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 1st, here is a list of the records which HB 1237 requires associations to maintain and produce to owners upon request:
]]>●Records specifically defined in the association’s declaration or bylaws;
●Records the association is required to disclose within 90 days after the end of the fiscal year as required by CCIOA;
●Detailed records of receipts and expenditures affecting the operation and administration of the association;
●Records of claims for construction defects and amounts received pursuant to settlement of those claims;
●Minutes of all meetings of its owners and board, a record of all actions taken by the owners or board without a meeting, and a record of all actions taken by any committee of the board;
●Written communications among, and votes cast by, board members that are: (i) directly related to an action taken by the board without a meeting pursuant to the Colorado Revised Nonprofit Corporation Act; or (ii) directly related to an action taken by the board without a meeting pursuant to the association’s bylaws;
●A list of the names of all owners and the physical mailing addresses at which the association communicates with them, showing the number of votes each owner is entitled to vote;
●The association’s current declaration, covenants, bylaws, articles of incorporation, rules and regulations, responsible governance policies and other policies adopted by the board;
●Financial statements for the past 3 years and tax returns of the association for the past 7 years;
●A list of the names, email addresses and physical mailing addresses of the current board members and officers;
●The most recent annual report (if any) delivered to the Secretary of State;
●Financial records sufficiently detailed to enable the association to provide an owner with a written statement stating the amount of unpaid assessments currently levied against the owner’s unit;
●The association’s most current reserve study (if any);
●Current written contracts to which the association is a party and contracts for work performed within the past 2 years;
●Records of board or committee actions to approve or deny any requests for design or architectural approval from owners;
●Ballots, proxies and other records related to voting by owners for 1 year after the election, action or vote;
●Resolutions adopted by the board relating to the characteristics, qualifications, limitations, and obligations of members;
●All written communications within the past 3 years sent to all owners.
While this list represents records routinely maintained by associations, we recommend that managers, management companies and HOA boards use the bullet points as a checklist to determine whether you are currently maintaining these records and are prepared to produce them beginning in January.
Stay tuned to this blog for more entries in this series relating to: (1) records which may be withheld from production to owners; (2) records which must be withheld from production to owners; (3) procedures for homeowners to request records; and (4) what associations may charge owners for producing records.
]]>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.
]]> While HB 12-1237 clarifies what constitutes a record, it gives rise to new questions that associations should consider, like, "How long do we need to keep all these documents?" and "As a board member, am I required to give owners my email address at work?" These questions, and others, suggest that associations should look beyond the standard inspection and copying of records policies and consider other operational matters, includingWith some planning and consideration of the issues now, associations can tackle the new records requirements in ways that will give owners access to information without bogging down association business with copy and inspection requests.
If you have questions as your association considers its policies and practices, contact one of our attorneys for assistance. Also, stay tuned for classes about this new legislation taught by members of the Community Associations Institute's Colorado Legislative Action Committee.
]]>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!
]]>Before joining WLPP, Mark was a sole practitioner in Littleton, Colorado from 1992 through 1997, and before that, he practiced in a small general practice firm in Greenwood Village, Colorado, where he focused on real estate and business transactions, and commercial litigation.
Mark graduated from the University of Denver in 1978 earning his B.S.B.A., magna cum laude, with a major in Real Estate and Construction Management, and graduated from the University of Denver, College of Law in 1982. He is a member of the American, Colorado and Arapahoe County Bar associations, and is admitted to practice in Colorado state and federal courts. To contact Mark directly, you may email him at mpayne@wlpplaw.com.
]]>Stayed tuned for the latest updates on HB 1237 and a comprehensive review of the bill once it makes it through the legislative process.
]]>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.
]]>However, under C.R.S. 38-33.3-316(8), the association must furnish, upon written request delivered personally or by certified mail, first-class postage prepaid, return receipt requested, a written statement setting forth the amount of unpaid assessments currently levied against the particular unit. The statement must be furnished within fourteen calendar days after receipt of the request and binds the association, the executive board, and every unit owner. In addition, the association must send its response via certified mail, first-class postage prepaid, return receipt requested, to the inquiring party. Failure to do so may jeopardize the association’s right to assert a super lien against the unit.
