- At least 67% (or more) of the Association must vote to terminate the common interest community in a Termination Agreement. The declaration may have a percentage requirement higher than 67%.
- See governing documents for election procedures.
- See governing documents for procedures to amend these items.
In addition to the above, the section 7-130-202 of the Colorado Revised Nonprofit Corporations Act prohibits boards from unilaterally amending their documents to change quorum and requires all quorum changes to be presented to the members for approval.
Amending the Rules and Regulations
Typically, rules and regulations can be changed by a vote of the Board of Directors. Committees may also be used to create or change rules and regulations, which then may be adopted by the Board. Using a committee may create an environment of transparency and foster positive relations between the Board and the membership. Look to your governing documents for information specific to your community regarding any process required for amending the rules and regulations.
Are there any statute of limitations on enforcement actions?
Section 38-33.3-123 of the Colorado Common Interest Ownership Act discusses an association’s right to enforce its declaration, bylaws, articles, or rules and regulations. This section also contains what may be referred to as a statute of limitations on the enforcement of certain association requirements.
Section 38-33.3-12 3(2) states that, despite any law to the contrary, no action shall be commenced or maintained to enforce the terms of any building restriction contained in the provisions of the declaration, bylaws, articles, or rules and regulations or to compel the removal of any building or improvement because of the violation of the terms of any such building restriction unless the action is commenced within one year from the date from which the person commencing the action knew or in the exercise of reasonable diligence should have known of the violation for which the action is sought to be brought or maintained.
Are there any rules against selective enforcement of an association’s rules?
Most governing documents permit the association’s board of directors to adopt rules, and the Colorado Common Interest Ownership Act expressly permits associations to adopt rules. Oftentimes, the language in a declaration that gives the board the authority to adopt rules also comes with a requirement that they be enforced in a uniform manner. The Colorado Common Interest Ownership Act does not contain any such express requirement, but it is clear from Colorado court decisions that courts will not enforce covenants or rules when the board is acting in an arbitrary or capricious manner.
Parking, Landscaping, Maintenance & Architectural ReviewCan an HOA tow my car? Can they really prevent me from parking on the street in front of my house?
In short, an HOA may establish and enforce parking restrictions on roads within the association ONLY if the road is NOT a public right-of-way. If your association’s road are public (maintained by the city or county), HB22-1139 changed the laws in Colorado so that associations cannot regulate parking within the association. Nevertheless, whether or not an association may utilize physical means of enforcing parking depends on whether or not the Association owns the property on which the vehicle is illegally parked. Colorado law only allows for the towing of a vehicle under the following conditions:
- When the towing is directed by a law enforcement officer;
- When the towing is requested by the owner, authorized operator, or authorized agent of the owner of the motor vehicle;
- or When the towing is requested by the property owner.
See HB22-1314 and section 6516 (Authorization for Towing of Motor Vehicles) of the Code of Colorado Regulations regarding rules for Towing Carriers .
What does the Colorado Common Interest Ownership Act say about maintenance responsibilities?
Section 38-33.3-307 of the Colorado Common Interest Ownership Act states that “Except to the extent provided by the declaration. the association is responsible for maintenance, repair, and replacement of the common elements, and each unit owner is responsible for maintenance, repair, and replacement of such owner's unit.
Can an HOA prohibit the use of xeriscaping?
Section 38-33.3-106.5 (1)(i)(I) of the Colorado Common Interest Ownership Act states that an association may not prohibit the use of xeriscape or drought-tolerant vegetative landscapes to provide ground covering to the property for which a unit owner is responsible, including a limited common element or property owned by the unit owner. However, associations may adopt and enforce design or aesthetic guidelines or rules that require drought-tolerant vegetative landscapes or regulate the type, number, and placement of drought-tolerant plantings and hardscapes that may be installed on a unit owner's property.
Are there any rules regarding how a board or committee must approve an application for architectural or landscaping changes?
Section 38-33.3-302 (3)(b) of the Colorado Common Interest Ownership Act states that decisions concerning the approval or denial of a unit owner's application for architectural or landscaping changes must be made in accordance with standards and procedures set forth in the declaration or in duly adopted rules and regulations or bylaws of the association, and shall not be made arbitrarily or capriciously.
AssessmentsWhy do I pay different amounts in assessments than my neighbors?
