From Capitol Hill/Legislation

Following the construction defects drama from the 2017 Colorado Legislative Session, the 2018 Legislative Session for HOAs was expected to be relatively quiet and early on the session is proceeding according to script.  While there have been some landlord/tenant bills, financing for affordable housing and other procedural bills introduced that only lawyers would be interested in, from a substantive perspective for HOAs here are two bills of interest:
House Bill 1126:  Following the complaint of a constituent who was unable to find an HOA that would let her keep her 2 german shepherd dogs, Representative Paul Rosenthal introduced HB 1126 which would stop HOAs from enforcing provisions in their declarations that prohibit dogs based solely upon their breed, weight or size.  However, the bill would permit HOAs to enforce provisions in their declaration or rules which regulate things like the number of dogs permitted per household, prohibiting nuisance barking, picking up poop, keeping dogs on leashes while in the association and the like.
HB 1126 has been assigned to the House Local Government Committee and is currently scheduled for a hearing on February 14th at 1:30 pm.  Given the fact that HB 1126 is inconsistent with many municipal ordinances prohibiting breeds of dogs which have been classified as vicious, I suspect HB 1126 faces an uphill battle for passage in its current form.  There will also likely be testimony from folks living in stacked condominiums with hard surface flooring, who will be concerned about the noise generated by larger dogs on wood and tile floors. Stay tuned for an update on HB 1126 following the hearing on Valentine’s Day.
Senate Bill 62:  Senator Dominick Moreno has introduced SB 62 which would make void provisions in contracts between HOAs and snow removal companies requiring the HOA or snow removal company to indemnify, hold harmless or provide a legal defense to the other party for legal actions and damages resulting from snow removal in the community.  In other words, HOAs and snow removal companies cannot hold each other responsible in a contract for slip and falls relating to snow removal.
SB 62 has been assigned to the Senate Judiciary Committee and is also scheduled for a hearing on February 14th at 1:30 pm.  Since Senator Moreno is a Democrat and the Republican controlled Senate is typically not interested in interfering with the contract rights of parties, it will be interesting to see what happens to SB 62 in Committee.
Be sure to stay tuned to this blog for information on substantive HOA bills as they are introduced and proceed through the legislative process.
On January 20th, Representative Kevin Van Winkle (R) introduced House Bill 17-1112 (HB 1112) which would provide immunity from penalties for individuals who engage in the unauthorized practice of a profession regulated by the Department of Regulatory Agencies (DORA), like a realtor engaging in the unauthorized practice of community association management, under the following circumstances:

Continue Reading Bill Introduced Granting Limited Immunity for Unauthorized Practice of Community Association Management

As I mentioned in my blog entry kicking off the 2017 legislative session in Colorado, 8 to 10 bills relating to construction defects and the construction of affordable housing are expected to be introduced this session.  In my January 12th blog entry, I reported on the bipartisan introduction of SB 45 which is intended to reduce the cost of construction insurance for builders.
Yesterday, in an effort to provide financial assistance to those individuals who are seeking to purchase, finance or rehabilitate attainable housing, Senator Rachel Zenzinger (D) introduced Senate Bill 17-085 ("SB 85").  The bill is also intended to provide financial assistance to nonprofit entities and political subdivisions that make loans to folks in relation to attainable housing.  To secure these funds, SB 85 would increase the per document surcharge that is assessed by clerk and recorders on each document they receive for recording from $1 to $5.  The additional $4 added to each document surcharge on a yearly basis would be transmitted to the State Treasurer and deposited into the "Statewide Attainable Housing Investment Fund."
Will the fiscal note on SB 85 be a non-starter for the Republican controlled Senate?  If SB 45 makes it through the legislative process and is signed into law, will it assist in a meaningful way the citizens of Colorado in purchasing attainable housing?  It SB 85 dead on arrival in the Senate?  Only time will tell! 
Senator Bob Gardner (R) has introduced Senate Bill 17-078 ("SB 78") to address the taxation of "residential storage condominium units."  If my memory serves me well, this is the third time this bill has been introduced in the Colorado General Assembly.  Will the third time be a charm? 
This bill is pretty simple and isn’t something that condominium associations need to concern themselves with.  For folks who own storage condominium units and submit an affidavit to their tax assessor’s office that the unit is being used "to store items from or related to the owner’s residence," then under SB 78 the storage unit will be taxed as residential real property with a rate of around 7.96%, as opposed to being taxed as nonresidential property at a rate of about 29%.  SB 78 does not impose upon storage condominium associations any obligation to participate in the process to determine whether any particular storage unit should be taxed as residential or nonresidential real property.
Stay tuned to this blog for updates on SB 78 as it proceeds through the legislative process. 
On the first day of the 2017 legislative session in Colorado, President of the Senate Grantham (R) and Speaker of the House Duran (D) introduced Senate Bill 17-045 to require courts to allocate defense costs in construction defect claims when more than one insurer has a duty to defend.  Senator Angela Williams (D,) a longtime advocate for homeowners living in HOAs, is the co-prime sponsor with the President of the Senate on this bill.  The bipartisan nature of this bill is truly impressive. 
This bill is intended to have courts fairly and equitably allocate the costs of defending construction defect claims between insurance companies with a duty to defend.  It also permits insurance companies to  bring claims against builders (referred to as "insureds" or "additional insureds" in SB 45) who did not procure liability insurance during the period of time the alleged claims for defects arose.
This bill is intended to reduce the costs of construction insurance.  Builders have long claimed that the costs of procuring construction insurance makes it cost prohibitive to build condominiums.  It will be interesting to see how the insurance industry responds to SB 45. 
As always, stay tuned to this blog for updates on this important bill and other bills impacting HOAs in Colorado!

