HOA Legi-Slate

I recently came across this article and it got me wondering if we should be concerned about texting during association board meetings.  As we know, board meetings must be open to members of the community and records of the association are available for inspection by owners following the association's inspection of records policy. Would those records include text messages between board members about association matters?  If text messages can't be "retained" (depending on your service provider), how can they be association records?  Does that then lead to a law prohibiting board members from texting each other?  Another risk might be that the discussions via text occurring during a meeting aren't open to owners who are present and thus the association has violated the statute.  Does that mean association's should also prohibit cell phone use during its meetings?

I do see a significant difference between Colorado associations and governmental entities -- the Sunshine Law. The Sunshine Law in Colorado basically provides that anytime 2 or more elected officials are communicating it is considered a meeting and thus must be open to the public. 

This law does not apply to associations but that may not overcome the arguments above

Posted By Loura K. Sanchez In Community Associations Miscellaneous 0 Comments Permalink

We generally think of the declarant control period ending  60 days after the sale of 75% of the total number of units that may be created within the community.  However, the Colorado Common Interest Ownership Act also has two other “triggering” events that may act to terminate the period of Declarant control.  CCIOA provides that in addition to termination based upon 75%, the Declarant control period will terminate two years after the last date the Declarant annexed property into the community or two years after the last sale of a unit in the ordinary course of business.  The Declarant control period terminates one whichever of these three events occurs first.  So, with the slow housing market, these other two triggers may become more commonplace.  Current Declarant controlled communities may want to look at these alternative dates and clearly understand when transition will occur.

Posted By David A. Firmin In Community Associations Miscellaneous 0 Comments Permalink

Use of the business judgment rule can't protect associations from every type of legal action.  Board members who choose not to enforce provisions in the declaration may not be protected by the business judgment rule.   In Ekstrom v. Marquesa at Monarch Beach Homeowners Association, 168 Cal. App. 4th 1111, 86 Cal. Rptr. 3d 145 (2008) the California Court of Appeals held that the association had to enforce its restriction on the height of trees in the community to all trees.  The court declined to allow the association to rely on the rule of judicial deference—an equivalent to Colorado's business judgment rule.

The Marquesa at Monarch Beach Homeowners Association had determined that the height restriction contained within the recorded declaration did not apply to palm trees, as palm trees can not generally be trimmed or pruned.  The court found that nothing in the declaration permitted the association to exclude an entire species of trees from the height and view restrictions simply because the association favored the aesthetic benefit of those trees to the community.  The court found that the board's interpretation of the declaration was inconsistent with the declaration's plain meaning and because the declaration did not grant the board the right to adopt rules and regulations that were inconsistent with the declaration itself, the court found that the judicial deference rule did not apply.

Posted By Loura K. Sanchez In Community Associations Miscellaneous 0 Comments Permalink

The Colorado Common Interest Ownership Act (CCIOA) is based upon the Uniform Common Interest Ownership Act (UCIOA).  UCIOA was recently adopted by the American Bar Association House of Delegates.  The 2008 Uniform Common Interest Ownership Act attempts to resolve a number of concerns related to the operation and management of common interest communities.  Generally, states that have acts based on uniform statutes will consider modifications once the uniform act is updated.  That may mean that CCIOA could be substantially overhauled in the near future.  In anticipation of that, if you have any specific concerns about CCIOA provisions or there are things you would like to see added to CCIOA please let me know as we hope to be actively involved in any rewrite of CCIOA.

Posted By Loura K. Sanchez In Colorado Homeowner Association Law 0 Comments Permalink

HB 1359 was signed by Governor Ritter on May 15. It becomes effective on August 5, 2009 and applies to all common interest communities. So what does your association need to do to comply?

1. Become educated about the types of reserve studies available and costs. Attend our educational programs on June 4, 2009 to learn more about reserve studies, investment vehicles and funding options. (We currently have a waiting list for these programs.  Click here to add your name to the list.  We may add another session if there is enough interest.) 

2. Adopt a policy that addresses:
   a. When a reserve study will be done and how often if will be updated. Click here for our Best Practice recommendations.

   b. Whether your reserve study will be based on a physical and financial analysis. Click here for our Best Practices recommendations.                                            

   c. Whether the association has a plan for funding the work recommended in the plan and if so, the possible sources including use of regular assessments, special assessments, borrowing, etc.

The policy must be consistent with your governing documents and should be consistent with the association’s responsible governance policy on investment of reserves. We are happy to draft this policy for your association for a flat fee of $295.00.  And, if we prepared your investment of reserve policy, we’ll revise it for free.

3.   Follow your policy.

Posted By Loura K. Sanchez In Legislative Miscellaneous 0 Comments Permalink

On April 22, 2009, Governor Ritter signed House Bill 09-1220.  This bill relates to affordable housing in certain mountain common interest communities.  Specifically, the bill only applies to counties with populations of less than 100,000 and that have a licensed ski lift.  Also, Declarant-controlled communities are exempt from this bill.

The bill adds a new section to the Colorado Common Interest Ownership Act, at Section 38-33.3-106.5.  Essentially, the bill requires associations to permit owners to promote affordable housing through deed restrictions. Under the bill, an association may not prohibit a unit owner from:

(i) restricting the permissible sale price, rental rate, or lease rate of their unit, or

(ii)  subjecting their unit to occupancy or other requirements designed to promote affordable or workforce housing. 

