HOA Legi-Slate

Interest rates fell below the psychological 5% last week, which led to a rush of homeowners looking to refinance.  While this may increase liquidity for some homeowners it may result in an unforeseen challenge for condominium associations if the refinanced loan is backed by FHA.  As of February 1, 2010 condominium associations must be approved as a whole and "spot approvals" are no longer allowed.  If your association is not approved the refinancing rush may result in confusion and high pressure on your management team and boards to get approval quickly.  For more information on the approval process watch our webinar or read recent articles.

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

In addition to your personal new year resolutions - consider making resolutions for positive change in the communities you serve!  Here are some ideas: 

1. Take Stock of 2009.  As a board, sit down and discuss what went well and not so well during the past year.  Talk about what your board can do to improve in governing the association and commit to making positive changes.
    
2. Create Goals for 2010.  Instead of flying by the seat of your pants, create goals for your board.  Once your board has agreed upon goals for 2010 -  identify benchmarks in reaching your goals, create timelines for benchmarks and identify who will be responsible for reaching them.  Goals might include:  building a sense of community; changing, adding or improving services to residents; facing tough financial challenges head-on and dealing with them.  
    
3. Dust Off Governing Documents and Use Them.   Locate the most recent version of the governing documents for your association, put them in a binder (or a paper bag if necessary), take them to every board meeting, consult them and comply with them.  As a director - it's your fiduciary duty to comply with your governing documents.  Enough said.

Posted By Molly Foley-Healy In Community Associations Miscellaneous 0 Comments Permalink

Times are tough and collecting delinquent assessments has become even more difficult in many situations. As countless homeowners struggle to pay assessments, we are seeing more and more judges looking for ways to give owners “breaks” and looking at association policies with much greater scrutiny.

Over the past year we’ve recommended that these revisions be made to collection policies to better protect associations:

1. Indicate owners are responsible for payment of tracking fees, processing fees or other fees charged to the association by management companies, if any;
2. Make sure your interest and late fees do not equal more than 45% per annum as this is considered usury in Colorado;
3. Provide that if an owner communicates via email, text, fax, phone or any other method, the owner authorizes the association and its agents to communicate via the same method in the future;
4. Provide that owner consents to credit reports being pulled in the event the owner’s account is turned over for collection by the association to an attorney or agency.

If you’d like specific language for any of these additions or our assistance in modifying your collection policy, please contact one of our attorneys at 303-432-9999 or send us an email to hoalaw@hindmansanchez.com.

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

Starting the day after Thanksgiving, I settle in for my favorite neighborhood entertainment -  watching the men in our culdesac begin the process of creating their outside holiday displays.  I have watched men on ladders in howling winds stringing lights while simultaneously looking out of the corner of their eyes to see what their buddies are up to.  I look forward to coming home in the evenings to see who has made an addition to their displays.  I have also held onto my husband's belt loop while he teetered off the edge of the porch railing in the dark carefully placing a string of lights.  Our homeowners association is alive with lights during the holiday season and I love it.  However, I'm sure that not everyone in the community shares my sentiment.

Posted By Molly Foley-Healy In Community Associations Miscellaneous 0 Comments Permalink

A homeowner living in a community association in Pitkin County is passionate about cutting his consumption of fossil fuels.  As a result, he has been going through the approval process with his association to install solar panels on the roof of his house which will provide energy to heat his home and water.  He is also planning to install a photovoltaic system in his yard that will consist of four free-standing poles with 12 solar panels.   This system will be used to power his house, studio and apartment.  The Aspen Times has reported the homeowner was granted a variance to install poles over the 10-foot limit and the County Commissioners will debate whether to permanently boost the overall height limitation from 10 to 16 feet. 

Posted By Molly Foley-Healy In Community Associations Miscellaneous 0 Comments Permalink

The Protecting Tenants at Foreclosure Act, which went into effect on May 20, 2009, was designed to provide protections for tenants in the event of foreclosure. In the past, tenants had little or no right to retain their lease when their landlord lost the unit through foreclosure. The new law affords a greater notice period for eviction (increased to 90 days) and allows renters to stay for the remaining term of their lease except in the event that the new title holder intends to occupy the unit as a primary residence.

