By Joe Smith, Burg Simpson Eldredge Hersh Jardine, P.C. 

Among the most feared phrases to be uttered in a common interest community is “construction defect.” A construction defect is generally defined as a condition resulting from a flaw in design, workmanship, or materials that reduces the value of a structure or threatens the safety of its occupants. Once identified, construction defects have to be taken seriously and without delay. Although “construction professionals” (as defined Colorado’s Construction Defect Action Reform Act) are afforded at least two opportunities to resolve potential CD claims before an Association can file a CD lawsuit, every Association that finds itself with defects should assume that litigation is likely to occur.

Potential Benefits of CD Litigation

The greatest potential benefit to an Association and unit owners in successfully pursuing CD Litigation is the recovery of funds by negotiation, settlement, trial, or arbitration that allow the Association to permanently repair the defects at issue at the expense of those who are responsible for them, rather than depleting reserves or specially assessing the unit owners. By being able to make these repairs, the Association avoids the downsides identified below.

Additionally, if the Association prevails in the CD Litigation a court or arbitrator may order the construction professionals to reimburse the Association for its litigation expenses (e.g., the cost of expert witness investigation, reporting, and testimony; filing fees; and deposition costs that have to be paid as they become due). The court or arbitrator may also order the construction professionals to pay the Association’ attorney fees. Awarded litigation costs and attorney fees are in addition to repair costs and any other legal damages the Association recovers.

Potential Downsides to CD Litigation

There are several potential downsides to an Association not pursuing CD Litigation when preliminary investigation identifies construction defects that will require significant repairs. Among the most significant downsides are:

• The defects could result in increased maintenance or repair costs for the Association.

• The defects could cause an increase in assessments or special assessments to cover the cost of repairs.

• If the Association does not initiate its CD claim before applicable legal deadlines, the claim will expire.

• If the Association does not prevail on its CD claim, a court or arbitrator may awards costs and attorney fees to the construction professionals the Association could be responsible for paying.

• There is no guarantee that the Association will recover enough funds to repair all of the defects.

• Until the defects are repaired, additional damage to property and a reduction in the useful life of the common elements might occur. 

• Until the defects are repaired, or until the CD claim is concluded, the market value of the units in the Association might be adversely affected.

• Until the defects are repaired, sellers of units may owe unit buyers a duty to disclose known defects.

• Until the defects are repaired, or until the CD claim is concluded, unit owners might have difficulty refinancing and prospective buyers might have difficulty obtaining financing.

• Certain federal underwriting standards prevent refinancing or obtaining a new loan in projects where a construction defect is claimed, and certain lenders simply will not refinance or provide a new loan in projects where a defect is claimed.

How Does an Association Determine if CD Litigation is Warranted?

Whether or not construction defects exist in a community is usually beyond the knowledge of a community manager, Board members, and unit owners. Fortunately, a number of Colorado forensic engineers and architects, repair contractors, and CD attorneys specialize in working with Associations to help identify defects in common elements and determine if CD litigation may be necessary. 

Initially, the CD attorney usually retains a forensic engineer or architect and/or specialty repair contractor to perform visual observations of the exterior of the community and possibly a small number of unit interiors. These experts look for and document visible defects, damage, or distress. With that information in hand, as well as the Association’s Declaration and any amendments, the CD attorney can advise the community manager and Board about the types and scope of defects, the impact of applicable time limits on the CD claims, statutory processes that must be complied with before initiating CD Litigation, and any additional pre-litigation processes the Declaration may require the Association to follow. As part of this discussion, the CD attorney should tell the community manager and Board whether retaining the attorney to handle all applicable pre-litigation requirements and, if necessary, file a CD lawsuit is warranted. Ultimately, the decision rests with the Board, which should ask the CD attorney any and all questions that come to mind about the pros and cons of pursuing a CD lawsuit.

Building a common interest community is a complex undertaking that requires meticulous planning followed by strict observance of construction best practices. Serious construction defects can – and often do – occur. An Association that discovers construction defects should consult with CD Litigation experts as early as possible to assist an Association in weighing the potential benefits and downsides of CD Litigation and, ultimately, to hold the declarant, builder, and/or other parties liable for repair cost and other damages. 

