From Capitol Hill/Legislation

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.

As reported here last month, Colorado House Bill 18-1342 becomes effective July 1, 2018. It was signed by the Governor’s office on June 8, 2018. It requires that all common interest communities, except those in which the declaration contains maximum assessment amounts or limits the increases in the annual budget, follow the process set out in Section 303(4) of CCIOA, which requires that the association’s board of directors adopt the annual budget. Then, within 90 days after adoption of the proposed budget, the board must mail, or otherwise deliver (which may include posting on the association’s website), a summary of the budget to all owners and set a date for a meeting for the owners to consider the budget. The meeting must take place within a reasonable period of time after the mailing or delivery, and in accordance with the association’s bylaws. Notice of the meeting must be provided as required by the bylaws. Continue Reading Budget Consideration for Pre-CCIOA Communities

 

As the title of this post suggests, as of July 1, 2018, there are big changes coming to those communities formed before July 1, 1992. Seemingly out of the blue, our legislature this year decided with little fanfare that it was time to undertake a relatively significant amendment to the budget provisions of the Colorado Common Interest Ownership Act. House Bill 18-1342, which passed out of the legislature and is now sitting on Governor Hickenlooper’s desk (and which is expected to be signed, or in the absence of a veto will automatically become law), requires ALL non-exempt Colorado community associations, with certain limited exceptions, to follow the budget consideration process set forth in CCIOA. The exceptions apply to communities formed before July 1, 1992 where the declaration sets a maximum assessment amount or limits increases in an annual budget to a specific amount and the budget proposed by the executive board does not exceed the maximum amount or limits set in the declaration. Continue Reading Big Changes to Pre-CCIOA Budget Approval Processes Coming July 1, 2018!

An amended version of House Bill 18-1126 (‘HB 1126"), which would have stopped HOAs in Colorado from prohibiting dogs in the communities based solely on breed, weight or size, was killed today in the Colorado House of Representatives on a 34 to 29 vote margin. Was this an earth shattering legislative development for HOAs?  You can be the judge of that!  

For those of you who know me, or have read my blogs over the years, you know that I love dogs.  Labrador retrievers and beagles are my breeds of choice.  But the truth is, I love darn near every dog – large, medium or small!  When Larry and I moved to Colorado 11 years ago, we were extremely careful to make certain that we could keep Lily (our beagle) and Paddy (our lab) in our new home.  While we love our home, if the declaration for our community would have prohibited our canine kids, we would have found a home in a different community.  Keeping Lily and Paddy was not negotiable for us.

Representative Paul Rosenthal introduced House Bill 18-1126 (HB 1126) which would make it impossible for HOAs in Colorado to prohibit dogs based upon breed, weight or size. However, as originally drafted, the bill seems to permit associations to regulate the number of dogs by rule and to enforce covenants contained in a declaration relating to dog or owner behavior, nuisance barking, picking up poop and the like.  For what it’s worth, typically these types of regulations are contained in rules and not in covenants.

The House Committee on Local Government held a hearing today on HB 1126.  Many folks testified in support of the bill and a few folks testified against the bill arguing that HOAs have the contractual right to regulate dogs and the drafting of the bill needs some serious work. Representative Rosenthal proposed an amendment to HB 1126, which was approved, that took out of the language in his bill relating to regulating the number of dogs by rule and enforcing covenants on dog and owner behavior, nuisance barking, picking up poop, etc.

On a vote of 9 to 4, the House Committee on Local Government reported this bill out of Committee as amended to the floor of the House with a favorable recommendation.  The language of the bill is now limited to providing that an association shall not prohibit “The keeping of certain types of dogs based solely on a breed, weight, or size classification.”

Stay tuned to this blog for updates on HB 1126 as it is considered by the full House.

House Bill 1175 (HB 1175) cleared the House Business Affairs and Labor Committee yesterday without amendment on an 8-5 vote.  The bill will now be taken up by the House Finance Committee where it is expected to be approved, since the Fiscal Note shows that no appropriation is required.

HB 1175 would (1) extend the community association manager licensure program for an additional five years; (2) amend the definitions of “community association management” and “community association manager;” (2) amend the supervision requirements for the apprentice license; (4) repeal references to private professional credentials; and (5) enhance the due process protections of a cease and desist order.

Following industry stakeholders reaching consensus, it is expected that amendments will be offered on the floor of the House to dispose of the requirement that management companies have a “designated manager” who is responsible for all of the management related activities in the company.  Based upon testimony by industry representatives in a hearing before the House Business Affairs and Labor Committee to determine whether HB 1175 would be introduced, this move seems to be in response to a designated manager being disciplined in 2017 for financial actions taken by an unlicensed president and an unlicensed CEO of a management company.  Since the designated manager was a subordinate of the president and CEO of the management company, she had no hope of regulating or controlling their actions.  As a result, it seems fundamentally unfair that she was disciplined for their unlicensed activity.