As we’ve discussed earlier this year, Congress recently passed the Housing Opportunity Through Modernization Act (HOTMA), which was signed into law by President Obama on July 29, 2016. While the act addresses many aspects of housing and federal housing assistance, of particular interest to us and some of our clients is one part of the act that addresses FHA Mortgage Insurance for Condominiums. The act requires that the Secretary of HUD streamline the project certification requirements that are applicable to insurance for condominium mortgages to that recertification is substantially less burdensome than certifications. In addition, the act requires that the Secretary of HUD also consider and modify other factors and practices in FHA project approvals for condominiums, including the amount of commercial space in a mixed-use project, transfer fees, and owner-occupancy requirements.

Continue Reading FHA Condominium Owner-Occupancy Requirements

 At a time when our two major political parties can seem to agree on nothing, in an astounding turn of events, both the House and the Senate approved legislation that has been signed by President Obama, that, in part, revises how the Federal Housing Administration is required to evaluate condominium projects for FHA insurance.

Continue Reading FHA Condominium Guidelines – Hope on the Horizon

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

Along with Matt Green from CAI National and Eric Turner from the Colorado Division of Real Estate, yesterday I participated in CAI’s Legislative Update Lunch & Learn in Fort Collins.  While Matt did an outstanding job, I suspect the information which Eric Turner shared relating to manager licensure was particularly interesting to the managers in attendance.  Here are highlights of the information which Eric shared on licensure:

Number of Licensees:  As of the end of January, there are 1,093 folks licensed in Colorado.  This is pretty close to the 1,200 licensees which CAI’s Colorado Legislative Action Committee had estimated for the Division of Real Estate.  Of those managers, 578 are either individual community association managers or work under a designated manager, 449 are designated managers and 66 currently hold an apprentice license.  There are also 439 management companies which are currently licensed in Colorado.

License Renewal for 2016:  As a reminder, community association managers (including designated managers) must renew their licenses by July 1, 2016.  The Division of Real Estate is recognizing the pre-licensure education these managers took as sufficient to cover the continuing education requirement for their first license renewal.  In other words, to renew their licenses in 2016, managers will not need to take continuing education classes.  Managers can begin renewing their licenses in May.  If a designated manager fails to renew his or her license, the licenses of managers who work under them will become inactive.  The cost to renew a license will be $190. 

Continuing Education for 2017 License Renewals:  For managers to renew their licenses in 2017, and every subsequent year after that, they will need to prove they have taken 8 hours of continuing education approved by the Colorado Division of Real Estate.  However, for the 2017 renewal period, the Division will only count those approved classes taken from July 1, 2016 through July 1, 2017.  As a result, any continuing education classes which managers take prior to July 1st will not count toward the hours needed for their 2017 license renewal. 

Management Company Renewals:  Unlike community association managers and designated managers who are required to renew their licenses on a yearly basis, management companies are not required to renew.  However, management companies will be required to provide updated information on their companies to the Division of Real Estate on a yearly basis.

Tomorrow I will provide you with interesting tidbits which Eric Turner shared on complaints made against managers to the Division of Real Estate.