About the Author: Joe Smith is a senior attorney in the Construction Defect Group at Burg Simpson Eldredge Hersh and Jardine. Joe is also a licensed architect and has represented Colorado homeowner associations and homeowners since 1999.

By Tim Moeller & Britton Weimer, Moeller Graf, P.C.

The business-judgment rule is an important legal doctrine in Colorado that applies to directors of common interest communities.  Most often, the business-judgment rule is used as a defense to complaints pertaining to discretionary board decisions.  The business-judgment rule requires courts to defer to corporate deliberations and avoid second-guessing the good-faith decisions of directors. 

Legal Overview

The business-judgment rule “bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in furtherance of a lawful and legitimate furtherance of corporate purposes.” Hirsch v. Jones Intercable, Inc., 984 P.2d 629, 637 (Colo. 1999). The rule recognizes the practical reality that courts “are ill equipped and infrequently called on to evaluate what are and must be essentially business judgments.” Id. at 638.

“Courts presume that a corporation’s directors possess the expertise and knowledge to make business decisions.” Walker v. Women’s Professional Rodeo Ass’n, 498 P.3d 648, 658 (Colo. App. 2021). However, the rule does not confer blanket immunity – it does not protect directors who engage in “fraud, self-dealing, unconscionability, and similar conduct” that is “incompatible with good faith and the exercise of honest judgment.” Id.

Generally, directors are afforded wide discretion in making decisions for the association, and if a director acts in good faith, such actions should not form a basis for imposing liability on that director. However, the business-judgment rule does not extend to transactions where the director has a conflict of interest, such as the director’s use of corporate funds for personal benefit.

The business-judgment rule extends to nonprofit organizations. "In the absence of some clearly arbitrary and unreasonable invasion of a member's rights, courts will not review the internal operation and affairs of voluntary organizations." Jorgensen Realty, Inc. v. Box, 701 P.2d 1256, 1258 (Colo. App. 1985). “Courts are reluctant to intervene, except on the most limited grounds, in the internal affairs of voluntary associations." Bloom v. Nat’l Collegiate Athletic Ass’n, 93 P.3d 621, 624 (Colo. App. 2004). 

Community associations are especially well positioned to invoke the rule, because of the discretionary nature of many board decisions. “Unlike other types of contracts that require specific acts at specific times by contracting parties, covenant enforcement may require the exercise of discretion as to both the timing and the manner of enforcement.” Colorado Homes v. Loerch-Wilson,43 P.3d 718, 723 (Colo. App. 2001). Indeed, in Colorado Homes, the Court recognized that the business-judgment rule may apply to claims against community-association directors for breach of contract and breach of fiduciary duty.

Thus, for community association boards, the business-judgment rule provides a vital defense to many claims for negligence, breach of contract and breach of fiduciary duty when performing board obligations. However, it rarely provides a defense to intentional torts such as fraud, to claims for conflicts of interest, or to actions that exceed the board’s authority under Colorado law or the governing documents.

Practical Tips

For HOA directors, the business-judgment rule provides some degree of comfort. If they can demonstrate that disputed actions were done in good faith and consistent with the governing documents and Colorado law, they will normally have a solid defense to a negligence action.

As is so often the case in preventing litigation, one key is to carefully document the material decisions, when they happen, before any lawsuits are filed. While it is often unfair, judges and juries may think that, if it wasn’t put in writing at the time, then “it probably didn’t happen.”

The board will have additional protection when it consults experts on specialized matters beyond the knowledge of the board, such as engineering, legal, investment, and accounting decisions. When the directors follow an expert’s advice, it is difficult for third parties to later second-guess the decision and show bad faith. Written opinions by experts are especially helpful.

Finally, as a risk-management backstop in case the court finds the business-judgment defense inapplicable, it is always prudent to have Directors & Officers and Commercial General Liability insurance, to help cover lawsuits that make it through the business-judgment shield.

Tim Moeller has been practicing community association law for 25 years.  He and David Graf started Moeller Graf, P.C.  in 2005.  The firm solely represents Colorado community associations. 

 

Britton Weimer is an experienced litigation, transactional and insurance attorney representing community associations with Moeller Graf in Englewood Colorado.

