In a memorandum opinion issued on December 3, 2024, Judge Mazzant out of the Eastern District of Texas issued a preliminary injunction against the Corporate Transparency Act, finding that the Act is likely beyond the scope of Congressional authority. Reporting companies do not have to comply with the CTA’s January 1, 2025 reporting deadline, pending further order from the court. The case is Texas Top Cop Shop Inc., et al., v. Garland, 4:24-cv-00478-ALM.

Unlike the earlier case out of Alabama, the Court’s order in Texas Top Cop Shop applies nationwide. If the preliminary injunction stands (it will certainly be appealed), corporations across the country – including our HOA clients – do not have to file their beneficial owner reports. We will update as soon as we hear news on this front!

Many of our clients have been following CAI’s lawsuit regarding the Corporate Transparency Act’s applicability to HOA clients, Community Associations Institute v. U.S. Department of Treasury, very closely. CAI sought a preliminary injunction, which would postpone the deadline for community associations to file beneficial ownership information reports until the case could be fully heard by the court. That preliminary injunction was denied today, which means that community associations that are not subject to the CTA’s exemptions (e.g., 20+ employees and revenue in excess of $5,000,000 per year) will be required to register no later than January 1, 2025.

So, what is this Corporate Transparency Act thing? What does the government need us to do NOW??? Come join me for lunch at noon on Thursday (September 26, bring your own food to the Zoom!) and we will learn everything you wish you never needed to know about the CTA, with screen grabs from the actual websites. I promise to be less boring than the CTA!

https://us02web.zoom.us/j/89137421569?pwd=6O5lpi0gBt9afbNfBqskVu0qcLoBFO.1

As we predicted in 2022, the Colorado legislature has revised provisions that were created by House Bill 1137, which now means that community associations need to again update their Collection Policy.

What does this mean for you?  Existing clients that previously received WLPP Collection Policies under House Bill 1137 will be entitled to a revised version at a discounted rate upon request.  New clients, or clients that have not yet updated their policies as required by House Bill 1137, can reach out to any of our attorneys to discuss a fixed fee to ensure your community is compliant with its policy obligations.

House Bill 24-1337 goes into effect on August 7, 2024.  Make plans now to have your updated policy in place!  You can email covenants@wlpplaw.com to be directed an attorney who can assist.

In addition, please plan to attend one of our lunchtime classes on House Bills 24-1337 and 24-1233 and what they mean for you and future compliance and collection activities.  Space is limited only to client Board members and client management representatives.  You can register here for July 17 at 12:00 noon, or here for July 18 at 12:00 noon.

Skyrocketing premiums for property insurance coverage for many common interest communities in Colorado, particularly condominium projects, are becoming a financial nightmare for those communities impacted by the premium hikes and the homeowners who live in them. In fact, the Speaker of the House in Colorado is sponsoring House Bill 24-1108 to require the Commissioner of Insurance to conduct a study on the property insurance market for common interest communities in Colorado and to make recommendations on measures and programs to ensure the long-term sustainability and availability of property insurance coverage. Unfortunately, assuming HB 24-1108 passes both chambers of the General Assembly and is signed into law by the Governor, the results of the study will not be published until 2026.

Since skyrocketing property insurance premiums are creating a real crisis now for HOAs in Colorado, here are some tips for attempting to blunt the impact of these premium hikes:

● Consider utilizing a reputable insurance broker who specializes in insurance for community associations and is able obtain quotes from multiple carriers that provide property insurance coverage.

● Look at the Declaration for your community to review the property insurance coverage your community association is required to provide on the units, if any, and consult with your legal counsel and insurance broker on whether an amendment to the Declaration would assist in reducing the premiums your community association will pay for property insurance coverage.

● If your Declaration provides a cap on the deductible that the Association may have on property insurance coverage, amend the Declaration to get rid of the deductible cap. The amount of the deductible for property insurance coverage is one way to help reduce the premium for the coverage.

● Do not defer maintenance in your community. Deferred maintenance can result in claims on your property insurance coverage which will typically result in increased premiums.

● Talk with your insurance broker about having a risk assessment conducted in your community to identify items that can be addressed to assist in reducing the premium for your property insurance coverage.

