Community Association Legal Audit (Part 1 of 2)

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.

adopted a policy concerning insurance deductibles

Colorado law allows associations to adopt policies concerning the allocation of responsibility for insurance deductibles and processing of insurance claims. We recommend that associations adopt a standard policy and adhere to it for all claims.

adopted a pet policy.

Associations generally hold the power to regulate the use of the common areas. We recommend that associations adopt a policy concerning pets and the common areas.

adopted other policies, such as those addressing emergency vehicle parking, landscaping, political signs and flags

Colorado law allows associations to adopt policies that further define location, timing, size, type and procedures for emergency vehicles, xeriscaping, political signs and flags.

completed all annual disclosures to association members

On an annual basis, every community association in Colorado must provide detailed information to the homeowner-members, including but not limited to the association’s budget, the assessments levied against each type of unit, and various insurance policies covering the association.

submitted the annual corporate report to the Colorado Secretary of State’s office.  

You can answer this question by accessing the Secretary of State’s online database at http://www.sos.state.co.us/. If the information for your association shows a noncompliant status, then the annual report was not timely filed. Associations appearing as “administratively dissolved” in the Secretary of State’s database may require member votes to reinstate the corporations. 

filed annual tax returns for the association.

Community associations in Colorado must file annual tax returns on their profits (if any). 

conducted a budget ratification meeting, if required by statute

Any community association formed after July 1, 1992, and subject to the Colorado Common Interest Ownership Act (“CCIOA”), C.R.S. 38-33.3-101, et seq., must submit a Board approved budget to its owners within 90 days after the adoption of the budget and set a meeting of the owners to consider the budget within a reasonable time after mailing or delivery of the budget to the owners. At the budget meeting, the board’s proposed budget is deemed approved in the absence of a veto by a majority of the owners, or a greater number of owners stated in the declaration.

How does your community association’s Legal Audit look? Did you identify some legal needs that your association may need to address? We can help you prioritize your association’s legal matters. Please do not hesitate to contact us about this Legal Audit or other community association legal matters. We look forward to hearing from you soon.

The Law Firm of Winzenburg, Leff, Purvis & Payne, LLP