to prepare for the licensure examination!  To review this important information, check out the State Portion Content Outline in this Community Association Manager Candidate Information Bulletin from PSI which has been published on the website of the Division of Real Estate. 

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Division of Real Estate Publishes 2014 Annual Report

The Colorado Division of Real Estate has published the 2014 Annual Report of the Colorado HOA Information and Resource Center.  This report provides a great deal of information on the registration of HOAs in Colorado and a general overview of complaints received by the HOA Information & Resource Office ("Office") relating to associations.

You will notice that during 2014, the Office received 1,440 complaints relating to HOAs.  Interestingly, those 1,440 complaints were registered by only 409 complainants.  Given the fact that there are an estimated 2 million individuals living in HOAs in Colorado, receiving complaints from just 409 individuals is an extremely low number. 

It is also important to note that HOA Information Officer has no statutory authority to investigate complaints which are registered with the Office.  While there is no doubt that some of the complaints are absolutely valid, without the authority to investigate the complaints, it is impossible to get a real estimate of the true number of meritorious complaints.   

The Division of Real Estate has the authority to investigate complaints brought against real estate brokers.  Of the complaints that are investigated, it's my understanding that about 80 to 85 percent of those complaints are determined to be without merit.  If complaints regarding HOAs were investigated, it would be interesting to see what percentage of those complaints were ultimately determined to be valid.  Prior to proceeding with the regulation of HOAs, this information would be critical from a public policy perspective.  

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Representative Roupe's Foreclosure Bill Clears First Hurdle!

In an unexpected and outstanding turn of events, the House State, Veterans & Military Affairs Committee, in a bipartisan 6 to 5 vote, reported an amended version of House Bill 15-1113 ("HB 1113") out of Committee yesterday with a favorable recommendation to the full House of Representatives. 

As originally introduced by Representative Kit Roupe (R-Colorado Springs),  HB 1113 would have protected HOAs in Colorado from the financial consequences of lenders repeatedly pushing out the sale dates of public trustee foreclosures, by requiring lenders who continue the foreclosure sale date to pay the assessments on the unit they are foreclosing upon until the lender actually sells the home in foreclosure.  HB 1113 was amended in Committee to require lenders to pay assessments if the lender withdraws the foreclosure and then refiles the foreclosure at a later date.  Under this scenario, the lender would be required to pay the assessments upon refiling the foreclosure until the home is actually sold. 

Given the fact that the bankers have strongly opposed this bill, it's going to be a real battle to keep this bill from being killed on the floor of the House.  Stay tuned to this blog for important updates on HB 1113 as it continues through the legislative process. 

 

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