● If your community gets hit with a high premium, talk with your legal counsel about whether you need to amend the budget to cover the premium hike or if you have the ability to levy a special assessment to cover the premium. You will also want to work through the required process with your legal counsel for amending the budget or levying a special assessment.

Skyrocketing premiums is something that many community associations in Colorado are currently facing or will be facing in the future. Now is the time for community associations to take the necessary steps to assist with managing these premium increases.

The HOA Homeowners’ Rights Task Force created by House Bill 23-1105 will hold its first public meeting on October 24, 2023 at 3:00 p.m. by Zoom Webinar. Find the agenda here, and register here. Submit public comments and answer the DORA survey here. Watch on YouTube here.

Homeowners have the right to live in the communities that they selected, and to have their expectations protected.

On August 10, 2022, House Bill 22-1137 (“HB 1137”) went into effect. The new law at that time made significant changes to how HOAs in Colorado are permitted to handle enforcement and collection matters. Now that we have lived with and worked under this law for a year, we have discovered issues with the law that adversely impact HOAs. However, the biggest failure of this new law is that it protects violating homeowners to the detriment of the 99% of other homeowners and residents in their community who are forced to live with these continuing violations which HB 1137 promotes.

A fundamental concept that is missing in HB 1137, is that HOAs are tasked with balancing the interests of individual homeowners living in their community with the interests of all homeowners and residents living in their community. At its core, the proponents of HB 1137 incorrectly made the assumption that HOAs routinely discriminate or treat unfairly the individuals who are violating the use restrictions in the declaration of their communities or the rules of their community. The proponents did not take into account that use restrictions and rules are intended to protect the interests of all of the homeowners and residents living in their communities and are not intended to protect the corporate entity which is known as the HOA.

Since we are still in the midst of summer, I have noticed when driving into the HOA where I am a homeowner that the two sixty-day cure periods that owners have for non-health and safety violations have made it extremely difficult for my community to enforce architectural guidelines. I live in a large planned community in Arvada where the vast majority of the owners take pride in keeping their yards in a tidy condition and their homes painted in compliance with the requirements of the community. However, every evening when I turn into my community, the first thing I notice is the home that was painted with colors that are not approved for our community (my HOA has 41 color combinations to choose from) and the house directly across the street from that eye sore has weeds that have now reached at least 2 feet in height. I’m glad that I live several blocks away from those two homes!

The cure periods for these violations have empowered these owners to thumb their nose at my HOA and their neighbors, since they can’t be fined for pro-longed periods of time and the HOA cannot bring a lawsuit against them for injunctive relief during the cure periods. Not to mention, I suspect my HOA doesn’t want to use the assessment income paid by all of the other homeowners in my community to bring a lawsuit against these two homeowners who refuse to come into compliance. Contrary to what the proponents of HB 1137 assumed, HOAs are not big corporate entities with unlimited funds. Instead, their income is reliant upon the assessments which the homeowners pay.

Finally, as an HOA attorney, I have recently had to deal with an unprovoked physical attack in a community I represent. Based upon HB 1137, we had to provide the individual who perpetrated the attack with 72 hours to cure their violation. What does that even mean? Does that mean if the individual doesn’t attack anyone else within 72 hours, the Association cannot levy a significant fine against the attacker or file a lawsuit for injunctive relief to protect the other owners and residents in the community? The provision providing a 72 hour cure period for health and safety violations does not provide the tools HOAs need to protect the other owners and residents in the community from these horrific violations!

There is a HOA Task Force that is convening for the purpose of looking at homeowner’s rights – which includes issues relating to enforcement. I hope you will join me in encouraging this Task Force to look at the unintended consequences of HB 1137 and to ensure that the rights of all owners and residents in HOAs in Colorado are protected. It is essential for HOAs and this Task Force to balance the rights of individual homeowners with the rights of all owners and residents living in HOAs. It is possible to get this balance right!