If a file is already with the association’s attorney, the Board or manager will need to provide a copy of the request to the attorney as soon as it is received. Failure to do so could harm the association’s financial affairs, and could be a violation of duties to the association. Don’t ignore those letters that you receive, and don’t delay! The difference could be a full six months’ worth of otherwise unpaid and uncollectable assessments.
]]>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.
]]>
Trait #3: A highly effective director asks constructive questions and is an outstanding listener.
A highly effective director never believes their opinion is the only reasonable opinion and their solution is the only correct solution. Instead, a highly effective director always approaches issues and solutions in an open-minded way. These directors understand the value of soliciting input from others and really listening to what others have to say. Highly effective directors always listen respectfully to others and don’t interrupt them. These directors understand when homeowners feel strongly about an issue and give them an opportunity to express their concerns and even anger. A highly effective director never permits their personal feelings about an individual to interfere with actively listening to that individual and giving their input fair consideration.
Trait #4: A highly effective director never acts as a Lone Ranger.
A highly effective director understands that he/she is only one member of a board of directors and has very little (if any) authority to make independent decisions on behalf of the board. These directors (including officers of the HOA) understand that any individual authority they may have is set forth in the governing documents of the association or is conveyed to the individual through formal action by the board. A highly effective director never makes promises to homeowners or others on how the board will act on any given issue. Instead, these directors invite homeowners to attend meetings of the board to provide constructive input on issues that are important to them. A highly effective director never enters into contracts or binds the association to any particular action unless the governing documents provide the director with this authority or without first obtaining board approval.
Trait #5: A highly effective director passionately debates issues in the board room and then supports the ultimate decision of the board.
A highly effective director understands that the board room is the place to debate association issues. While these individuals are passionate proponents for their position, they are always constructive in their presentation and never engage in verbal attacks. If the board of directors votes to take a different approach than the position they advocated for, these directors understand that it’s in the best interests of the association to speak with “one voice” and will never cause dissention in the community over the decision. Highly effective directors will support the decision within the community or if they cannot do so – they will say nothing at all.
Trait #6: A highly effective director is committed to governing with transparency.
A highly effective director understands and embraces the fact that their HOA is made up of members who have a right to observe the governance process and provide input to the board prior to important decisions being made. These directors do not use “working sessions” as an excuse for holding closed meetings. Instead, these highly effective directors provide notice to members of regular board meetings and invite their attendance. These individuals also understand that routinely carrying out the governance of their association via email does not promote the transparent governance of their association and should only be utilized when necessary. A highly effective director understands and complies with the open meeting requirements under the Colorado Common Interest Ownership Act (“CCIOA”) and the right of members to speak to an issue prior to a vote being taken by the board.
Trait #7: A highly effective director strategically looks at and plans for the future.
A highly effective director understands that the directors of the HOA cannot afford to put their heads in the sand and not look to the future. Instead, these individuals encourage their boards to effectively address the issues of the day and to engage in strategic planning to look at the strengths, weaknesses, opportunities and threats (SWOT Analysis) facing their association and to appropriately set achievable goals and objectives to meet them. Highly effective directors encourage their boards to keep their eye on the ball and follow through with these goals and objectives. These individuals understand the financial and operational consequences of not planning for the future.
The final trait of a highly effective director addresses the importance of ethics and integrity in the governance of HOAs.
Trait #8: A highly effective director discloses and properly handles conflicts of interest.
A highly effective director is familiar with and complies with the SB 100 policy of his/her HOA relating to board member conflicts of interest. These individuals understand when they must recuse themselves from discussing and voting on matters relating to potential conflicts of interest. Highly effective directors understand that any monetary benefit the director, a family member or related business entity may ultimately receive relating to a business transaction with the association must first be disclosed to the entire board of the HOA before a decision is made on whether to enter into the transaction. These directors also understand that covenant enforcement actions against residents of the HOA which would uniquely benefit the director are also conflicts of interest and the director should recuse himself/herself from acting as an impartial decision maker on these enforcement matters. Highly effective directors never attempt to unduly influence other directors for personal or financial benefit.
