Money Matters

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Issue: A large homeowners association is looking to make repairs to the common area fences within the community. What options are available to them to finance this project?

Background: Recently, the Board of Directors of a large homeowners association called our office to discuss a problem. It seems that they had common area fences that were fairly old and in desperate need of some TLC. Unfortunately they did not have any funds available to make the necessary repairs.    Pursuant to the Association’s covenants, the Board was severely restricted in the amount it could set for the annual assessments each year (without approval of at least 2/3 of the members, the covenants limited the annual assessment to a 10% increase from the previous year). As a consequence, the Association’s reserve fund was nearly empty. The Board had tried on several occasions to get the members to approve a special assessment, but it was turned down each time. The Board was now wondering what options it had available to pursue.Continue Reading Financing Repairs to the Common Elements

As legal counsel for community associations, we assist our clients with the various types of conflict that arise in the course of association business activities.  We understand that conflict can sometimes escalate to a level that requires court intervention.  We also know that certain preventative steps can help to alleviate the time, expense, and emotional drain that come with litigation.  In particular, good contract drafting can help to minimize the impact of disputes between associations and their contractors.  We encourage our clients to seek legal advice when entering into contracts for management services, landscape maintenance, capital improvements, and any other project or service that involves a relationship with an independent contractor.  The following reminders come directly from our experience advising community associations:

 

A bid or proposal form, while legally binding, is not a good contract.  While signing a bid or proposal form may bind the association to pay for services performed by the contractor, the association does not receive any protections as part of the bargain.  We recommend contracts that contain specific provisions which, at the very least, address the scope of work, insurance coverage, payment terms, remedies for default or breach, and attorney fees for the prevailing party in any dispute that may arise under the contract terms.  Bid forms do not typically include these recommended contract terms.

 Continue Reading Contracting with Association Contractors: An Ounce of Prevention

A homeowner files bankruptcy, now what? First and foremost, all collection activity must stop in accordance with the Automatic Stay until the case is dismissed, an Order for Relief from Stay is granted, or the debtor receives a discharge. Second, the association must determine what type of bankruptcy has been filed. Individuals commonly file for bankruptcy protection under Chapter 7 or Chapter 13, and the type of bankruptcy will determine what steps an association must take to protect its interests. In this article, we will look at Chapter 7 bankruptcy.
Continue Reading Chapter 7 Bankruptcy and your Association

The weather is warm, your Association’s pool is prepped for summer, and Memorial Day is just around the corner. Everything is fine until the owners currently contesting their Association debt (the same owners whose case is currently set for trial in one month) call to request the pool key. Their son’s birthday falls over the weekend and the whole family will be in town to celebrate at the pool. Your Association documents say the key can be withheld if the account of the owner is not in good standing. Do you give them the key?
Continue Reading The Pool Key: to Withhold or Not to Withhold

This article, which looks at several metro-area counties, may help to explain why Colorado is one of several states leading the nation in foreclosures. Jefferson, Adams, Arapahoe, Denver, Boulder, and Broomfield show a 15.4% jump in foreclosures from second quarter numbers last year. In particular, Jefferson County foreclosures are up 32% from last year…

If your association has been feeling like too many of its delinquent properties have been undergoing foreclosure by lenders, it is not alone. The country is facing increasing foreclosures overall and Colorado, in particular, has been singled out as a problem state.

We all know the havoc a lender foreclosure can wreak on the association’s collection attempts: if the association decides not to exercise its right to redeem, and thereby take ownership of the property, it loses the right to its lien�perhaps the most potent remedy an association has to collect its assessments�and is entitled only to a super lien worth six months of assessments. Is there anything we can do to limit loss in these situations?
Continue Reading Feeling the Crunch? Colorado Among Foreclosure Leaders