Any attorney that represents homeowner associations will tell you that the Colorado legislature has unleashed a massive assault on associations over the last several years with respect to regulating the collection of delinquent assessments.  However, no other area of collections has been affected to quite the same extent as the foreclosure of association liens.  There have been wide-sweeping revisions and new impediments to foreclosure never before seen in Colorado. 

In 2022, the legislature passed the Homeowners’ Association Board Accountability and Transparency bill that was introduced as HB22-1137.  HB22-1137 curtailed actions by associations in the collection of debt.  The term of the payment plan required to be offered to a delinquent owner increased from six (6) months to eighteen (18) months, while reducing the maximum interest rate to 8%. Owners were also permitted to pay as little as $25 per month for the first 17 months, with a balloon payment in month 18.  The extended payment arrangements allowed owners to remain delinquent for a protracted amount of time while unreasonably delaying an association’s ability to take legal action, including foreclosure, to collect the past due balance. 

In addition to requiring notices to owners be sent via certified mail, return receipt requested, HB22-1137 also instituted a questionable requirement to post the letter on the owner’s property.  2022 was also the year that associations became required to provide notices in any language requested by the owner, in addition to English, as well as to a third party if one was designated by the owner. 

HB22-1137 also changed the ‘application of payments’ provision to require all payments to first be applied to assessments before applying any overage to other charges.  Before this change, associations historically applied payments first to legal fees and other charges before applying monies to assessments.  This change to the application of payments dove-tailed with HB22-1137’s provision that precluded an association from foreclosing on balances that consisted only of fines and/or attorney fees regardless of the balance owed, further tying the hands of an association to utilize foreclosure as an effective collection tool.  Additionally, HB22-1137 limited the parties that could purchase a foreclosed property. Essentially, any person affiliated with or related to the Board, management company, and attorney representing the association was precluded.  Lastly, HB22-1137 created a cause of action for an owner against the association with a five-year statute of limitations for the violation of any foreclosure laws. The determination of a violation permitted an award of up to twenty-five thousand dollars in damages, plus costs and reasonable attorney fees.  Talk about a chilling effect on the foreclosure of association liens.

Over the next two years associations struggled to bring their processes into compliance with the requirements of HB22-1137, only to have the legislature turned the industry on its head with new collection and foreclosure procedures enacted into law in 2024. These new laws, effective August 2024, have drastically altered the landscape of HOA foreclosures.

The primary bills in 2024 that affected collections and foreclosure are HB24-1233 and HB24-1337.  HB24-1233 required associations to amend their collection policies, once again, in order to proceed with any action to collect delinquent balances.  HB24-1233 also changed the methods of notifying owners of past due balances to exclude posting of the notice, but adding a new requirement to contact owners by two of the following means: telephone, text, or email, in addition to the certified mail requirement. Interestingly, HB24-1233 recognized and excepted owners of time share units from the provisions of 1233, as well as removed the requirement to comply with HB22-1137, provided the owner does not occupy the unit on a full-time basis.

HB24-1337 implemented many changes to the Colorado Revised Statutes, specifically to Sections 123, 209.5, 316, and 316.3 of the Colorado Common Interest Ownership Act (“CCIOA”).  HB24-1337 also made drastic revisions to Article 38, Section 302 related to redemption procedures, but only with respect to homeowner association judicial foreclosure sales.  Additionally, HB24-1337 expanded on the group of persons prohibited from purchasing foreclosed property by adding community association management companies to the list. 

Effective August 7, 2024, Associations were prohibited from commencing a judicial foreclosure to collect assessments unless specific criteria were met.  The criteria include compliance with each of the requirements set forth in Section 209.5, including sending the required collection notices (at a minimum, a written offer to enter into a payment plan) with notification to the owner in the manner provided therein, as well as a board vote to refer the account to an attorney.  Neither HB22-1137 or HB24-1337 made any revisions to the requirement that the balance must equal or exceed six months of assessments or that the Board must vote individually to foreclosure on each unit.

Section 316 of CCIOA now provides additional prerequisites to foreclosure actions.  Before commencing a judicial foreclosure, a homeowner association must first obtain a personal judgment (i.e., a money judgment) against the owner. Exceptions to this requirement are the death or incapacity of the owner, an active bankruptcy case, or if the owner has successfully avoided service for six months.  The aforementioned provision to obtain a money judgment does not apply if the unit to be foreclosed is not an owner’s principal residence or if the unit is corporate owned, unless the unit is used for workforce housing.

