Where do governance policies come from?
I recently prepared a package of the nine mandatory policies for a community association. The board of that association read the policies very carefully and sent back a number of questions, asking why I had drafted various provisions the way I had, or why I had included them at all.
When drafting the mandatory policies, there is no single source. The “nine mandatory policies” or “SB-100” policies originate from Senate Bill 05-100 signed into law in 2005. Originally there were seven mandatory policies, with the dispute resolution requirement added in 2006 and the reserve study requirement added in 2009. Since SB-100 became law there have also been many other additions and amendments to the Colorado Common Interest Act (CCIOA) and Colorado Revised Nonprofit Act that affect these policies.
While SB-100 and the subsequent additions and amendments to CCIOA specify what policies must exist, they do not always specify the required contents of the policies. Certain issues, such as collections and records inspection have very detailed sections in CCIOA. However, the Colorado Revised Nonprofit Act controls conflicts of interest policies. Further, a community’s declaration and the association’s bylaws and articles of incorporation will contain further requirements. Often, especially in older governing documents, provisions will conflict with current law. For instance, many governing documents limit records inspection to a “proper purpose,” a limitation that is now contrary to state law.
The changes in CCIOA, whether by legislative action or interpretation by courts, do require periodic review of governing policies by boards and their legal counsel to keep them in compliance. For this reason, the mandatory policies are best adopted as separate documents, so that if the requirements for one policy change, then the association does not need to revisit every policy. After any policy is adopted, an association or its manager must have the signed and adopted policies readily available, and provide a signed copy to the association’s legal counsel.