Section 38-33.3-315 (2) of the Colorado Common Interest Ownership Act requires every declaration to state what the formula is for allocating assessments.
What are special assessments?
Generally, there are two types of assessments–regular (also known as “dues”) and special. Regular assessments are typically paid on a monthly, quarterly, or annual basis, while special assessments are usually less frequent and made on an as needed basis. Regular assessments go towards overall operational maintenance costs, while special assessments are typically made for a specific purpose, such as a repair, replacement, or new construction. Although the Colorado Common Interest Ownership Act does not address any time periods in which the Board has to require the payment of a special assessment, your governing documents may.
Is there a limit on how much an association can raise its dues?
The short answer is generally “no.” An HOA can typically raise dues as much as it needs to in order to meet its annual budget requirements. Any exception to this would be included in the association’s governing documents and usually listed as an annual cap on the amount a board may raise assessments from the previous years. You will need to review your association’s governing documents to determine if such a cap exists.
I’m in a dispute with my HOA over assessments and they have placed a lien on my home. Can they do that?
One of the most powerful tools available to associations in Colorado is the statutory lien. The statutory lien exists on any unit for any assessment levied against that unit or fines imposed against its unit owner. Interestingly, unless an association’s declaration provides otherwise, The Colorado Common Interest Ownership Act describes the term “fines imposed” to include fees, charges, late charges, attorney fees, fines, and interest charged. The association has a super lien meaning it has priority over all other liens. Generally, liens have to be recorded to be perfected. However, in Colorado, the recording of an association’s declaration constitutes record notice and perfection of the lien. The association need not take any further recordation of any claim of lien for assessments for the lien to be valid. Interestingly, an association has six years from the time the full amount of assessments becomes due to institute enforcement actions. A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within such time frame.
Association FinancesAre associations required to conduct audits of the association’s finances?
Section 38-33.3-303 of the Colorado Common Interest Ownership Act only requires an audit at the discretion of the executive board or if an audit is requested by the owners of at least one-third of the units represented by the association. However, in order for a unit owner-requested audit to occur, the association must have annual revenues or expenditures of at least two hundred fifty thousand dollars.
Are there any rules on the commingling of association funds?
Section 38-33.3-306 (3)(a)(II) of the Colorado Common Interest Ownership Act states that if an association with thirty or more units delegates powers of the executive board or officers relating to collection, deposit, transfer, or disbursement of association funds to other persons or to a managing agent, the bylaws of the association must require that the other persons or managing agent maintain all funds and accounts of the association separate from the funds and accounts of other associations managed by the other persons or managing agent and maintain all reserve accounts of each association so managed separate from operational accounts of the association.
How must reserve funds be used?
Generally speaking, the use of reserve funds is at the discretion of the Board, unless governing documents require membership approval.
Is there a process that associations must follow in order to pass a budget?
All Common Interest Communities (except those in which the declaration contains maximum assessment amounts or limits the increases in the annual budget) must follow the process set out in section 38-33.3-303(4) of the Colorado Common Interest Ownership Act, which requires that the association’s board of directors adopt the annual budget. Then, within 90 days after adoption of the proposed budget, the board must mail, or otherwise deliver (which may include posting on the association’s website), a summary of the budget to all owners and set a date for a meeting for the owners to consider the budget. The meeting must take place within a reasonable period of time after the mailing or delivery, and in accordance with the association’s bylaws. Notice of the meeting must be provided as required by the bylaws. Unless a majority of the owners veto the proposed budget (or such higher percentage as established in the Declaration), the proposed budget becomes the approved budget of the association.
For more detailed information on the Colorado Common Interest Ownership Act budget process, please see Association Budgeting - A Webinar from The HOA Information & Resource Center.
Can an association amend its budget?
Section 38-33.3-302(1)(b) of the Colorado Common Interest Ownership Act gives an association the power to "Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners" [Emphasis added]
Sections 38-33.3-303(4)(a)(I) & 38-33.3-303(4)(a)(II)(A) of the Colorado Common Interest Ownership Act provide that within 90 days of the date the board adopts a budget, a summary is mailed to all owners and a meeting is called. Unless a majority of all owners vetoes the budget, the budget is approved. The declaration can require a higher percentage of owners to veto the budget.
