Lindsay S. Smith

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Many Colorado communities are facing the need to impose special assessments as a result of recent wind and hail events in the state. Special assessments may be imposed in circumstances where the association lacks cash on hand to pay for a large or unexpected expense. Such assessments have become increasingly common due to changes in the insurance industry.

Historically, condominium communities and other associations that are obligated to insure roofs and exteriors against damage have paid a flat deductible for various claims. Due to the expense and frequency of hail claims, insurance companies are no longer offering flat deductible amounts, and are instead requiring associations to pay a percentage based on the value of the insured property. Now, instead of a community paying a predictable $5,000 or $25,000 for a hail claim deductible, communities are facing unexpected six-figure deductibles.

Because this change is recent, and the deductibles are high, many communities do not have sufficient cash reserves to pay the deductible. Other communities choose not to reallocate reserve funds that may be earmarked for other projects, like asphalt replacement. As a result, communities turn to their members to bear the deductible by way of a special assessment. Many homeowners have loss assessment or additional coverage on their personal insurance policies, which can help pay some or all of that special assessment.

If your community is facing an unexpected deductible and you aren’t sure how to pay for it, contact legal counsel to determine the process for undertaking a special assessment. In the meantime, as the weather starts warming, hope for rain – and no more hail!

Yesterday, Representatives Brianna Titone and Monica Duran introduced House Bill 19-1212, which, if passed, will re-create the community association manager licensure program that is currently set to end in July of this year. The proposed bill includes provisions responsive to comments made throughout the industry since the original advent of community association manager licensing, and will create a seven-member advisory committee tasked with making recommendations for rules and guidelines related to manager complaints.

We will regularly update this blog as the bill makes its way through the legislature.

On Wednesday, the New York Times reported that the owners of units in the building formerly known as Trump Place had voted to remove the name from the building. The building will now be known by its address, 200 Riverside Boulevard.

A 2000 licensing agreement with the Trump Organization allowed the use of President Trump’s name on the building. As political sentiments changed, community members wanted to remove the name. One resident stated she would not remain in the building with the Trump branding. While community members wanted to remove the name, the Trump Organization claimed the 2000 agreement prevented this removal. In response, the community sought a declaratory judgment. The court determined that the 2000 agreement required superluxury maintenance, but did not require use of the Trump name. With a substantial number of owners voting to remove the name, and no appeal of the court’s decision, the letters came off the building this month.

The use of declaratory relief in this case allowed the community to determine whether it had the right to remove the name without forcing the Trump Organization to file a lawsuit to stop the removal from happening. This offensive use of declaratory relief likely saved the homeowners substantial legal fees, and is a viable means of determining the rights and obligations between parties to a contract without first forcing a breach of that contract.

Colorado gives courts the power to declare the rights, status, and other legal relations between parties to a written instrument, which could include a contract with the declarant, the Declaration itself, or even a provision of CCIOA. Be careful, however, as all homeowners may have to be joined in as parties to a declaratory judgment action for the judgment to apply to everyone. These actions are not to be taken lightly, and you should consult carefully with legal counsel before asking a court for this extraordinary relief.

The heat hitting Denver this weekend has reminded several clients to ask us to review their pool rules.  Community associations are "housing providers" under the Federal Fair Housing Amendments Act, and thus our pool rules need to comply with Fair Housing requirements.  

Fair Housing prohibits housing discrimination based on the following factors:

  • Race
  • Color
  • Religion
  • Sex
  • National Origin
  • Familial Status
  • Disability 

A rule that might seem reasonable and appropriate to a community, such as requiring all children to wear swim diapers, can result in a Fair Housing complaint.  If you’re revising your rules, look to objective guidelines for your restrictions.  Health and safety requirements apply to everyone, regardless of whether they are a member of a protected class.  It is possible to create rules that accomplish your goals without running afoul of the law.  Talk to your attorneys to ensure that your concerns are appropriate, and that your restrictions are expressed in a manner that protects your community from a Fair Housing complaint.

In the meantime – stay cool out there!

Congratulations to Molly Ryan of Metro Property Management, Inc. and Jared Theis of Community Management Specialists, Inc.!  You are the winners of our mint julep baskets.  We will be in contact with you shortly so you can claim your prizes.  Thanks to everyone who stopped by to see us at the CAI-RMC Spring Showcase.  We had a great time!

It’s the first Monday of 2016, and while some of us might still be shaking off the eggnog, time passes and deadlines arrive.  Remember to comply with your annual disclosure and registration obligations before your deadlines arrive, and take some time for education while you’re at it!