Section 316, as amended by HB24-1337, also mandates additional notices that must be provided at least thirty (30) days prior to initiating a foreclosure. One must notify an owner of the right to participate in mediation. If the owner fails to respond, the association may move forward with foreclosure.  The other notice must be provided to all lienholders identified on the property record of the pending foreclosure.  The notice to lienholders must include the amount owed to the association. Both notices must be provided in writing and electronically.  Unfortunately, at this time, Colorado law does not require lienholders to provide email addresses for electronic notification.

Section 123 of CCIOA was amended by HB24-1337 to limit attorney fee awards to “…reasonable attorney fees incurred as a result of the failure to pay…”  Section 123 further specified that attorney fees are limited to five thousand dollars or fifty percent of the assessments and money owed to the association, unless the court finds that the owner was “…financially, physically, and reasonably able to comply with the declaration, bylaws, articles, or rules and regulations but willfully failed to comply.”  Section 123 provides that the court shall consider all relevant factors and enumerate specific criteria, such as the amount of the unpaid assessments, whether the case was contested, and other factors.

Finally, HB24-1337 overhauled the redemption procedure in judicial foreclosure sales when the lien being foreclosed is on a unit in a common interest community. HB24-1337 created six categories of “Alternate Lienors.”  These are statutorily created categories of persons/entities that do not actually have a lien on the property that are permitted to effectively purchase the property following the sale.  The time for redemption for these Alternate Lienholders has been so heavily extended that the end result may be to deter junior lienholders rightfully permitted to redeem from doing so. Due to the extended timelines, ownership of the property will now remain in limbo for six months or more, increasing the amount of the delinquency that the foreclosure sought to collect.

It is rumored that the 2025 legislative session will continue to curtail the ability of homeowner associations to collect assessments and further limit the foreclosure of association liens.  If this trend endures, owners that do pay the assessments will continue to shoulder the burden for non-paying owners and may force associations to reduce services.

Kate began her career as a paralegal in a collection law firm and has more than ten years of experience in collection litigation as an attorney and a paralegal. After graduating from law school, she put her knack for teaching to use as a law librarian and adjunct professor. Being able to explain the legal process to clients and consumers has made her an effective advocate and negotiator. Kate now focuses solely on foreclosure litigation and has a high success rate of resolution.

By Wes P. Wollenweber, Resolve ADR Group

As someone who has litigated community association legal disputes for many years, and now mediates those conflicts, I have a strong bias in favor of alternative dispute resolution (ADR) for these cases. As to why, disputes over property rights, property values, and people's homes tend to be among the most emotionally charged cases I have handled in my career. As a result, people in the dispute spend thousands of dollars in litigation where they often regret going to the mat. All too often, those who win a covenant or other common HOA disputes lose financially in the end. HOA litigation creates financial burden to the members of a community, causes significant interruptions in peoples' lives, including those community managers that are dragged into the litigation, and poses financial risk when the outcome is weighed against the money spent. With that, ADR provides opportunities to control both the outcome and cost of a dispute. There are pros and cons to ADR but for community association disputes, the advantages are significant.

Types of ADR for Associations

The two common forms of ADR that pertain to community disputes are mediation and arbitration. As many know, mediation is a confidential settlement process where a neutral third party facilitates settlement negotiations between the parties to the conflict. More and more, courts are requiring mandatory mediation in all types of civil litigation cases. So, in a community legal dispute, the chances of being forced to mediate the case are high. Is that a good thing? When a case is mediated and the parties do not settle, then no one feels like it is a good thing because of the perception that money has been wasted on the mediator for a case that may go all the way to trial. However, good mediators help the parties understand the strengths, weaknesses, and points of risk in their cases. So, there is always an advantage to mediation, even when the case does not settle: it helps the parties evaluate their situations going forward and the parties get heard.