Section 38-33.3-308(1) of the Colorado Common Interest Ownership Act, regarding meetings, states that any meeting of the unit owners must be accompanied by a notice, which must state "the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove an officer or member of the executive board." [Emphasis added]
Section 38-33.3-308(1) of the Colorado Common Interest Ownership Act also discusses the procedure for calling a special meeting. While the HOA Center is unable to provide legal advice, and you should definitely follow up with legal counsel, it is likely that in order to amend an approved budget, the budget process would have to take place again, and a special meeting would need to be called to allow the membership an opportunity to veto the amended budget.
Is my HOA required to carry insurance?
Associations must maintain property insurance on the common elements for broad form covered causes of loss and commercial general liability insurance against claims and liabilities arising in connections with the ownership, existence, use or management of the common elements (see section 38-33.3-313 of the Colorado Common Interest Ownership Act).
Are there any other insurance requirements for HOAs?
(Unit owner/employee controlling/disbursing funds)
If any unit owner or employee of an association with thirty or more units controls or disburses funds of the common interest community, the association must obtain and maintain, to the extent reasonably available, fidelity insurance. Coverage shall not be less than the aggregate of two months' current assessments plus reserves, as calculated from the current budget of the association (see section 38-33.3-313(10) of the Colorado Common Interest Ownership Act).
(Community Association Manager Insurance)
Any person employed as an independent contractor by an association with thirty or more units for the purposes of managing a common interest community must obtain and maintain fidelity insurance in an amount not less than the aggregate of two months' current assessments plus reserves, as calculated from the current budget of the association, unless the association names such person as an insured employee in a contract of fidelity insurance, pursuant to subsection (10) of this section (see section 38-33.3-313 (11) of the Colorado Common Interest Ownership Act).
(Ability to carry greater coverage)
The association may carry fidelity insurance in amounts greater than required by the Colorado Common Interest Ownership Act and may require any independent contractor employed for the purposes of managing a common interest community to carry more fidelity insurance coverage than required by the Colorado Common Interest Ownership Act (see section 38-33.3-313(12) of the Colorado Common Interest Ownership Act).
(Insurance requirements in bylaws)
If an association with thirty or more units delegates powers of the executive board or officers relating to collection, deposit, transfer, or disbursement of association funds to other persons or to a managing agent, the bylaws of the association must require the other persons or managing agent maintain fidelity insurance coverage or a bond in an amount not less than fifty thousand dollars or such higher amount as the executive board may require (see section 38-33.3-306 (3)(a) of the Colorado Common Interest Ownership Act)
What is FHA condo certification?
For condominium project approval or recertification, eligible projects must be complete and exist in full compliance with applicable state law requirements including good standing with the state, and with all other applicable laws and regulations. The condominium project also must meet the approval requirements established by HUD through the SF Handbook 4000.1, including insurance coverage, financial condition, nature of title, the existence of any pending legal action or physical property condition, and other factors that may affect the viability or marketability of the project or its units.
Does my HOA have to meet the requirements for FHA certification?
When it comes to determining the particular insurance needs of an HOA in Colorado, the declaration (“CCRs”) will usually contain specific provisions regarding the types and details for insurance which must be carried by the association. The Colorado Common Interest Ownership Act requires communities formed after July 1, 1992, to purchase and maintain certain insurance policies “to the extent reasonably available.” However, the requirements in the Colorado Common Interest Ownership Act do not require anything in relation to FHA requirements, which are separate and distinct and which HOAs are under no obligation to follow. For more information, please see the below articles.
Succinctly speaking, it is up to the individual HOA to determine whether or not to structure their insurance program so that it is in accordance with FHA guidelines.
Who decides how much each unit in an HOA pays for common insurance?
Section 38-33.3-313(6) of the Colorado Common Interest Ownership Act states that an association may adopt and establish written nondiscriminatory policies and procedures relating to the submission of claims, responsibility for deductibles, and any other matters of claims adjustment.
Meetings and VotingHow often should my HOA be holding membership meetings?
Section 38-33.3-308 of the Colorado Common Interest Ownership Act requires that meetings of the unit owners, as the members of the association, be held at least once each year.
Are there any notice requirements for membership meetings?
Notice of any meeting of the membership must be provided no less than ten and no more than fifty days in advance of such meeting. The notice must be physically posted in a conspicuous place, to the extent that such posting is feasible and practicable, in addition to any electronic posting or electronic mail notices. The notice must state the time and place of the meeting and the items on the agenda, including the general nature of any proposed amendment to the declaration or bylaws, any budget changes, and any proposal to remove an officer or member of the executive board.
