How Is SB 100 Enforced?
We have received several questions on how SB 100 is enforced, along with comments remarking that enforcement seems like a very large task given the number of HOAs in Colorado. Since SB 100 amended the Colorado Common Interest Ownership Act ("CCIOA"), the amendments brought to CCIOA by SB 100 are enforced in the same manner as the rest of statute.
Colorado does not have any enforcement or regulatory office in place to monitor homeowner association compliance with CCIOA. In addition, there are no civil or criminal penalties for failing to comply with CCIOA, so there is no danger of being taken off in handcuffs or incurring fines for failing to adopt the required policies and procedures. However, board members do have a legal duty to their associations to comply with any applicable laws, regardless of whether they believe certain provisions to be necessary for their association or whether the homeowners are concerned about compliance.
CCIOA also has an enforcement provision that gives associations and homeowners the right to bring to court anyone (owners or associations) violating any section of the law. If a homeowner prevails on such a claim, the court will enter judgment in favor of the homeowner and issue an order directing the association to come into immediate compliance with the law. At first glance, this enforcement mechanism may seem not to have much of a bite. However, there is a catch that should provide a strong encouragement to associations to comply with CCIOA. Section 38-33.3-123 states the prevailing party in any action to enforce CCIOA is entitled to the reimbursement of the reasonable attorney fees incurred in bringing the action. Thus, the association would end up paying the homeowner's attorney fees. Boards, therefore, have a strong financial incentive for complying with all of CCIOA's provisions, new or old, to avoid any potential of having to pay both the association's attorney fees and those of the prevailing homeowner.
Not only do boards have a duty to apply with applicable laws, it only takes one disgruntled homeowner (and this may be a homeowner who presently claims not to care about compliance) to file a lawsuit for noncompliance that may end in having the association pay both parties attorney fees.