How does this effect community Associations? For one thing, it makes the collection remedy of receivership less risky than it has previously been. In the past, there was always a substantial risk that costs would be expended to get a receiver appointed, find a renter, and enter into a lease only to have that lease terminated prematurely by a foreclosure. Often the time frames proved too limiting to guaranty the Association would recoup its delinquent assessments and costs. Under the new law, in most cases where a bank forecloses, that tenant will be allowed to remain in the Unit until the lease term naturally expires. The receiver must enter into a valid lease with a tenant for a fair market rent. And if possible the receiver will want to try to enter into a lease term long enough to be sure the association recoups all or a majority of its delinquent assessments and costs. 

Contact the knowledgeable collection attorneys at HindmanSanchez, P.C. for more information on receiverships.

Posted By Eric R. McLennan In Community Associations Miscellaneous 0 Comments Permalink

The FHA announced yesterday that it is once again delaying the implementation of the requirements found in Mortgagee Letter 2009-19 until December 7, 2009.  As we posted previously, these new guidelines for condominium projects are likely to have a significant impact on condominium communities.  FHA has indicated that revisions to the 2009-19 Letter will be forthcoming in the next two weeks and will offer leniencies because of current market conditions and provide clarification to some of the proposed new provisions.   We will continue to monitor these new requirements.

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

Mortgagee Letter 2009-19, issued by the FHA, outlines the new approval process for condominium projects and provides guidance to lenders for determining project eligibility.  This new process was set to begin October 1, 2009, but has been delayed.  It will now be effective for cases submitted beginning November 2, 2009. 

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

A homeowners association in Colorado Springs is installing "Project Approved" signs in the front yards of approved construction projects.  The sign goes up as soon as the project starts, and is taken down upon completion.  The idea is to reduce calls on whether a construction project is approved and reduce the problem of people constructing without approval.  "If folks get used to seeing the signs, they’ll immediately know when they see illegal construction.  No sign?  No HOA approval."  See http://www.gazette.com/news/hoa-61463-maybe-calls.html  
 
What do you think? Good idea? Will this help your association crack down on unapproved installations?

Posted By Melissa M. Garcia In Community Associations Miscellaneous 5 Comments Permalink

The City and County of Denver’s Pool Rules and Regulations has a policy which requires "limited access pools" to have telephones or equivalent alarm systems within the immediate pool areas.

"Limited access pools" are defined as: pools maintained in conjunction with a hotel-motel, apartment house, condominium, health club, health facility, or similar facility, and which is not available for use by the general public, but only by their occupants or members and their guests.  Based on this definition, condominium and townhome communities in Denver are required to comply with this requirement.

However, the rule does indicate that pools constructed or remodeled prior to the effective date of November 9, 2006, may be exempt from the rule if no immediate danger to public health and safety exists. So, communities created prior to this date have a legitimate argument of not being required to have such a phone system in place.

Posted By Elina B. Hindley In Community Associations Miscellaneous 2 Comments Permalink

If not and you live in Aurora, you may have a quick solution.  The City of Aurora has an ordinance that requires owners of vacant homes, which are subject to a foreclosure action or that have been foreclosed on, be registered with the City.

Once registered, Aurora code-enforcement officers check on the registered homes, making sure they are maintained. If not, the City will mow the lawn, haul away debris and perform other maintenance and charge the lender for those services.  If a home is not registered, the owner (bank) will receive letters giving them 30 days to do so.  If they still don’t register the home, they will be fined $150 every 90 days until they register or the home is sold.

Therefore, if you have a home not being maintained, a first step would be to contact the City of Aurora code enforcement.

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

If your association is located in the City and County of Denver you may want to take a look at the proposed new zoning code.  The new code will replace the existing code which is 53 years old.  The new code, in development since 2005, is designed to "support a growing economy, a sustainable environment, a diverse mix of housing, strong neighborhoods and a high quality of life."
 
