And knowing is half the battle. – G.I. Joe

When owners in community associations sell their homes, associations and their management companies inevitably get involved in the transactions by providing governing documents for the buyers’ review and status letters showing assessments and other amounts due at the time of closing. These document disclosures typically fall within the sellers’ obligations under Section 7 of the Colorado Real Estate Commission-approved Contract to Buy and Sell Real Estate (Residential).

Effective January 1, 2019, the standard residential real estate contract form includes additional documents that sellers must disclose to buyers. This means that associations and their management companies will receive requests for different documents starting January 1st. The following table lists the documents required under the old contract and those that associations and management companies will need to gather and provide as of January 1, 2019, under the new contract:

OLD CONTRACT NEW CONTRACT
Declarations Declarations
Articles of incorporation Articles of incorporation
Bylaws Bylaws
Articles of organization Articles of organization
Operating agreements Operating agreements
Rules and regulations Rules and regulations
Party wall agreements Party wall agreements
Responsible governance policies adopted under § 38-33.3-209.5, C.R.S.
Minutes of most recent annual owners’ meeting Minutes of the annual owners’ or members’ meeting; such minutes include those provided under the most current annual disclosure required under § 38-33.3-209.4, C.R.S. and minutes of meetings, if any, subsequent to the minutes disclosed in the Annual Disclosure. If none of the preceding minutes exist, then the most recent minutes, if any.
Minutes of any directors’ or managers’ meetings during the six-month period immediately preceding the date of the Contract. If none of the preceding minutes exist, then the most recent minutes, if any. Minutes of any executive boards’ or managers’ meetings; such minutes include those provided under the most current annual disclosure required under § 38-33.3-209.4, C.R.S. and minutes of meetings, if any, subsequent to the minutes disclosed in the Annual Disclosure. If none of the preceding minutes exist, then the most recent minutes, if any.
List of all Association insurance policies as provided in the Association’s last Annual Disclosure, including, but not limited to, property, general liability, association director and officer professional liability and fidelity policies. The list must include the company names, policy limits, policy deductibles, additional named insureds and expiration dates of the policies listed.
A list by unit type of the Association’s assessments, including both regular and special assessments as disclosed in the last Annual Disclosure.

The most recent financial documents which consist of:

(1) annual and most recent balance sheet

(2) annual and most recent income and expenditures statement

(3) annual budget

(4) reserve study, and

(5) notice of unpaid assessments, if any.

The most recent financial documents which consist of:

(1) the Association’s operating budget for the current fiscal year

(2) the Association’s most recent annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the Association’s last Annual Disclosure

(3) the results of the Association’s most recent available financial audit or review

(4) list of the fees and charges (regardless of name of title of such fees or charges) that the Association’s community association manager or Association will charge in connection with the Closing including, but not limited to, any fee incident to the issuance of the Association’s statement of assessments (Status Letter), any rush or update fee charged for the Status Letter, any record change fee or ownership record transfer fees (Record Change Fee), fees to access documents

(5) list of all assessments required to be paid in advance, reserves or working capital due at Closing

(6) reserve study, if any.

Any written notice from the Association to Seller of a “construction defect action” under § 38-33.3-303.5, C.R.S. within the past six months and the result of whether the Association approved or disapproved such action.

These changes to the contract incorporate annual disclosure requirements that have applied to community associations since 2005 under Section 209.4 of the Colorado Common Interest Ownership Act (“CCIOA”). Even though associations must provide many of these documents at no cost to individual owners pursuant to CCIOA, associations can charge to fulfill title company requests for these documents.

The 2019 Contract to Buy and Sell Real Estate may affect the timing for status letter requests as well. A new provision in the contract requires the seller to request a status letter “at least fourteen days prior to the Closing Date.” Associations and management companies may need to adjust procedures to ensure that payoff amounts remain accurate for longer periods of time.

With these new requirements in mind, associations and their management companies can take the following steps to prepare for and comply with requests under the new standard real estate contract:

  • Gather and maintain all documents required for disclosure under the standard contract form.
  • Determine pricing, if any, for the bundle of documents required under the contract.
  • Consider whether to offer the status letter as part of the document bundle or on its own for a separate fee.
  • Update management contract terms to reflect any pricing for the new document package and/or status letter.
  • Consult with legal counsel as needed.

Now you know!

Snow season is upon us! Most communities have secured their vendors for the season, with signed contracts already in place. For many communities, those snow removal contracts include snowfall triggers that obligate the vendor to mobilize and fulfill the contract obligations once a specific snowfall threshold is reached, such as two inches of snow. The threshold set in the contract drives both the cost to the association and the priority for vendor mobilization. In other words, if an association chooses a higher threshold of, say, three inches, the association will pay less but will also fall farther down the line of vendor priority when a heavy snowfall occurs because vendor crews will tackle one inch and two inch trigger properties first. Association boards must weigh these factors and make business decisions according to their communities’ needs when deciding on contract terms.