How often must Board meetings take place?
The Colorado Common Interest Ownership Act does not contain any frequency requirements for Board meetings, but your governing documents may.
Are there any notice requirements for board meetings?
The Colorado Common Interest Ownership Act does not contain any notice requirements for Board meetings, but your governing documents may.
Who is allowed to attend a regular or special meeting or committee meeting?
All regular and special meetings of the association's executive board, or any committee, must be open to attendance by all members of the association or their representatives. Agendas for meetings of the executive board shall be made reasonably available for examination by all members of the association or their representatives (the Colorado Common Interest Ownership Act does not define “reasonably available”).
Notwithstanding any provision in the declaration, bylaws, or other documents to the contrary, all meetings of the board of directors are open to every unit owner of the association, or to any person designated by a unit owner in writing as the unit owner's Representative.
Do association members have a right to participate at meetings?
At an appropriate time determined by the board, but before the board votes on an issue under discussion, unit owners or their designated representatives must be permitted to speak regarding that issue. The board may place reasonable time restrictions on persons speaking during the meeting. If more than one person desires to address an issue and there are opposing views, the board must provide for a reasonable number of persons to speak on each side of the issue.
What are “work sessions” and can a board or committee hold closed door work sessions?
While there are generally only two types of formal meetings (Unit Owner Meetings and Board Meetings), another form of conference commonly found in HOAs are working sessions. Although not specifically defined in the Colorado Common Interest Ownership Act, work or study sessions of Executive Boards are not prohibited by it. However, they still must be in accordance with the community’s governing documents and policies. Since they are not considered meetings, due to the lack of actions or votes on community issues, unless otherwise stated in the governing documents, unit owners do not have a right to notice of the session or a right to participate and minutes are not required to be taken.
What are proxies and how may they be used?
Unless otherwise provided in the declaration, bylaws, or rules of the association, proxies may be appointed pursuant to the requirements of section 7-127-203 of the Colorado Revised Nonprofit Corporation Act, which allows for great latitude in the appointment of proxies and provides that an individual may appoint a proxy by: signing an appointment form; transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment which shall include or be transmitted with written evidence from which it can be determined that the individual transmitted or authorized the transmission of the appointment. This is most commonly done in the form of an email appointment.
Proxies can be “general” or “directed.” General proxies simply appoint an individual to vote on an owner’s behalf and authorize such individual to vote as they deem appropriate on all issues. A directed proxy specifies and directs the proxy holder how they must vote on each issue.
With respect to the use of proxies by directors in board meetings, section 7-127-205 of the Colorado Revised Nonprofit Corporation Act (“CRNCA”) provides that in the context of board meetings, for purposes of establishing a quorum and for voting, a proxy may only be used if: the use of proxies for director meetings is specifically authorized in the association’s bylaws; and the director has granted a signed written proxy to another director who is present at the director meeting; and the proxy provides instruction regarding how to vote on specific items. If the association’s bylaws are silent on the issue of the use of proxies by directors then proxies cannot be used at director meetings. In addition, if the proxy form does not indicate how the vote is to be cast on each specific matter (for or against) then the proxy cannot be used for purposes of voting on that specific issue.
What are special meetings?
Special meetings of the unit owners may be called by the president, by a majority of the executive board, or by unit owners having twenty percent, or any lower percentage specified in the bylaws, of the votes in the association. Special meetings may be used for a variety of purposes, including but not limited to removing directors, voting in new directors, or to discuss a particular issue or concern.
Can my HOA Hold Meetings Virtually?
In general, HOAs have the right to have remote meetings unless it is restricted in its governing documents.
What is a quorum?
Oxford dictionary defines quorum as “the minimum number of members of an assembly that must be present at any of its meetings to make the proceedings of that meeting valid.”
What are the quorum requirements for my association?