The second common ADR format is binding arbitration, where the parties choose an arbitrator to serve as a private judge. Arbitration is very similar to going to court, except the parties in a dispute do not pay the judge. In arbitration, you pay for the arbitrator's time and possibly for the administration of the private dispute. Some arbitrators provide non-administered arbitrations to keep the cost down. Many community construction defect cases go to arbitration. The process is faster than court, or should be, and while it can be more expensive, arbitration often increases the chances of a faster outcome and more certainty of getting some or all of what you hope for. In addition to these formats, facilitation and med-arb exist for associations. Facilitation is a process sometimes used to help boards with deadlocked decisions. Med-arb is a hybrid of mediation and arbitration, and while controversial, can work well for smaller HOA disputes.

ADR Today

In the 2024 legislation session, Colorado passed HB 1337. Among a variety of statutory changes to the association collection process, this bill amended § 316 of CCIOA and requires an association to attempt mediation with a homeowner before filing a judicial foreclosure claim in a lawsuit. These changes allow an association to judicially foreclose if the delinquent homeowner does not agree to mediation or fails to cooperate in selecting a mediator. This legislative action signifies our legislature's view that mediation is important in association disputes. Similar bills could follow.

As to whether mediation or arbitration makes sense, HOA general counsel and community managers all know that litigation can greatly impact a community's budget. Worse, letting a judge or jury decide a case is a major roll of the dice. When determining whether litigation will be worth it, a crucial consideration is whether either party to a dispute can recover their attorneys' fees. Compared to all other types of litigation, HOA cases are the riskiest in terms of judges awarding attorneys' fees. Judges do not always award a prevailing party all its attorneys' fees. It is hard to be made whole in these cases. Mediation is a great way to avoid the risk of those upside-down expenses and fashioning your remedy without that risk. When cases are settled in mediation, the parties are done spending money on attorneys' fees and control their financial bottom line.

The parties in an HOA dispute, such as owners, board members, community managers, need to be heard. More importantly, they often must live together long after the dust settles. Mediation gives them a voice, explores their real interest in the dispute, and can bring about a resolution that builds a permanent solution among neighbors. Mediation negates risk and empowers the parties to figure out their own solution and not gamble on a judicial outcome. Arbitration can save major time, and even expense if done right. As our world changes, ADR is a great leveler - keeping the parties in control of their pocket book and outcome.

Wes Wollenweber is a 26-year trial attorney, as well as a credentialed mediator, and arbitrator. He is the founder of ReSolve ADR Group in Lakewood. After 26 years of litigating complex HOA disputes, employment cases, construction, real estate, and other similar maters, Wes focuses his ADR practice in these areas.

By Jeff Kerrane, Kerrane Storz, P.C. 

An HOA receives an engineer’s report warning that a retaining wall on the property is on the brink of failure. The board, focused on other issues and keeping dues low, decides to put the report on the back burner. After all, the wall looks fine from a distance, right? Fast forward a few months, and a heavy rainstorm triggers a collapse, flooding several units.  The HOA now faces costly damage claims, lawsuits, and increased insurance premiums.  The expert report, neglected due to budget concerns, becomes a major liability.

The Role of Third-Party Reports and Recommendations

Expert reports and recommendations may come from a variety of sources, including engineers, architects, community association managers, accountants, attorneys, and even committees and board members.  These recommendations can address a wide variety of issues, including maintenance, fiscal management, legal issues, or safety concerns.

Expert reports can be valuable tools for HOA boards, offering professional insights and helping them make informed decisions. However, these reports also introduce potential liabilities if not handled with due diligence. 

Legal Liability of HOAs and Board Members

The Colorado Common Interest Ownership Act (CCIOA) offers legal protections for HOA board members. Under C.R.S. § 38-33.3-303(2)(b), board members are generally not liable for decisions made in good faith, with due care, and within their authority—unless the actions are willfully negligent.  This “Business Judgment Rule” safeguards decisions made by the board, provided those decisions are made on an informed basis, in good faith, with due care, and within the scope of their authority. To invoke the protections of the business judgment rule, board members must inform themselves of all material information reasonably available to them before making a business decision and act with due care.  If the board ignores an expert report without a reasonable basis, it could be argued that they did not act with due care, potentially exposing both the HOA and individual board members to liability.