Because the past zoning has been subject to incremental and inconsistent changes over the last 53 years, it is likely that some communities may find their zoning modified under the new plan. Zoning will be based upon each neighborhoods context as determined by block patterns, lot size, land use, building forms, transportation and parking.  The 7 proposed zone types are:  suburban, urban edge, urban, general urban, urban center, downtown and special context.  Meetings are being held in each district to review the proposed zoning within the district and allow owner feedback on the proposed code.  Click here to find your district's meeting date.

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

On May 14, 2009, Governor Ritter signed into law House Bill 09-1248 (HB 1248) which amends the Revised Colorado Nonprofit Corporation Act (Nonprofit Corporation Act) and addresses in Section 20 the ability and procedures that boards of associations must follow when taking action outside of a board meeting.  However, if the bylaws of your association address whether your board is permitted to act outside of a meeting and the procedures for doing so, the provisions of your bylaws will control and the Nonprofit Corporation Act does not apply. Section 20 of HB 1248 provides that boards may take action outside of a meeting if the following requirements are met: 

1. Notice of the action to be taken must be transmitted in writing to each director on the board.  In this day in age, many of us make the assumption this means the notice may be sent via email.  That mode of communication works if all directors are set up to receive email.  If this isn't the case, the remaining directors must receive the written notice in some other way.  This may require faxing or hand-delivering the written notice to those individuals.
    
2. The written notice of the action to be taken must contain the following information:
   a.  The action to be taken;     
   b.  The time (date and time) by which a director must respond to the written notice;     
   c.  That failure by a director to respond, by the time stated in the notice, will have the same effect as abstaining in writing or failing to demand in writing that the action be taken at a meeting.  Click here to view a sample notice. 
    
3. By the time stated in the written notice, each Director may:
   a. Vote in writing for the action; 
   b. Vote in writing against the action; 
   c. Fail to respond or vote; or 
   d. Demand in writing that the action be taken at a meeting. If a director makes this demand in a timely manner, the action without a meeting is no longer a valid course of action and the board must take action on the matter at an actual meeting.
    
4. Once the time has elapsed in the written notice - and assuming no written demand from a director is received requiring that the action be taken at a meeting - the action of the board is deemed effective if the number of affirmative votes required in the bylaws for the board to act at a meeting are received.  In other words, if your bylaws require a majority of affirmative votes at a meeting to pass a motion - that same number of affirmative written votes would be required for an action without meeting to become effective.

The tenets of good governance and transparency dictate that boards should utilize action without meeting in a judicious manner.  We also recommend that any such action taken be placed on the agenda to be ratified at the next meeting of the board. 

Posted By Molly Foley-Healy In Community Associations Miscellaneous 0 Comments Permalink

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

According to this NYTimes article, the use of guide horses, monkeys, goats, parrots, pigs, ferrets and even iguanas as service or comfort animals are growing in number.  But, as a result, the OMB (Office of Management and Budget) is considering proposed regulations for the ADA which may limit certain types of comfort and service animals.  The proposed final ADA regulations were accepted by the OMB on December 3 after soliciting over 5000 comments.  Given the change in administration, the regulations may be quickly adopted or languish for months.  We will continue to monitor for approval but in the meantime, association should proceed very carefully if an owner requests an accommodation for a service or comfort animal and seek advice of counsel before denying any such request. 

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

The legal distinction between condominiums (where the units are each owned separately by individual owners) and apartment buildings (where the entire building is usually owned by one entity and then the units are rented out) can have impacts in unexpected ways. For example, condominium owners in Charleston, South Carolina are disputing their trash removal charges because they are charged a higher rate by the county than apartment complexes, which, from a practical perspective, have the same trash needs. Is this something that is or could happen here? 

This scenario also points out that community associations, like the individual homeowners who make up the associations, are suffering through these tough economic times along with the rest of us. Many associations are more closely scrutinizing vendor invoices, and we have seen an increase in disputes between associations and vendors as associations attempt to tighten their belts. In an effort to save money in other areas, a lot of associations are entering into alternative collection fee arrangements with their attorneys, and selling their liens to investors. Until these economic times improve, many associations are going to have to continue to be creative to stay ahead of the game. 