Section §38-33.3-309 of the Colorado Common Interest Ownership Act discusses the requirements regarding quorums. The specific requirements for quorum will first be found in the association’s governing documents. If the governing documents are silent on quorum requirements, a quorum is deemed present throughout any meeting of the association if persons entitled to cast twenty percent, or, in the case of an association with over one thousand unit owners, ten percent, of the votes which may be cast for election of the executive board are present, in person or by proxy at the beginning of the meeting. It is important to recognize that since the Colorado Common Interest Ownership Act allows proxy votes to count as physically present, although a meeting may not appear to have enough bodies to amount to a quorum, if enough proxies have been executed, there still may be a quorum.
If the governing documents are silent on quorum requirements, a quorum is deemed present throughout any meeting of the executive board (which includes committees) if persons entitled to cast fifty percent of the votes on that board are present at the beginning of the meeting or have properly executed their proxy.
What is an executive session of the board?
The Colorado Common Interest Ownership Act allows for closed-door sessions of the board under specific circumstances (see section 38-33.3-308 (3) of the Colorado Common Interest Ownership Act). The minutes of the meeting must state that an executive session was held and the general subject matter of the executive session. The specific circumstances under which entering an executive session would be appropriate are:
(a) Matters pertaining to employees of the association or the managing agent's contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association;
(b) Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client;
(c) Investigative proceedings concerning possible or actual criminal misconduct;
(d) Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure;
(e) Any matter, the disclosure of which would constitute an unwarranted invasion of individual privacy, including a disciplinary hearing regarding a unit owner and any referral of delinquency; except that a unit owner who is the subject of a disciplinary hearing or a referral of delinquency may request and receive the results of any vote taken at the relevant meeting; or
(f) Review of or discussion relating to any written or oral communication from legal counsel.
What are “working sessions” or “work groups?
While there are generally only two types of formal meetings (Unit Owner Meetings and Board Meetings), another form of conference commonly found in HOAs are working sessions. Although not specifically defined in the Colorado Common Interest Ownership Act, work or study sessions of Executive Boards are not prohibited by it. However, they still must be in accordance with the community’s governing documents and policies. Since they are not considered meetings, due to the lack of actions or votes on community issues, unless otherwise stated in the governing documents, unit owners do not have a right to notice of the session or a right to participate and minutes are not required to be taken.
When must an association use secret ballots?
Section 38-33.3-310 of the Colorado Common Interest Ownership Act requires secret ballots be utilized at membership meetings under the following circumstances:
- Secret ballots must be utilized for contested positions on your board of directors. Simply put, this means secret ballots must be used when there are more folks running for the board than there are open seats. The requirement does not apply if your governing documents provide for the election of directors through delegates who cast votes on behalf of a segment of the membership.
- Secret ballots may be used at the discretion of the board of directors. Some boards like to use secret ballots for every item which is voted upon at a membership meeting. This gives members the ability to cast their vote without any perceived pressure from the board or their neighbors.
- Secret ballots must be utilized on any issue where 20% of the owners, present in person or by proxy at the meeting of the members, request use of a secret ballot on an issue.
Once votes are cast at a membership meeting by secret ballot:
- The ballots must be counted by a neutral 3rd party or a committee of volunteers;
- If a committee of volunteers is utilized, the president of the board (or the individual presiding over the membership meeting) during the meeting should select members of the HOA to serve on the committee of volunteers. The volunteers cannot be members of the board or a candidate in a contested election for a position on the board.
Am I allowed to record a meeting in my association?
One of the mandatory responsible governance policies required by the Colorado Common Interest Ownership Act is a "conduct of meetings policy". That policy should address whether the recording of meetings is permitted, and if so, to what extent.
What are meeting minutes?
Meeting minutes are notes that are recorded during a meeting. They highlight the key issues that are discussed, motions proposed or voted on, and activities to be undertaken. The minutes of a meeting are usually taken by the board secretary or community association manager. Their task is to provide an accurate record of what transpired during the meeting.
Are there any rules regarding how minutes should be taken or what information they should contain?
Section 38-33.3-317 (1)(c) of the Colorado Common Interest Ownership Act states that the association must keep, as permanent records: minutes of all meetings of the unit owners and executive board; a record of all actions taken by the unit owners or executive board without a meeting; and, a record of all actions taken by any committee of the executive board. The only section of the Colorado Common Interest Ownership Act which speaks to the contents of minutes is section 38-33.3-308 (7) which states that minutes of all meetings at which an executive session was held shall indicate that an executive session was held and the general subject matter of the executive session.
Covenant Enforcement, Fines and FeesWhat is a covenant enforcement policy?