Conflicting Expert Recommendations

Even the most diligent board can face trouble when it receives conflicting advice from its experts.  For example, an HOA’s roof maintenance contractor advises the board that unless an expensive repair is performed, a portion of the roof could collapse.   The board hires a structural engineer to investigate, and the structural engineer tells the board there is no significant structural problem, and that only an inexpensive repair is necessary.

If the board decides to make only the inexpensive repair, could the board be subject to liability if the roof collapses?  In this case, a court would consider whether the board’s decision was reasonable under the circumstances, fully informed, and in good faith.  To avoid second-guessing, the HOA may consider seeking clarification or a third opinion from a neutral expert. 

Proper Implementation of Expert Recommendations

Another potential area of liability arises when an HOA relies on a third-party recommendation but implements it poorly or incorrectly. Even though the recommendation comes from a qualified expert, the HOA still bears responsibility to ensure that the work is done correctly.

For example, an HOA receiving a recommendation to replace roofing, might hire an unqualified contractor to do the work. If the contractor installs the new roof improperly, leading to further damage, the HOA could face liability due to its failure to ensure proper oversight and execution of the third-party recommendation.

To avoid poor implementation, HOA boards should ensure that contractors are qualified and reputable and should require periodic inspections during the project. If possible, they should hire an experienced project manager or owner’s representative to oversee the work and ensure it meets the expert's recommendations.

The Impact of Colorado's Two-Year Statute of Limitations

Neglecting expert recommendations can also trigger issues with Colorado’s Two-year statute of limitations for construction-related claims.

Under Colorado law, construction defect claims generally must be brought within two years of the date the physical manifestation of the defect is discovered or should have been discovered. If the HOA board delays acting on expert recommendations or does not address potential issues promptly, they may inadvertently jeopardize their ability to seek legal recourse within the allowed timeframe.

For instance, if the board ignores an engineer’s recommended foundation repairs, and the foundation fails years later, the HOA may miss the opportunity to file a claim for damages. This could leave the HOA with no legal remedy, further compounding the financial burden.

Insurance Considerations

HOAs should also consider their insurance coverage. Many HOAs carry liability insurance to protect against claims related to property damage, personal injury, or negligence. It is important for HOA boards to review their insurance policies regularly to ensure that they are adequately covered in case a third-party recommendation is not implemented correctly or if something goes wrong.

In some cases, the HOA’s insurance policy may also include coverage for errors and omissions, which could protect board members in the event that a decision based on a third-party report leads to a lawsuit. 

Conclusion

In Colorado, as in other states, homeowners’ associations have a fiduciary duty to protect and manage their communities responsibly. To mitigate risk, HOA boards should thoroughly review and act upon expert advice with due diligence.  By taking expert advice seriously, HOA boards can not only avoid immediate financial pitfalls but also safeguard the community's future.

Jeff Kerrane is a shareholder with the construction defect law firm Kerrane Storz, P.C.  and can be contacted at 720-898-9680 or jkerrane@kerranestorz.com. 

By Tony Smith, SJJ Law 

Accessory Dwelling Units (ADUs), affectionately known as granny flats, in-law suites, or backyard cottages, are the talk of Colorado – because, really, who wouldn't want their backyard to double as a thriving metropolis? 

As the state wrestles with an affordable housing crisis, ADUs are strutting onto the scene like knights in shining (albeit slightly cramped) armor, promising to expand housing options. However, recent legislative changes aimed at making ADUs more common are causing quite a stir, especially among homeowners associations (HOAs), which generally prefer to keep their neighborhoods as uniform as a closet full of freshly pressed khakis.

What Are ADUs, and Why Are They Important?

ADUs are secondary housing units that cozy up to the original home. They come in various forms, from detached structures to surprisingly stylish converted garages or basement apartments. ADUs serve up a smorgasbord of benefits – they allow homeowners to earn rental income and keep family members close (regardless of whether you may want them there). 

Recognizing these perks, Colorado passed new laws to make ADU construction easier. These laws sweep aside certain local zoning restrictions that previously treated ADUs like second class citizens, thereby signaling the state's commitment to tackling housing shortages, one backyard at a time.