  • “…I always think that the chances of finding out what really is going on are so absurdly remote that the only thing to do is to say hang the sense of it and just keep yourself occupied.” — Douglas Adams, The Hitchhiker’s Guide to the Galaxy*

Responding to record requests can sometimes be a daunting task. With CCIOA’s detailed list of “records of the association” that Colorado common interest communities are required permit requesting owners to inspect, combined with requesting owners’ increasing tendency to submit broad records requests, here are a few tips to help you get through this process as easily and painlessly as possible:

  • “I don’t know what I’m looking for… I think it might be because if I knew I wouldn’t be able to look for them.”

It is helpful to scrutinize records requests closely, as soon after receipt as feasible, in case they encompass documents that are not “records of the Association.” Unless stated otherwise in the governing documents, if a document in the possession of the association or manager (as the association’s agent) does not qualify as a “record of the association” (per C.R.S. 38-33.3-317), the Board may decline to allow the requestor to inspect or copy that document. This includes documents falling outside the relevant statutory retention timeframes (such as old ballots, contracts, proxies, tax returns, “written communications…to all unit owners generally as unit owners” etc.).

  • “So once you do know what the question actually is, you’ll know what the answer means.”

Just because an owner has requested it, and the association/manager has it, doesn’t mean it needs (or is allowed) to be provided:

  1. Contracts, leases, and bids, etc. currently under negotiation, attorney-client privileged communications, and records involving individual units not belonging to the requestor, are among the types of documents that may be withheld.
  2. Personnel, salary, or medical records relating to specific individuals and (without prior written consent) personal identification and account information of members and residents, including bank account information, telephone numbers, electronic mail addresses, driver’s license numbers, and social security numbers, must be withheld/redacted before records are turned over to the requestor.

However, copies of email threads among Board members that culminate in a vote/action outside a meeting, must be provided to owners who request them, so it is best to limit extraneous discussion on such threads.

  • “We demand rigidly defined areas of doubt and uncertainty!”

Although the provision of association records to a requestor may no longer be conditioned upon the statement of a “proper purpose,” owners may be required to submit written document request describing with reasonable particularity the records sought. This means, if an owner requests a broad category (such as ‘financial records’) fails to include a limiting timeframe, etc., the Board is within its rights to request greater specificity. This can be a very helpful early step in the process by expediting/ limiting the review time required for responding to such requests.

Moreover, associations may charge, and collect in advance, a reasonable charge to cover the costs of labor and material for copies, production/reproduction, mailing, and special processing of records, if applicable.  

Records that do not already exist or are not in possession of the association or manager do not need to be created/re-created in response to a records request.

* Unless otherwise specified, all quotes herein are from Douglas Adams, The Hitchhiker’s Guide to the Galaxy. (See https://www.audible.com/blog/quotes-hitchhikers-guide-to-the-galaxy.)

Notice Regarding Colorado HOA Homeowners’ Rights Task Force

On May 24, 2023, Governor Polis signed into law HB23-1105, which creates an HOA Homeowners’ Rights Task Force (“Task Force”) to examine issues confronting communities that are governed by the executive board of an association. You can read more about the Task Force at https://dre.colorado.gov/division-notifications/house-bill-23-1105-task-forces-to-examine-issues-affecting-homeowners-rights.

Thanks to Senate Bill 23-178, community associations throughout the state will see a significant increase in the presence of mischievous young rabbits in the coming years.  Senate Bill 178 requires planned communities with detached structures – single family home communities – to permit the installation of vegetable gardens (which include flowers, fruit, herbs, and other edible plants) in front, side, and rear yards. Only owners who are responsible for their landscaping are allowed to make these changes.

The first thing that crossed my mind was that my front yard, with its steep slope, would wash immediately onto the sidewalk if I removed the turf and left a bare dirt planting bed.  Fortunately, community associations can impose design and aesthetic guidelines on vegetable gardens, so you probably shouldn’t plow up your sod to grow corn throughout your 800 square feet of front yard yet. Associations can protect existing drainage and grading, and require that these changes not impair fire buffers.

The bill also ensures that owners can install nonvegetative turf grass in backyards, and strengthens the existing right of owners to install xeriscaping.  In fact, it requires community associations to provide owners with a choice of three pre-approved water-wise garden designs!

We are hard at work preparing policies for our clients to be ready for this bill to take effect this August.  Reach out to any of our attorneys for more information and pricing!