Section 38-33.3-209.5(1)(b)(IV) of the Colorado Common Interest Ownership Act requires all associations to adopt policies, procedures, and rules and regulations concerning the enforcement of covenants and rules, including notice and hearing procedures and the schedule of fines.
Can my association fine me?
Section 38-33.3-209.5(2) states that an association may not fine any unit owner for an alleged violation unless the association has adopted, and follows, a written policy governing the imposition of fines. This policy must include a fair and impartial fact-finding process concerning whether the alleged violation actually occurred; and, whether the unit owner is the one who should be held responsible for the violation. This process may be informal but must, at a minimum, guarantee the unit owner notice of the alleged violation and an opportunity to be heard before an impartial decision-maker.
What is an “impartial decision-maker"?
“Impartial decision-maker" means a person or group of persons who have the authority to make a decision regarding the enforcement of an association's covenants, conditions, and restrictions, including its architectural requirements, and the other rules and regulations of the association and do not have any direct personal or financial interest in the outcome. A decision-maker shall not be deemed to have a direct personal or financial interest in the outcome if the decision-maker will not, as a result of the outcome, receive any greater benefit or detriment than will the general membership of the association.
Can associations charge interest on past due amounts?
Associations may charge interest on past due amounts. Section 38-33.3-315 of the Colorado Common Interest Ownership Act states that interest on delinquent assessments is capped at 8% per year.
Is there a limit on the interest an association may charge?
First, look at your governing documents regarding what rate your association may charge you for delinquent assessments (including fines and fees). If your governing documents do not address a limit on the amount of interest that can be charged, section 38-33.3-315 (2) of the Colorado Common Interest Ownership Act provides a limit of no more than 8% per year.
Executive BoardIs there a way to remove a board member from office other than voting them out?
Section 38-33.3-303(8) of the Colorado Common Interest Ownership Act discusses the process for removing Board members. It states that "Notwithstanding any provision of the declaration or bylaws to the contrary, the unit owners, by a vote of sixty-seven percent of all persons present and entitled to vote at any meeting of the unit owners at which a quorum is present, may remove any member of the executive board with or without cause, other than a member appointed by the declarant or a member elected pursuant to a class vote under section 38-33.3-207(4) ."
What are the powers of the board of directors?
Generally, board members have the authority to do the following:
- Enter into contracts on behalf of the association with various vendors;
- Control the maintenance of common areas, which includes the right to decide on how the common areas will be maintained, when they will be maintained, and who will perform any service on them;
- Initiate legal action on behalf of the association;
- Control the maintenance of unit exteriors (generally in condos and townhomes);
- Enter into management agreements with management companies with or without input from the membership;
- Obtain insurance for the benefit of the community, including property and liability policies, as well as directors’ and officers’ liability policies;
- Enforce covenants and rules, including imposition of fines and initiation of legal action in accordance with its covenant enforcement policy;
- Adopt budgets for presentation to owners for ratification;
- Collect delinquent assessments and impose late fees in accordance with the association’s collection policy;
- Adopt rules and regulations governing use of common areas, and to a certain extent, of the units within the association (i.e. rental and leasing restrictions);
- Grant easements and licenses over common area, and;
- Create and disband committees and appoint committee members;
Can a board take out a loan on behalf of the association?
Most covenants allow for the board of directors to borrow money and incur debt on behalf of the association. This power is also explicitly granted in Section 7-123-102 of the Colorado Revised Nonprofit Corporation Act. Additionally, the Common Interest Ownership Act allows for associations to pledge their future assessments as collateral or subject the common areas to a security interest. Section 38-33.3-312 of the Colorado Common Interest Ownership Act requires approval of 67% of the membership before subjecting the common areas to a security interest. Depending on the association’s governing documents, it may also be necessary to obtain membership approval before pledging future assessments.
Is an association’s board allowed to take action without a meeting?
While the Nonprofit Corporation Act, and many community Bylaws, permit actions without meeting, the Colorado Common Interest Ownership Act grants to unit owners the right to speak on an issue before the Board votes on that issue [38-33.3-308(2.5)(b)]. You should consult with legal counsel to ensure that you are not inadvertently preventing interested owners from speaking on an issue before the Board, by making electronic decisions.
What are my association’s responsibilities with regard to conflicts of interest?