Posted By Trisha K. Harris In Community Associations Miscellaneous 0 Comments Permalink

Warning!  If you received a mailing from Colorado Corporate Compliance that requests your association to send a fee ranging from $150.00 to $175.00 in order to process meeting minutes - IT IS NOT REQUIRED!!  Despite the implications in this solicitation, associations are not required by law to file minutes with the Secretary of State.

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

Freddie Mac has ordered its national network of mortgage servicers and foreclosure attorneys to suspend all foreclosure sales and evictions involving occupied single family and 2-4 unit properties with Freddie Mac-owned mortgages between November 26, 2008 and January 9, 2009. This suspension will support the implementation of the Streamlined Modification Program recently announced by Freddie Mac, Fannie Mae, the Federal Housing Finance Agency (FHFA), HOPE Now and 27 mortgage servicers. The suspension period also provides servicers with more time to work with borrowers to help them avoid foreclosure.

How does this affect homeowners associations? Some argue this suspension could be very bad for associations since lenders are delaying their responsibility for common area expenses. Others believe it is a step forward in addressing the systemic issues driving the increase in foreclosures. What will your association do?

Posted By HindmanSanchez In Community Associations Miscellaneous 0 Comments Permalink

 As we approach the holiday season, many owners in community associations will be pulling the boxes of holiday decorations out of the attic and stringing lights. Every year, associations are faced with the task of responding to the outdoor displays many people wish to have. Here are some quick practice pointers to avoid controversy and discrimination issues at this time of year: 

Do:      

Be reasonable and uniform. For example, if your association wants to ban holiday displays (and it has the authority to do so in the governing documents), ban ALL displays, regardless of the holiday being celebrated.

Develop reasonable rules related to the size, illumination and timing of displays. For example, rules should address how long before and after the holiday exterior displays can be installed.

Don’t:   

Base rules on the holiday being celebrated or create rules that discriminate based on the holiday.

Require prior approval for temporary holiday displays. Doing so puts your architectural review committee in the awkward position of determining good taste. 

For more tips on keeping everyone in the holiday spirit, click here and here.

Posted By Trisha K. Harris In Community Associations Miscellaneous 0 Comments Permalink

The nationwide mortgage crisis is resulting in some interesting decisions that may impact associations. The Cook County, Illinois (Chicago area) Sheriff made an announcement yesterday that his office will no longer serve eviction notices as a result of a foreclosure. He claims he is serving "justice" but he may be in contempt of court and face jail time. I wonder what impact this might have in Colorado if our sheriffs decided to take a similar approach. A renter is paying rent to the owner but the owner doesn't pay the mortgage. The mortgage company forecloses and becomes the legal owner of the property but can't evict the tenant. Instead, the renter pays the rent to the mortgage company and the mortgage company pays assessments and maintains the property -- we can only hope! But maybe the mortgage company wouldn't foreclose at all and the owner would continue to not pay assessment nor maintain the property and the association would be no better off. It will be interesting to see how Cook County reacts to this and any disciples it creates nationwide.  Click here for the full story.

Posted By Loura K. Sanchez In Community Associations Miscellaneous 3 Comments Permalink

Ever wanted to get more owners to attend an annual meeting?  Well, an association in Delaware has come up with a controversial method...they have imposed a $100 fine if owners don't attend the annual meeting or at least return a proxy!  Would this work in Colorado?  We certainly would not recommend doing this through rule but it may be possible to write this type of a requirement into the Bylaws of the association.  One should question the legality of requiring an owner to vote!  Can you imagine if every owner in the U.S. was required to vote in the upcoming presidential election.  Weigh in by sending me an email with your thoughts.

Posted By Loura K. Sanchez In Community Associations Miscellaneous 24 Comments Permalink

If your association is located in the Town of Erie you may already be aware that some changes are coming in regard to park, tot lot, and arterial maintenance.  The Board of Trustees of the Town of Erie has decided that maintenance responsibilities for these areas will shift to the associations they are owned by beginning January 1, 2009.  The exception to this new rule is that if the town conducts public programs on your park area then the town will maintain that area.  Although this is the blanket rule for all  associations within Erie, each development is unique.  To find your specific rights and responsibilities you should refer to  the original Annexation Agreement  between the town and the developer of your community as well as your governing documents and any deeds recorded for the affected properties. 