I look forward to seeing whether CAI’s Colorado Legislative Action Committee will take any action on addressing better screening of complaints brought against managers prior to the Division of Real Estate launching a full blown investigation into the complaint.  I have personally seen a handful of complaints brought against community association managers that had nothing at all to do with their management and instead related to decisions made by the board of directors of the HOAs they manage.  It’s simply wrong to subject managers to a full blown investigation on issues that are not management related and should be disposed of through an initial review of the complaint.

As expected, last Friday House Bill 18-1175 (HB 1175) was introduced in the Colorado House of Representatives.  The co-prime sponsors in the House are Representative Tracy Kraft-Tharp (D-Jefferson County), Chair of the House Business Affairs and Labor Committee where the bill has been assigned, and Representative Dan Thurlow (R-Mesa County).

As I mentioned in my January 30th blog posting, the House Business Affairs and Labor Committee approved introduction of the HB 1175 which would extend the community association manager licensure program for an additional five years.  With the exception of a recommendation from DORA that the Director of the Division of Real Estate be authorized to establish renewal fees for management companies, the Committee directed that all of the other recommendations from the DORA Sunset Review be included in the bill.  Those recommendations include:

1.  Continue the CAM licensure program for five years, until 2023;

2.  Amend the definitions of “community association management” and “Community Association Manager,” and authorize the Director of the Division of Real Estate to promulgate rules clarifying the supervision requirements for support staff who are providing clerical, ministerial, accounting or maintenance functions to a licensee and specify any activities that would trigger support staff to be licensed;

3.  Amend the supervision requirements for the Apprentice License and require the Director of the Division of Real Estate to define by rule the appropriate level of supervision related to specific activities of an Apprentice and detail any supervision requirements that are necessary to protect the public;

4.  Repeal any references to private, professional credentials and authorize the Director of the Division of Real Estate to approve, by rule, any credentials, examinations or education deemed equivalent or superior to the education and examination otherwise required by the Director; and

5.  Enhance the due process protections of a cease and desist order.

HB 1175 has not yet been scheduled for a hearing before the House Business Affairs and Labor Committee.  However, since that very Committee approved introduction of the legislation, it is expected the hearing will simply be a formality.

All expectations are that HB 1175 will enjoy bipartisan support in both the House and Senate and the community association manager licensure program will be renewed for another 5 years.

The House Business Affairs and Labor Committee heard testimony this afternoon on whether to approve the introduction of a bill to continue the Community Association Manager Licensure Program for another five years and to include other recommendations of the Colorado Department of Regulatory Agencies (DORA), which I outlined in my blog posting on January 29th.

Based upon the testimony presented and questions answered by the Director of the Division of Real Estate, the Committee overwhelmingly approved the introduction of a bill reflecting all but one of the recommendations of DORA.  The recommendation that was deleted from the bill is the recommendation that the Director of the Division of Real Estate be authorized to establish renewal fees for management companies.

The bill will be formally introduced tomorrow and I will post that bill on this blog as soon as it becomes available.

Tomorrow is the beginning of the legislative process to determine whether the licensure of community association managers will continue for another five years or whether the licensure program will be sunset.  On Tuesday, January 30th, the House Business Affairs and Labor Committee will consider the 2017 Sunset Review:  Community Association Management Practice Act (Sunset Report) prepared by the Colorado Department of Regulatory Agencies (DORA) to determine whether a bill should be introduced during the 2018 legislative session to continue the licensure program for five years and whether the bill should include the recommendations outlined in the Sunset Report which are:

1.  Continue the CAM licensure program for five years, until 2023;

2.  Authorize the Director of the Division of Real Estate to establish renewal fees for management companies;

3.  Amend the definitions of “community association management” and “Community Association Manager,” and authorize the Director of the Division of Real Estate to promulgate rules clarifying the supervision requirements for support staff who are providing clerical, ministerial, accounting or maintenance functions to a licensee and specify any activities that would trigger support staff to be licensed;

4.  Amend the supervision requirements for the Apprentice License and require the Director of the Division of Real Estate to define by rule the appropriate level of supervision related to specific activities of an Apprentice and detail any supervision requirements that are necessary to protect the public;

5.  Repeal any references to private, professional credentials and authorize the Director of the Division of Real Estate to approve, by rule, any credentials, examinations or education deemed equivalent or superior to the education and examination otherwise required by the Director; and

6.  Enhance the due process protections of a cease and desist order.

In addition to these recommendations relating to continuing the CAM licensure program for another five years, the Sunset Report also recommends that the Director of the Division of Real Estate should create an advisory committee to assist with drafting rules regarding the use of unlicensed support staff and Licensed Apprentices.

It is expected that the House Business Affairs and Labor Committee will approve the introduction of a bill, which should be introduced within a week or two, consisting of the recommendations outlined above.  Once the bill is introduced and assigned to a committee for hearing, there will be a full vetting in testimony of the recommendations outlined in the Sunrise Report and additionally addressing the need to streamline the complaint and investigation process.  However, all indications are that the House and Senate will approve continuing with the CAM licensure program for an additional five years.

Stay tuned to this blog for more information on the sunset review as it proceeds through the legislative process.