In addition to section 38-33.3-310.5 of the Colorado Common Interest Ownership Act (which substantially adopts section 7-128-501 of the Colorado Revised Nonprofit Corporation Act) section 38-33.3-209.5 (responsible governance policies) states that the required policy regarding how to handle conflicts of interest involving board members must, at a minimum, define or describe the circumstances under which a conflict of interest exists; set forth procedures to follow when a conflict of interest exists, including how, and to whom, the conflict of interest must be disclosed and whether a board member must recuse himself or herself from discussing or voting on the issue; and, provide for the periodic review of the association's conflict of interest policies, procedures, and rules and regulations.
Section 7-128-501 of the Colorado Revised Nonprofit Corporation Act defines a conflicting interest transaction to mean "A contract, transaction, or other financial relationship between a nonprofit corporation and a director of the nonprofit corporation, or between the nonprofit corporation and a party related to a director, or between the nonprofit corporation and an entity in which a director of the nonprofit corporation is a director or officer or has a financial interest.”
Can an HOA regulate the display of political signs?
Section 38-33.3-106.5 of the Colorado Common Interest Ownership Act addresses political signs in HOAs. It states that “t he display of a sign by the owner or occupant of a unit on property within the boundaries of the unit or in a window of the unit. The association shall not prohibit or regulate the display of window signs or yard signs on the basis of their subject matter, message, or content; except that the association may prohibit signs bearing commercial messages. The association may establish reasonable, content-neutral sign regulations based on the number, placement, or size of the signs or on other objective factors.
If one or multiple board members has information that other board members do not, is there a duty to share that information?
Section 38-33.3-303 (1)(b) of the Colorado Common Interest Ownership Act discusses the dissemination of information to all Board members. It states that “Notwithstanding any provision of the declaration or bylaws to the contrary, 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 necessarily 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 managing agent, attorney, or accountant employed or engaged by the executives board to whom the executive board delegates responsibilities under this article.”
Are board members allowed to be compensated?
Previously, during the period of Community Association Manager regulation in Colorado (2015-2019), anyone seeking to receive compensation for the performance of certain duties related to community association management was required to first obtain a Community Association Manager license. However, on May 31, 2019, the Governor vetoed HB19-1212 , and the CAM Program expired on June 30, 2019. Therefore, there is currently no regulatory oversight of HOAs or Community Association Managers and no state law preventing the compensation of board members.
However, there are some considerations that should be evaluated before compensating board members. Although the Colorado Revised Nonprofit Act allows a corporation to compensate its board of directors, an association's governing documents must allow for compensation. Be sure to review your governing documents, as many association declarations call for a volunteer board, but also allow reimbursement for related expenses.
Additionally, you should consult with your association's attorney and insurance agent before compensating any board members, as there may be insurance concerns. Finally, be sure to discuss with your attorney how compensated board members may be treated under the business judgment rule if litigation surrounding a decision by the board is ever instituted. You should also discuss with your attorney section 7-129-107 of the Nonprofit Act, which covers the indemnification of board members.
Are there any required qualifications for board members?
Section 7-128-102 of the Colorado Revised Nonprofit Corporation Act speaks to the qualifications of directors. It states that a director shall be an individual; that the bylaws may prescribe other qualifications for directors and that a director need not be a resident of this state or a member of the nonprofit corporation unless the bylaws so prescribe.
The Colorado Common Interest Ownership Act does not specify qualifications for board members. Rather, the governing documents of an association will typically specify the qualifications for board members. Generally, most documents require board members to be owners within the community. Additionally, some documents may require board members to be in good standing, meaning they are current in their payment of assessments, and otherwise in compliance with the association’s governing documents.
Are individual board members personally liable for decisions made as a board member?
Section 38-33.3-303(2)(b) of the Colorado Common Interest Ownership Act states that, if not appointed by the declarant, no board member may be liable for actions taken or omissions made in the performance of such board member's duties, except for wanton and willful acts or omissions.
Do board members have any term limits?
The Colorado Common Interest Ownership Act does not contain any limits on the terms of board members. Many HOAs are organized as Nonprofit Corporations. As such, Section 7-128-105 of the Nonprofit Act states that the association's bylaws may state the terms of directors and in the absence of any term stated in the bylaws, the term of each director shall be one year. Unless otherwise provided in the bylaws, directors may be elected for successive terms.
