HOA Legi-Slate

For your convenience, here is a quick run-down on the substantive provisions of the reengrossed version of SB 89. (A "reengrossed" bill includes all the amendments adopted in the house of introduction.) This version is what will be introduced in the House by Representative Carroll. (Click here for a copy of the bill.)

Definitions

• Adds the definition of "mixed-use development" and "phased community" to CCIOA's definition section [38-33.3-103]

Political Signs

• Requires association regulations on the display of political signs to allow at least one political sign per political office or ballot issue with maximum dimensions limited to the lesser of 1) the maximum size allowed by any applicable local ordinance or 2) 36 inches by 48 inches. [amendment italicized] [38-33.3-106.5(1)(c)]

Emergency Vehicle Parking

• Clarifies that this provision applies to the occupant of the unit, regardless of whether the occupant is a unit owner. [38-33.3-106.5(1)(d)]


• Adds "guest parking area" to the requirement that the parking of emergency vehicles may not interfere with the reasonable needs of other members of the association to use streets and driveways. This addition clarifies that the parked emergency vehicle may not interfere with the reasonable needs of other members of the association to use the association's guest parking area, in addition to its streets and driveways. [38-33.3-106.5(1)(d)]


• Clarifies that the occupant must be employed by "a primary provider of emergency fire fighting, law enforcement, ambulance, or emergency medical services" for the section to apply. This clarification removes any confusion that the provision may apply to such service. [38-33.3-106.5(1)(d)]

Attorney Fees

• Removes the claim-by-claim award of attorney fees, costs, and costs of collection to the prevailing party to allow simply for an award of attorney fees, costs, and costs of collection to the prevailing party. [38-33.3-123(1)(c)]

Policy for Addressing Disputes Between Associations and Owners

• Requires an association to adopt a written policy setting out its procedure for handling association/owner disputes. The association must make a copy of this policy available at an owner's request. [38-33.3-124(1)(b)]

Annual Association Disclosures

• Allows for associations to disclose the results of its most recently complete audit or review rather than the results of "any financial audit or review for the fiscal year immediately preceding the current annual disclosure." [38-33.3-209.4(2)]


• Adds to the list of association insurance policy disclosure a disclosure statement that alerts owners to the fact that they should obtain professional insurance advice to determine if they carry adequate insurance coverage. Unfortunately, this requirement amended an important provision in the introduced bill discussed in this post. This provision does nothing to alleviate the problems that arise from owners and associations misunderstanding or being ignorant of their respective insurance and maintenance responsibilities. [38-33.3-209.4(2)]

Responsible Governance Policies Section

• Removes the requirement for associations to maintain their records using generally accepted accounting principles, directing associations to "maintain accurate and complete accounting records on an accrual, cash, or modified accrual basis of accounting." [38-33.3-209.5(1)]


• Adds to the list of required responsible governance policies the policy addressing disputes arising between association and unit owners required by section 124. [38-33.3-209.5(1)]

Amendment of Declaration

• Provides that mixed-use and phased developments may specify a higher percentage than 67% to amend declarations [38-33.3-217(1)]


• Clarifies that associations may still pursue a court order as allowed by 38-33.3-217(7) to reduce the required percentage of affirmative votes needed to amend its declaration to less than 67% [38-33.3-217(1)]


• Clarifies that an association that has an alternate first-mortgagee notification procedure set-out in its declaration is not required to follow the procedure set-out in the statue. [38-33.3-217(1)]

Seller Disclosures

• Repeals section 223 in its entirety. Section 223 currently provides a detailed list of items that a seller of a property within a common interest community must disclose to a buyer.

Liability of Board Members

• Provides that board members and officers will not be liable for the financial results of any investment of reserve funds if the conduct comported with the business judgment rule. [38-33.3-303(2)(c)]

Required Audit or Review At Least Once Every Two Years

• Removes the requirement that an association have an audit or review at least once every two years. An audit or review may be done at the discretion of the board. A review shall be required when request by the owners of at least one-third of the association's units. (The requirement for an audit remains the same - if the association has annual revenues or expenditures of at least $250,000 and is request by the owners of at least one-third of the association's units. [38-33.3-303(4)]

Owner Participation in Meetings

• Clarifies when owners have the right to speak at board meetings. [38-33.3-308(2.5)]

Requirement to Use a Secret Ballot & Counting Secret Ballots

• Retains the requirement for associations to use a secret ballot for board member elections in cases of contested elections. For uncontested elections, a secret ballot may be used at the discretion of the board and must be used at the request of twenty percent of the unit owners present at the meeting or represented by proxy, if a quorum has been achieved. [38-33.3-310]


• Deletes the option of having a "neutral third party" count the ballots, replacing that with a more user friendly "committee of unit owners who are not candidates and not board members. The committee shall consist of volunteers selected or appointed at an open meeting, in a fair manner, by the chair of the board or another person presiding during that portion of the meeting." [38-33.3-310]


• Provides that the secret ballot requirement does not apply to an association whose governing documents provide for board member election by delegates for the owners. [38-33.3-310]

Board Member Conflicts of Interest

• Amends this section to track the conflict of interest section of the Colorado Revised Nonprofit Act [7-128-501], which allows board members with conflicts to vote if they disclose their conflict to the board. [38-33.3-310.5]

Common Interest Community Disclosure

• Changes the current disclosure statement required by this section. The amendment provides that every contract for the sale of property located in a common interest community will contain a disclose statement that reflects the special district disclosure. This disclosure would inform the buyer that the property is located in a common interest community and is subject to its governing documents, which the buyer must adhere to. In addition, the disclosure would state that buyers should investigate the financial obligations of association members. [38-35.7-102]


• Modifies what damages a buyer may recover from a seller who fails to provide the disclosure. A buyer has a claim for relief for actual damages directly and proximately caused by the failure to provide the disclosure plus court costs. [38-35.7-102]


• Provides that contracts prepared by a licensed real estate broker are not required to contain this disclosure until the Real Estate Commission has promulgated a real estate purchase contract. Sellers represented by such an agent will not be liable for failing to provide the disclosure. [38-33.3-35.7]

Homeowner Initiated Claims

• Allows an owner to file a claim against an association policy if 1) the owner has contacted the executive board or the manager in writing, and in accordance with any applicable association policies or procedures for owner-initiated claims, regarding the subject matter of the claim; 2) the owner has given the association at least fifteen days to respond in writing, and, if so requested, has given the association's agent a reasonable opportunity to inspect the damage; and 3) the subject matter of the claim falls within the association's insurance responsibilities as defined by the declaration or in an insurance policy listed per section 209.4 (association annual disclosures). [10-4-100.8]