To make the transition more clear, the Town of Erie sent each development a packet of paperwork which specified maintenance responsibilities as of January 1, 2009.  This packet should have included a plat map with color coded responsibilities clearly labeled.  If you have not received this packet or you have any questions you can visit  www.erieco.gov for further clarification and information.   You can contact the Parks and Recreations Department with specific questions.  Copies of all documents should be on file with the Town Clerk.

Posted By HindmanSanchez In Community Associations Miscellaneous 0 Comments Permalink

Are you aware that the City and County of Denver Pool Rules and Regulations provide that:  "Each limited access pool shall have a manager or other designated responsible person on duty at any time swimming or bathing is permitted?"  Limited access pools are defined to include any pool maintained in conjunction with a condominium or similar facility and which is not available for use by the general public but only by their occupants or members and their guests.  This definition would include most community association pools.  So what exactly does this mean?  A person "on duty"? Someone physically at the pool? The community manager at the pool?  Fear not, according to the Denver Department of Environmental Health who adopted the rules, this only requires that a sign be posted at the community with a phone number, other than 911, listed to contact in the case of an emergency or for questions or concerns.    For a full set of the rules click here.

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

Under QETP, the IRS and 29 state agencies have agreed to share information through a centralized database in an attempt to share resources and encourage businesses to comply with federal and state employment tax requirements. The intent is to disincentivise businesses from classifying workers as independent contractors to avoid payroll tax benefits, and workers’ compensation insurance. Auditors will be looking closely at independent contractor agreements and sharing information via the database.

The difference between an employee and an independent contractor lies in your ability as owner or manager to control how a worker performs the job. If you have the right to direct and control the worker’s job, the IRS says the worker is an employee even if you and the worker have agreed other wise. Key factors include:

• Amount of training provided.
• Amount of supervision needed.
• Compensation method (by the job or by the hour).
• Whether the worker’s expenses are reimbursed .
• Who furnishes the equipment or “tools of the trade.”
• How the worker can be terminated.

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

In order to help our clients in Weld county who are victims of yesterday's tornados, HindmanSanchez is collecting essentials for delivery next Wednesday, May 28, 2008.  Our hope is to deliver basic toiletries, bottled water, hand wipes, pet food, trash bags, gloves, etc. to associations which sustained damage to their homes and common areas.  If you would like to contribute please drop off your contributions to our office by Tuesday, May 27 at 5:00 pm.  Or, if you'd prefer to send us a check we will purchase items on your behalf.  We will recognize all contributions on our website.

Thank you for your help in strengthening Colorado associations.

HindmanSanchez P.C.
"Strength in Association"

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

As we know, legislation affecting associations here in Colorado generally comes about because of alleged abuses in the industry and vocal owners who feel their rights are being unjustly infringed.  The attached story seems to have all the makings for potential legislation.  When an owner didn't like the actions being taken by his community (short-term rental restrictions), he decided to fight back.  He apparently obtained a significant number of proxies from other owners and used these proxies to remove the board who was making decisions he didn't like. The result is a questioning of proxies, the role of proxies in associations and just how much power boards and owners should have with respect to basic property rights.

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

In a Working Paper published by the Federal Reserve Bank of Boston, discussing the sub-prime market and its impact on home ownership, it found that condominiums and other multi-family homes have a 67-86% higher default probability than owners of single family homes. And if the condominium was purchased under a mortgage from a sub-prime lender, it is estimated that the default possibility is increased by 715%! This means that multi-family associations (condominiums and townhomes) should carefully budget for bad debt in the next few years. However, it is not all bad news…the paper also found that condominiums are more likely to sell compared to townhomes and single family homes so the chances of recovery on a lien is greater. So, make sure you are recording liens and carefully watching for-sale signs and listings.

Posted By Loura K. Sanchez In Community Associations Miscellaneous 1 Comments Permalink