Only the unit owner may occupy a unit that is under a restriction described above.

In addition, a future owner who purchases a unit under a restriction described above may lift the restriction as long as a similar unit in the same common interest community replaces the unit from which the restriction is lifted.

HB 09-1220 takes effect on August 5, 2009.

Posted By Melissa M. Garcia In Legislative Miscellaneous 0 Comments Permalink

On May 5, 2009, we informed you in a posting on HOA Legi-Slate, that the Senate had just passed an amended version of House Bill 09-1359 ("HB 1359") which cleaned-up some language of the bill that addresses association reserve studies, dissemination of information to board members and qualifications of committee chairs.  Later that day, the Senate amended version of HB 1359 was sent back to the House which voted to concur with the Senate amendments.  That version of the HB 1359 has been sent to Governor Ritter today for action.  We fully expect Governor Ritter to sign HB 1359 into law.  
 
Reserve Studies
As we have addressed in previous postings on HOA Legi-Slate, the most significant portion of HB 1359 addresses the issue of reserve studies.  The original version of the bill, which would have required associations to have reserve studies conducted every three years beginning in 2010, has been amended to now require that associations must adopt a responsible governance policy concerning:  "When the association has a reserve study prepared for the portions of the community maintained, repaired, replaced and improved by the association; whether there is a funding plan for any work recommended by the reserve study and, if so, the projected sources of funding for the work; and whether the reserve study is based on a physical analysis and financial analysis.  For the purposes of this subparagraph (IX), an internally conducted reserve study shall be sufficient."   Unfortunately, this final version of HB 1359 does not clarify whether associations are actually required to have reserve studies conducted. 
 
Assuming HB 1359 is signed into law and a referendum petition is not submitted, this provision of the bill will go into effect on August 5, 2009.  In order to comply with the reserve provision of the HB 1359, associations will need to either amend their current SB 100 policy addressing investment of reserve funds or adopt an additional policy to comply with this provision of the bill.   HindmanSanchez is ready to assist your association with this process.  To learn more about your options send us an email to hoalaw@hindmansanchez.com.    
 
Dissemination of Information to Board Members
As we also discussed when HB 1359 was first introduced, constituent concerns received by Representative Andy Kerr were the impetus behind the inclusion of language in the bill that requires members of association boards to be provided with the information necessary to exercise their fiduciary duties.  That language has been cleaned-up and now provides in part: ". . . all members of the executive board shall have available to them all information related to the responsibilities and operation of the association obtained by any other member of the executive board.  This information shall include, but is not limited to, reports of detailed monthly expenditures, contracts to which the association is a party, and copies of communications, reports, and opinions to and from any member of the executive board or any managing agent, attorney, or accountant employed or engaged by the executive board to whom the executive board delegates responsibilities under this article."  Whether this provision of HB 1359 has the potential of interfering with the attorney-client privilege, is subject to debate.
 
Assuming HB 1359 is signed into law and a referendum petition is not submitted, this provision of the bill will go into effect on August 5, 2009.
 
Qualifications for Committee Chairs
The final provision of HB 1359 addresses the qualifications of committee chairs.  Working under the assumption that this bill will be signed into law, any committee chair appointed after August 15, 2009, "shall meet the same qualifications as are required by the governing documents of the association for election or appointment to the executive board of the association."  It's important to point out that this provision applies only to an individual appointed to preside over a committee of their association.  It does not require that other individuals appointed to participate on a committee of their association be eligible to be appointed to or run for a position on the board.
 
We will update you when Governor Ritter signs HB 1359 into law.  We will also be providing a legislative update on this, and other bills passed during the 2009 legislative session, to managers and board members on August 19, 2009.  To register to attend a legislative update session click here.

Posted By Molly Foley-Healy In Legislative Miscellaneous 0 Comments Permalink

Today, May 5, 2009, one day before the Colorado General Assembly is slated to adjourn for the session, the Senate passed an amended version of House Bill 09-1359 (HB 1359) which addresses association reserve studies, dissemination of information to members of boards and qualifications of committee chairs. 

Posted By Molly Foley-Healy In Legislative Miscellaneous 0 Comments Permalink

The U.S. Senate voted 51-45 earlier today against the legislation that would have allowed bankruptcy judges to rewrite mortgage terms for struggling borrowers before they face foreclosure -- the so-called mortgage "cram-down" bill.  CAI National and the College of Community Association Lawyers were actively involved in educating legislators about the potential impact of the legislation on associations through out the nation.

Posted By Loura K. Sanchez In Legislative Miscellaneous 0 Comments Permalink

On Monday, April 27, 2009, the House passed an amended version of House Bill 09-1359 ("HB 1359").  This legislation, introduced by Representative Andy Kerr, was granted late bill status and is speeding through the legislative process.  As you know, this legislation addresses reserve studies, information disseminated to members of boards of associations and who is eligible to be appointed as a committee chair.  Late last week, representatives of the homebuilders got involved in the legislation which led in part to "friendly amendments" that were passed last week on the floor of the House.   

Posted By Loura K. Sanchez In Legislative Miscellaneous 0 Comments Permalink