We hope you have found this series of blog entries on highly effective directors useful. Stay tuned for a new series we will be starting soon addressing "homeowner bill of rights" types of provisions in the Colorado Common Ownership Interest Act ("CCIOA") that every board needs to be aware of and comply with.
]]>" ● 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!
]]>The 7th 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.
]]>Trait #7: A highly effective director strategically looks at and plans for the future.
A highly effective director understands that the directors of the HOA cannot afford to put their heads in the sand and not look to the future. Instead, these individuals encourage their boards to effectively address the issues of the day and to engage in strategic planning to look at the strengths, weaknesses, opportunities and threats (SWOT Analysis) facing their association and to appropriately set achievable goals and objectives to meet them. Highly effective directors encourage their boards to keep their eye on the ball and follow through with these goals and objectives. These individuals understand the financial and operational consequences of not planning for the future.
Stay tuned for the final trait of highly effective HOA directors!
]]>To recap, here’s where we have been on our journey thus far:
Trait #1: It’s all about the HOA and not about their personal agenda.
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.
Trait #3: A highly effective director asks constructive questions and is an outstanding listener.
Trait #4: A highly effective director never acts as a Lone Ranger.
Trait #5: A highly effective director passionately debates issues in the board room and then supports the ultimate decision of the board.
]]>This next trait recognizes that members of an association, who are homeowners, have a personal stake in the governance of their communities and a right to observe and appropriately participate in the governance process.
Trait #6: A highly effective director is committed to governing with transparency.
A highly effective director understands and embraces the fact that their HOA is made up of members who have a right to observe the governance process and provide input to the board prior to important decisions being made. These directors do not use “working sessions” as an excuse for holding closed meetings. Instead, these highly effective directors provide notice to members of regular board meetings and invite their attendance. These individuals also understand that routinely carrying out the governance of their association via email does not promote the transparent governance of their association and should only be utilized when necessary. A highly effective director understands and complies with the open meeting requirements under the Colorado Common Interest Ownership Act (“CCIOA”) and the right of members to speak to an issue prior to a vote being taken by the board.
Stay tuned this week for the final 2 traits of highly effective HOA directors!
]]>If you are reading this series of blog entries for the first time on the traits that make a director highly effective in participating in the governance of their homeowners’ association (“HOA”), check out this blog entry to catch-up on the first 4 traits.
]]>Trait #5: A highly effective director passionately debates issues in the board room and then supports the ultimate decision of the board.
A highly effective director understands that the board room is the place to debate association issues. While these individuals are passionate proponents for their position, they are always constructive in their presentation and never engage in verbal attacks. If the board of directors votes to take a different approach than the position they advocated for, these directors understand that it’s in the best interests of the association to speak with “one voice” and will never cause dissention in the community over the decision. Highly effective directors will support the decision within the community or if they cannot do so – they will say nothing at all.
Have a great weekend everyone and we invite you to keep an eye on our blog for more traits of highly effective directors, updates on HB 1237 and entries on other association issues of interest.
]]>Trait #1: It’s all about the HOA and not about their personal agenda.
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.
Trait #3: A highly effective director asks constructive questions and is an outstanding listener.
For those of you who remember the radio show the Lone Ranger, you’ll have to forgive me for using the hero in this next trait of a highly effective director. While I may not have the concept of the show quite right, I hope you will give me a pass on this one!
]]>Trait #4: A highly effective director never acts as a Lone Ranger.
A highly effective director understands that he/she is only one member of a board of directors and has very little (if any) authority to make independent decisions on behalf of the board. These directors (including officers of the HOA) understand that any individual authority they may have is set forth in the governing documents of the association or is conveyed to the individual through formal action by the board. A highly effective director never makes promises to homeowners or others on how the board will act on any given issue. Instead, these directors invite homeowners to attend meetings of the board to provide constructive input on issues that are important to them. A highly effective director never enters into contracts or binds the association to any particular action unless the governing documents provide the director with this authority or without first obtaining board approval.