Boards should also consider potential liabilities as part of the snow contract negotiating and decision-making process. This attention to potential liabilities especially holds true now, after passage of Senate Bill 18-062 (“SB 18-62”) by the Colorado legislature. Senate Bill 18-62 addresses snow removal vendor liability in the context of contract terms. Generally, SB 18-62 creates a new statutory provision—C.R.S. 13-21-129—that makes void any contract term that would require a vendor to indemnify, hold harmless, or defend an association when damages or injuries result from the association’s acts or omissions if the contract or other writing prohibits the vendor from mitigating a “specific snow, ice, or other mixed precipitation event or risk.”

This statutory language, known as the Snow Removal Service Liability Limitation Act, introduces new legal protections for vendors and begs attention to different scenarios that could result in association responsibility for injuries from snow and ice accumulation on common areas. Association boards should take the following steps to protect their communities from potential consequences related to snow removal under the new law:

Submit any snow removal contract for review by the association’s attorney. Even if the association’s attorney drafted the contract originally, the new law should prompt legal review and updates. In consultation with legal counsel, the association may decide, among other things, to (1) alert the vendor to the expectation that the board receive communication about any problem areas on the property and options for how to address the issues most effectively and efficiently and (2) clearly state that the vendor remains responsible to indemnify, hold harmless, and defend against damages resulting from vendor’s acts or omissions unrelated to mitigation.

Discuss insurance coverage with the association’s broker, and update insurance as appropriate, in light of the new law and any contract updates.

Implement proper risk management, such as signage, ice melt, and proactive attention to drainage concerns, to help avoid slip and falls and escalating costs under the vendor contract during the snow season.

Communicate with owners about snow removal expectations throughout the community. Minimizing liability involves educating residents about risks on the property and how to protect themselves during Colorado winters.

Earlier this year, the Colorado General Assembly enacted one of the most stringent data protection laws in the country. This law applies to Colorado businesses and governmental entities as well as third-party vendors who collect and maintain personal identifying information (“PII”). C.R.S. 6-1-713 defines PII as “a social security number; a personal identification number; a password; a pass code; an official state or government-issued driver’s license or identification card number; a government passport number; biometric data, as defined in section 6-1-716 (1)(a); an employer, student, or military identification number; or a financial transaction device, as defined in section 18-5-701 (3).” This definition includes bank account and debit/credit card information.

Effective September 1, 2018, associations, management companies, and their vendors that collect and maintain PII must adopt policies concerning the protection of that information and procedures for handling breaches and destruction of documents containing PII.

Our attorneys can assist with the preparation of a policy for your association. Please contact us to discuss your association’s needs related to this new data breach law. We look forward to helping you with this compliance issue before a breach occurs.

Welcome to the Colorado Homeowners Association Law blog! Winzenburg, Leff, Purvis & Payne, LLP attorneys seek to provide timely information on news, legislation, and common issues facing community associations in Colorado. You can receive this information directly in your email inbox by following these steps:

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We hope you find this resource helpful in your management and governance of your HOA and understanding of community association living. That said, these blog posts do not constitute legal advice. If you need assistance with a legal issue involving your association, please contact one of our attorneys.

Winzenburg, Leff, Purvis and Payne, LLP is pleased to announce our Warehouse Lecture Series for the 2017/2018 year. The Series is comprised of quarterly, half-day sessions providing Community Association Manager Continuing Education credits approved by DORA.

The first session, titled “Meetings,” will take place Friday, October 27, 2017, from 8:30 am to 12:30 pm. Session topics include the following:

  • Everything You Need to Know about Membership Meetings
  • Board of Directors Meetings
  • Action Plan for Meetings*
  • Mock Board Meeting.

Please e-mail Allison Grout at agrout@wlpplaw.com for information about pricing and how to register for all or some of the class sessions. Price increases apply for registrations received after October 23, 2017.

*Submitted for Continuing Education approval.

All the media and legislative talk of construction defect litigation and its impact on condominium construction in Colorado may seem like discussion that does not impact existing communities. But the changes to state and local laws concerning construction defect litigation do affect existing communities by creating owner notice and vote requirements that, in some cases, apply to construction undertaken by associations long after initial development of their communities. The impact of these requirements on communities will likely play out over time as defects occur and associations seek remedies.

While associations cannot unilaterally change the controlling laws, associations can take proactive steps when contracting for new projects. In particular, associations need to know how the potential for construction defects may affect insurance coverage on projects that associations contract to complete on their own. Did you know that many contractors’ insurance policies exclude multi-family housing projects from coverage?

