Colorado Homeowners Association Law Blog

The migration away from paper products is a hot trend these days. The benefits of such a move for a homeowners association are clear - not only does it save trees, it also saves money (less paper, postage, and storage costs). In short, being green saves green. But can an Association truly become paperless? Not yet, but as computer technology and the use of the internet become more and more advanced, the answer is closer to becoming yes. Below are some steps your Association can take to start freeing itself from the paper weight:

Community association board members fill tough roles that require a great deal of attention to association business. We understand that, as board member volunteers, you need guidance from professionals to facilitate informed decision-making, allowing you to uphold your fiduciary duties to the association that you serve. To assist you in evaluating the legal priorities for your community, we have created this Legal Audit checklist. 

Place a check mark in the box beside each statement that applies to your community association.

My community association has . . .

?  adopted the seven mandatory Senate Bill 05-100 policies. 

Senate Bill 05-100 requires all associations to adopt seven different responsible governance policies concerning (1) the adoption and amendment of policies, (2) board member conflicting interest transactions, (3) covenant enforcement and fines, (4) collection of delinquent assessments, (5) conduct of meetings, (6) inspection and copying of records and (7) reserve fund investments.

?  adopted the Senate Bill 06-89 dispute resolution policy. 

Senate Bill 06-89 requires all associations to adopt a policy concerning disputes between owners and the association.

?  updated Senate Bill 05-100 policies to conform to Senate Bill 06-89 requirements. 

Senate Bill 06-89 modified some of the terms of Senate Bill 05-100, creating recommended changes to the responsible governance policies.

When homeowners become delinquent in their assessment payments, their accounts are usually turned over to the association’s law firm for collection. Generally, these delinquent owners fall into one of six categories.

Summer time is the season of vacations, fun and, for many Community Associations, construction.  Most Managers are very thorough and knowledgeable, and have assisted Associations with construction projects. Some Board members have worked in the construction industry and have valuable insights. So why is it wise to involve an independent engineer, architect, or construction expert (here called "engineer") in your Association's repair projects (such as painting, roofing, siding or asphalt projects)? Here are a few reasons for an engineer to be involved on repair or restoration projects in your community:

 After posting the attached entry, the legislature has extended the date the remaining provisions become effective.  They now become effective on January 1, 2008.

One thing about this business – it is full of surprises. One surprise that occasionally comes to light during our course of representing an association has to do with how common expenses are shared. The declaration of restrictive covenants (which imposes the obligation to pay assessments) should describe how expenses of the association are allocated. In fact, CCIOA mandates that the declaration must allocate the various types of allocated interests: the allocation of voting rights; the allocation of burden of common expenses; and in condominiums, the ownership of the undivided interests in the common elements. In a couple of cases recently we’ve discovered that an association is allocating common expenses in a manner that is different from how the declaration specifies.

Issue: A large homeowners association is looking to make repairs to the common area fences within the community. What options are available to them to finance this project?

Background: Recently, the Board of Directors of a large homeowners association called our office to discuss a problem. It seems that they had common area fences that were fairly old and in desperate need of some TLC. Unfortunately they did not have any funds available to make the necessary repairs.    Pursuant to the Association's covenants, the Board was severely restricted in the amount it could set for the annual assessments each year (without approval of at least 2/3 of the members, the covenants limited the annual assessment to a 10% increase from the previous year). As a consequence, the Association's reserve fund was nearly empty. The Board had tried on several occasions to get the members to approve a special assessment, but it was turned down each time. The Board was now wondering what options it had available to pursue.

As legal counsel for community associations, we assist our clients with the various types of conflict that arise in the course of association business activities.  We understand that conflict can sometimes escalate to a level that requires court intervention.  We also know that certain preventative steps can help to alleviate the time, expense, and emotional drain that come with litigation.  In particular, good contract drafting can help to minimize the impact of disputes between associations and their contractors.  We encourage our clients to seek legal advice when entering into contracts for management services, landscape maintenance, capital improvements, and any other project or service that involves a relationship with an independent contractor.  The following reminders come directly from our experience advising community associations:

A bid or proposal form, while legally binding, is not a good contract.  While signing a bid or proposal form may bind the association to pay for services performed by the contractor, the association does not receive any protections as part of the bargain.  We recommend contracts that contain specific provisions which, at the very least, address the scope of work, insurance coverage, payment terms, remedies for default or breach, and attorney fees for the prevailing party in any dispute that may arise under the contract terms.  Bid forms do not typically include these recommended contract terms.

We already know that Colorado has been a consistent national leader when it comes to foreclosures. Not exactly a title we're clamoring for.

A homeowner files bankruptcy, now what? First and foremost, all collection activity must stop in accordance with the Automatic Stay until the case is dismissed, an Order for Relief from Stay is granted, or the debtor receives a discharge. Second, the association must determine what type of bankruptcy has been filed. Individuals commonly file for bankruptcy protection under Chapter 7 or Chapter 13, and the type of bankruptcy will determine what steps an association must take to protect its interests. In this article, we will look at Chapter 7 bankruptcy.

The weather is warm, your Association's pool is prepped for summer, and Memorial Day is just around the corner. Everything is fine until the owners currently contesting their Association debt (the same owners whose case is currently set for trial in one month) call to request the pool key. Their son's birthday falls over the weekend and the whole family will be in town to celebrate at the pool. Your Association documents say the key can be withheld if the account of the owner is not in good standing. Do you give them the key?

This Denver Post article, which looks at several metro-area counties, may help to explain why Colorado is one of several states leading the nation in foreclosures. Jefferson, Adams, Arapahoe, Denver, Boulder, and Broomfield show a 15.4% jump in foreclosures from second quarter numbers last year. In particular, Jefferson County foreclosures are up 32% from last year and Adams County has seen a 34.6% increase.

If your association has been feeling like too many of its delinquent properties have been undergoing foreclosure by lenders, it is not alone. The country is facing increasing foreclosures overall and Colorado, in particular, has been singled out as a problem state (see Colorado among foreclosure leaders - Denver Post - 05/06/2005).

We all know the havoc a lender foreclosure can wreak on the association's collection attempts: if the association decides not to exercise its right to redeem, and thereby take ownership of the property, it loses the right to its lien—perhaps the most potent remedy an association has to collect its assessments—and is entitled only to a super lien worth six months of assessments. Is there anything we can do to limit loss in these situations?