What will be the 5th trait of a highly effective HOA director? Stay tuned to find out!
]]>
Trait #1: It’s all about the HOA and not about their personal agenda.
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.
I believe the next trait of a highly effective director may well be one of the most important traits in effective governance. This trait requires a director to suspend his/her ego and their own ideas of whether an issue in their HOA is truly a problem and how to best address the problem.
]]>Trait #3: A highly effective director asks constructive questions and is an outstanding listener.
A highly effective director never believes their opinion is the only reasonable opinion and their solution is the only correct solution. Instead, a highly effective director always approaches issues and solutions in an open-minded way. These directors understand the value of soliciting input from others and really listening to what others have to say. Highly effective directors always listen respectfully to others and don’t interrupt them. These directors understand when homeowners feel strongly about an issue and give them an opportunity to express their concerns and even anger. A highly effective director never permits their personal feelings about an individual to interfere with actively listening to that individual and giving their input fair consideration.
We’ll continue our journey tomorrow in exploring the traits of highly effective HOA directors.
]]>Condominium Project Approval Guidelines
Through contact with key FHA condominium staff CAI has learned additional changes to the condominium project approval process are in the works. Aspects of new FHA condominium guidelines could include the following:
● Assessment Delinquencies—CAI anticipates FHA will modify its standard on assessment delinquencies to allow flexibility for associations. CAI has argued the existing standard that no more than 15 percent of units may be 30 days past due on assessments is too strict. Many condominiums are immediately disqualified from FHA approval by the current standard.
● Certification Statements—
o CAI has voiced strong concerns over the broad and ill-defined obligations association board members take on when signing FHA’s required project approval certification. CAI anticipates FHA will make modest adjustments to its certification to clarify the duties imposed by signing a FHA project approval certification
o CAI does not anticipate FHA will modify the certification to protect signors from making legal determinations or attestations that the condominium is in compliance with all applicable local, state, and federal laws and regulations.
● Investor limits, FHA concentration, and commercial space—CAI anticipates that FHA will offer condominium associations additional flexibility on investor ownership limitations that prohibit ownership of more than 10 percent of units by a single entity. FHA is also studying its current limitations on the percentage of units in a condominium with FHA-insured mortgages. Further, FHA is considering an increase to the current limits on commercial space within a condominium.
● Fidelity Insurance Coverage—CAI continues to work with FHA on the requirement that an association’s property manager be named on the association’s fidelity insurance policy. To date, FHA has maintained that managers must be individually named on an association’s fidelity policy. This has led insurers to treat the matter differently with some insurers adopting FHA’s position, others adapting to the new guidelines but charging associations a fee for the change, while other insurers have strongly objected on the basis of their conclusion FHA’s requirement exposes associations to lapses in coverage.
Transfer Fees
CAI has remained in contact with FHA staff regarding the agency’s view of association transfer fees. FHA ruled in 2010 that all transfer fees violate its regulations and that any property subject to a transfer fee covenant is ineligible for FHA-insured mortgage financing. In response, CAI provided FHA information on the use of transfer fees by associations and the prevalence of transfer fee covenants in community associations across the country.
CAI anticipates FHA will release new guidelines on transfer fees through a mortgagee letter in the coming weeks. FHA has indicated the new policy on transfer fees will permit associations to charge a transfer fee, but with limitations. In general, FHA is likely to allow transfer fees that are used for “administrative” purposes, but is likely to disallow transfer fees that are based on a percentage of a property’s sale price.
CAI will continue to monitor FHA action to regulate the use of transfer fees by community associations to ensure that association homeowners have access to a broad range of housing finance options, including FHA-insured mortgages. Further, CAI continues to express concern that multiple federal regulations on transfer fees will cause confusion and increase regulatory risks for associations and mortgage lenders, which may limit access to mortgage credit for association homeowners.”
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