Continue Reading Construction Defects and Insurance: Proactive Steps To Protect Your Community

HOA transfer fees are getting some attention in the news again this week. In particular, news coverage has focused on demands that HOA property management companies provide invoices for the transfer fees charged to buyers or sellers of properties within HOAs. There is good news for buyers and sellers in HOAs: access to transfer fee information is already available.

What exactly are transfer fees? Colorado statutes address transfer fees in the three following ways that are relevant to HOAs and their members:

  1. The Colorado Revised Nonprofit Corporation Act expressly authorizes nonprofit corporations to impose transfer fees upon their members unless the articles of incorporation provide otherwise. Most HOAs are formed as nonprofit corporations and have this right to impose transfer fees.
  2. The real property statutes prohibit certain transfer fee covenants, such as those intended to benefit a person or entity who does not hold an interest in the property burdened by the covenant. But transfer fee covenants for fees payable to homeowner associations are not prohibited and are recognized by statute as valid fees.
  3. Community association management companies typically contract with the HOAs they manage to charge transfer fees to the buyers or sellers of properties within those communities. The community association manager statutes and licensing rules impose explicit requirements on managers concerning these transfer fees. Those statutes and rules are the good news for buyers and sellers, and all owners, who want to know what transfer fees apply in their HOAs.

So what rights do owners, buyers, and sellers have to access transfer fee information?

Continue Reading HOA Transfer Fees: Access to Information Available Now

You’ve probably heard the news by now–an HOA refused to allow Make-A-Wish to grant a young cancer patient’s wish by constructing a playhouse in the girl’s back yard. The reason? Outbuildings are against the covenants. Of course, the HOA ends up taking the heat with press coverage and outspoken support for the sympathetic young girl.

The story has quickly blown up, with multiple sources reporting the details. One source reports that the HOA board member names and telephone numbers have been removed from the association’s website. Other stories give updates on the HOA’s reconsideration of the matter and willingness to compromise after talking with Make-A-Wish and the construction contractor.

For now, it sounds like one young girl will get her wish. It remains to be seen whether other kids in the neighbor will be permitted to have their own playhouses constructed or what kind of pressure the volunteer board members will face from neighbors who do not appreciate the compromise in this case. Unfortunately, boards can come under fire even when following the rules and fairness to others guide their decision-making.

We’ve previously written about what to do if your HOA ends up in the news (because we all know that making the headlines is rarely, if ever, a good thing). But, on this Friday afternoon, I’m curious about how you and your association may have handled the playhouse wish differently to avoid the headlines from the start. Ideas?

Winter in Colorado is sure to bring cold weather, snow, and urgent phone calls about broken water lines and slip-and-fall accidents on common areas. The problems usually start when the temperature begins to warm up after a cold spell or heavy snowfall. Water suddenly streams out of broken pipes, or snow melts and then freezes when the temperature drops at night. Whatever the circumstances, managers and board members can attest to the amount of work involved responding to owners, sorting through damages and injuries, dealing with insurance, and trying to understand legal obligations for water and slip-and-fall incidents. Most of us would love to find a magic wand that we could wave to make these problems disappear. Unfortunately, magic is not a reliable solution.

Associations can best position themselves for dealing with slip-and-fall situations by planning ahead and communicating with owners along the way. If your association is not sure what responsibility it has to remove snow and ice hazards from common areas, here are some risk management steps to help.

Review the association’s governing documents to determine responsibilities for snow removal. Different communities have different responsibilities, and your documents give direction. A condominium community may have the general obligation to remove snow from the common elements, while townhome documents may only require the association to take care of parking lots. A failure to comply with the covenants could result in claims of breach by the association, so confirming responsibilities up-front is crucial.

Continue Reading Frozen? Snow and Ice – Don’t Let It Go

We’ve all received the party invitation with a note letting us know that gifts are not requested–Your presence is present enough. Some of us take the cue, while others go above and beyond and bring a gift despite the note. I like to think that association board members, through their election or appointment to their boards, receive an invitation to the big party of the boardroom. And I’d like to encourage you to thank your association’s board members for their presence on the board this holiday season. I realize you’re busy attending parties at work, gathering with family and friends, going to your places of worship, and finding time to relax amidst the bustle of the season. Whew–this is a busy time of year! But this one quick and easy task can be accomplished by email, in passing at the mailbox, or through a handwritten note or card. I sincerely encourage you to reach out and say "thank you."

This is my "thank you" note to board members:

Continue Reading Your Board’s Presence Is Present Enough: Don’t forget to say “Thank you” this holiday season