Key Provisions of the New ADU Laws

Thanks to the new laws, which go into effect June 30, 2025, municipalities and counties must now roll out the welcome mat for ADUs in most residential zones. While local governments can still insist on aesthetic niceties and parking requirements, outright bans are as outdated as disco. Moreover, the legislation turns the permit approval process from a nail-biting saga into a more reasonable one-act play and chops excessive fees, which were previously about as welcome as a surprise tax audit.

How Do These Changes Affect HOAs?

The new law applies to HOA communities consisting of “Single-Unit Detached Dwellings,” which is defined as “a detached building with a single dwelling on a single lot.” So, it does not apply to condominium buildings or townhome communities with party walls. 

Traditionally, many HOAs in Colorado have taken a hard stance against ADUs, citing potential risks like heightened traffic, parking Armageddon, and the terrifying threat of fluctuating property values. Yet now, the new laws render ineffectual provisions in the HOA governing documents and rules that looks ADUs in the eye and say "not in my backyard!"  These changes, however, are not universal throughout Colorado and instead apply only in “subject jurisdictions” as defined in HB24-1152.

Most notably, these laws yank some of the power from HOAs to veto ADUs. This change has raised eyebrows and voices among HOA communities, as it could potentially disrupt the uniformity these associations aim to preserve.

For HOAs subject to the new ADU law, this means breaking out their governing documents (perhaps dusting off some cobwebs) and making sure they align with state law. While HOAs can still insist on rules that are reasonable, like ensuring new structures don't resemble UFO landing pads, they can no longer simply deny requests to build ADUs.

Challenges and Opportunities for HOAs

The legislative shake-up brings both headaches and hallelujahs for HOAs. On one hand, balancing homeowners' desires for ADUs with neighborhood harmony might feel like juggling flaming torches while riding a unicycle. On the other, seeing ADUs as partners in solving the housing crisis could polish a community's image.

To ride this wave, HOAs subject to the law should consider drafting policies that are the Goldilocks of guidelines – neither too strict nor too lenient, but just right. This entails setting parameters for ADU placements, insisting that they resemble the existing homes, and managing the nitty-gritty of shared utilities. Open communication with homeowners about these rules is crucial—after all, no one likes feeling like they're playing a game where someone changed the rules and didn't tell them.

HOAs would be wise to consult legal counsel to retouch their documents to avoid potential clashes with newly minted state laws. Boards should be ready for an avalanche of inquiries regarding homeowners' newfound ADU rights and be poised with answers that don’t start with "um."

Conclusion

Colorado’s new ADU laws are shaking up housing policy like a snow globe, promoting flexibility and inclusivity in zoning that scoffs at boundaries. For HOAs subject to the new laws, these shifts serve up a cocktail of challenges with a side of opportunities, both of which must be gulped down to adapt and evolve. Proactively tackling the law's implications enables HOAs to maintain community standards while jumping on the state’s bandwagon toward alleviating housing woes.

As these regulations set root, ongoing tête-à-tête among HOAs, homeowners, and local authorities will be crucial for a smooth transition, like a well-oiled machine or a perfectly executed dance routine. With careful planning and a sprinkle of cooperation, HOAs can effectively integrate ADUs into their communities while keeping their respective essences (whatever those might be) that make them desirable places to live.

Tony Smith is one of the founding partners of SJJ Law and the chair of its Community Association practice group. Tony and SJJ Law are proud to provide a wide range of legal services to HOA clients throughout Colorado.

Whether you are an experienced manager or a brand-new board member, navigating the ever-growing world of HOAs can be challenging. It is a challenge because each year there are new laws and regulations to follow, updated budgets to stay on top of, and codes to be aware of. 

However, did you know that there are many resources available to you? Here is a list of websites and online resources (and one in-person suggestion) to take advantage of when you need the information at your fingertips. 