Annual Disclosures. Within 90 days of the conclusion of the fiscal year, an HOA must notify its members, at no cost, of certain information. It may do this by posting the information on its website with mailed notice to members, maintaining a notebook at its principal place of business, or by mail or personal delivery. The required information includes the following:

  • The date on which the fiscal year commences;
  • The HOA’s operating budget for the current fiscal year;
  • A list, by unit type, of the HOA’s current assessments (both regular and special);
  • The annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the current annual disclosure;
  • The results of the HOA’s most recent financial audit or review;
  • A list of all association insurance policies, including company names, policy limits, policy deductibles, additional named insureds, and expiration dates;
  • The HOA’s bylaws, articles of incorporation and rules and regulations;
  • The minutes for board and member meetings for the fiscal year immediately preceding the current annual disclosure;
  • The HOA’s Responsible Governance Policies, often referred to as "SB 100 Policies."

Division of Real Estate Registration. An HOA’s registration is good for one year. Check your registration and re-register, or contact us to register for you. Registration is required if the HOA is going to undertake enforcement activity.

Secretary of State Reports. While you are re-registering with the Division of Real Estate, verify that your HOA has filed its annual report and is in good standing with the Secretary of State. This is another filing required for the HOA to have the power to assert its legal rights.

Board Education. If your HOA held its annual meeting in the fourth quarter, you likely have one or more new board members. Educate new board members, and remind veteran members, of their obligations under the Revised Nonprofit Corporation Act and CCIOA. Proper education can prevent unintentional bad acts, and the expenses related to education can be accounted for as a common expense.

Happy New Year from everyone at Winzenburg, Leff, Purvis & Payne!

Today, the Colorado Court of Appeals issued an opinion addressing the statutory declaration amendment process set forth in C.R.S. 38-33.3-217(7).  This process allows community associations that have sought to amend their declaration, and received fewer approvals than required to amend the declaration outright, to obtain a court order that approves the amendment notwithstanding the vote result. 

The statutory process is pretty black-and-white; if the Association complies with the statute’s requirements and fewer than 33% of those entitled to vote file written objections, the court "shall" approve the amendment.  "Shall" is mandatory, but some courts have declined to approve petitions notwithstanding this language.

In Centennial Ranch and Aspen Mountain Ranch Association v. Fuller et al., 14CA1326, the Court of Appeals held that when a court determines that a community association has met the requirements of Section 217(7), it errs if it denies the petition to amend.  The Court of Appeals further determined that another community association case analyzing the substantive impact of an amendment did not expand the statutory criteria for the court’s analysis of a petition to amend. 

We have always considered the process in Section 217(7) be fairly straightforward, and are pleased to have a Court of Appeals decision that supports our analysis.  It’s more important today than ever to make sure your amendment process complies with the Section 217(7) requirements, and to make sure that you comply before you end up with insufficient voter turnout. 

Oh yes we can.

It is not unusual for us to encounter communities with strict restrictive covenants that have not been enforced in a strict manner.  Much of the time, this is due to apathy or ignorance.  In other circumstances, Board turnover results in more or less enforcement.  Some Boards hate to enforce against their neighbors, and offer so many variances the covenants might as well not even exist.  Some Boards will interpret documents in a manner different than other, future Boards, but when the documents remain the same, we have to figure out what to do to follow those documents in light of the community’s history.

A recent case in California provides a bit of guidance for those of us facing the historical enforcement challenge.  In The Villas in Whispering Palms v. Tempkin<!–, No. D065232 (Cal. Ct. App. May 18, 2015), No. D065232 (Cal. Ct. App. May 18, 2015) the California Court of Appeals held that an association board that had historically offered numerous variances to a one-dog rule was not required to offer variances.  The homeowner claimed the Board was unreasonable because it had provided variances and allowed multiple dogs in the past.  The Court ruled that the Association’s prior variances did not impact its ability to deny the requested variance.

Continue Reading You Can’t Enforce That!!!

NOW OFFERING

CLASSES FOR THE COLORADO LAW PORTION

OF

THE MANAGER LICENSE EXAM

 

As you all know, the July 1st deadline for Colorado community association manager licensing is fast-approaching. We’re hearing a lot of “buzz” about the Colorado law portion of the licensing exam. Many managers have asked for a consolidated review of Colorado laws to help prepare for the test. With your requests in mind, we are excited to announce classes on the areas of Colorado law that community association managers need to know.

Continue Reading Manager Licensing Class Registration

I don’t typically make New Year’s resolutions because I believe that if something needs to be fixed, it should be fixed at that time – not on an arbitrary date.  However, many folks do like their resolutions, and I’ve heard several resolutions from my clients. 

We resolve to adopt our policies.  The responsible governance policies mandated by Senate Bills 100 and 89 have been required for nearly a decade!  Adopt your policies, already!

Continue Reading New Year’s Resolutions