CCIOA 101 for HOA Boards: Covenants and Rules Enforcement Policy
Earlier this week, I blogged on the requirements in the Colorado Common Interest Ownership Act (“CCIOA”), that HOAs must adopt as a Reserve Study Policy and Conflicts of Interest Policy and what those policies must contain. As one of the Nine Responsible Governance Policies, C.R.S. 38-33.3-209.5 also requires HOAs to adopt a Covenants and Rules Enforcement Policy which should contain, at a minimum, provisions which address the following items:
● Notice and hearing procedures which must be followed prior to the association imposing fines for covenants and rules violations
● A schedule of fines which may be assessed
● A fair and impartial fact finding process concerning whether the alleged violation actually occurred and whether the owner is the one who should be held responsible for the violation. While this process may be informal, at a minimum it must guarantee that the owner has notice and an opportunity to be heard before an impartial decision maker.
● The definition of impartial decision maker which “means a person or group of persons who have the authority to make a decision regarding the enforcement of the association’s covenants, conditions, and restrictions, including its architectural requirements, and other rules and regulations of the association and do not have any direct personal or financial interest in the outcome. A decision make shall not be deemed to have a direct personal or financial interest in the outcome if the decision maker will not, as a result of the outcome, receive any greater benefit or detriment than will the general membership of the association.”
● If as result of the fact finding process it is determined that an owner should not be held responsible for the alleged violation, the association shall not allocate to the unit owner’s account any of the association’s costs and attorney fees incurred in asserting and hearing the claim. Regardless of any provision in the association’s governing documents, the unit owner shall not be deemed to have consented to pay such costs and fees.
As you can tell, the enforcement of covenants and rules is a procedural process that can result in complications and unintended consequences. As a result, it is highly recommended that HOAs work with their legal counsel to effectively draft and comply with the Covenants and Rules Enforcement Policy.