1. The CAI Exchange Forum: The CAI Exchange is a resource for community association members to exchange knowledge and share solutions. This website is a text-based question forum (similar to Quora or Reddit) where users can post questions and comments for the community to respond to. The most popular community on the forum is the ‘CAI Members Open Forum’, and at the time of publication, there are currently 54,000 members contributing to over 75,000 discussion topics. This is a helpful resource if you have a question about any HOA or Metro-related topic since there is most likely someone else who has already asked your specific question. Please note that you must be a user to utilize the posting feature - https://exchange.caionline.org

1. Colorado Department of Real Estate HOA Center: The DORA HOA Center is a resource center for homeowners and board members of a Homeowners Association. DORA designed this to be a centralized location for HOA-related information, resources, and tools, with the goal of helping homeowners and board members navigate the complexities of HOA management and make informed decisions The page provides information on various aspects of HOA management, including:
   1. Governance and policies
   2. Financial management
   3. Elections and voting
   4. Dispute resolution
   5. Record keeping and retention
   6. Education and training for board members
   7. Registering an HOA

More information can be found here - https://dre.colorado.gov/hoa-center

1. CAI Service Provider Finder: CAI Service Provider Finder is a helpful resource available for free to anyone who is in need of a centralized website that lists service providers who specialize in serving HOA communities. For example, are you in need of a fencing contractor that serves HOAs in Colorado - the finder tool yields about (22) different contractors that are available to help you. What is nice about the finder tool is that it can narrow your search query to a specific set of parameters depending on your service needs and location. Find more here -  https://caidirectory.onlinemarketbase.org/

1. Business Partner Websites: Another great option is to utilize the business partners’ websites as a resource. If you have a question about how a new piece of legislation regarding collections will impact your HOA, most likely a collections attorney will have an updated article or blog post addressing your question. You can also subscribe to these blogs and receive updated articles straight to your email inbox. 

1. CAI Conferences: Lastly, what if you are looking for something offline? Make sure to mark your calendars every Spring to make sure that you can attend the CAI Rocky Mountain Chapter Spring Conference, and every Fall to attend the CAI Rocky Mountain Chapter Mountain Conference. Both conferences host classes and training sessions that are handpicked to be relevant to the current situations that Colorado HOAs are experiencing. In addition, these conferences are a great way to catch up with and connect with local service providers. 

By Shannon Torgerson, Goodwin & Company

How do you chart your course? For me, an annual calendar serves as a roadmap of tasks that need to happen each week, month and year. It helps in tracking deadlines and knowing when something is supposed to happen (hello, pool opening!), while providing the Board with insight into my activities as their manager. 

Including specific dates for proposals, landscape items and meetings not only helps the Board and I stay organized and focused on community goals, but also provides a framework for accountability and evaluation.  The accountability and evaluation process helps us assess progress, identify successful strategies, and recognize areas that need improvement.  It further assists in better communication, enhanced collaboration and problem solving.  

The Annual Calendar is the broad picture and helps dictate the day to day. If you know your insurance is going to renew in 60 days, you can put a note on the calendar “start insurance renewal discussions” at 2 months before the renewal. At 1 month before the renewal, you may but a note “confirm receipt of renewal proposal,” for example. 

Items to include on the calendar can be: 

• Contract start and end dates.

• Board meeting dates.

• Annual/Budget meeting dates.

• Budget due dates.

• Holiday/community event dates.

• Irrigation start-up, contractual irrigation checks, irrigation winterization edging, fall clean up and flower installation dates.

• Helpful resident information broadcast dates. 

• Owner notification dates (i.e., Annual Meeting notices, billing statements), etc.

January	Board Meeting  Confirm monthly reserve transfer with RBC for current year Send annual disclosure Follow up on Reserve Study Update approved in late 2022 ARC Committee Appointments (even ended years)
February	Board Meeting  Request bids for insurance policy renewal April 1 Prior year end financial info to CPA
March	Board Meeting  Follow up on Audit & Tax Returns (if needed) Send Community Reminder – Dryer Vent Cleaning Schedule Gutter /Underground Drainage Cleaning for May
April	Board Meeting Workers comp policy renewal E-Blast Insurance Notice & Memo Follow up on gutter guard project and status of gutter cleanliness.
May	Board Meeting  Confirm irrigation system activated Request Church Ditch Mowing Email Spring Notice (reminder of rules and regs property) Follow up on Audit/Taxes
June	Board Meeting  Power Wash Stucco (if needed) Schedule Storm Water Inspection Schedule Backflow Testing (irrigation)
July	Board Meeting  Conifer Treatments Send Community Reminder – Window Well Cover Cleaning
August	Board Meeting  Request landscape and snow removal contracts for 2024 Request tree pruning and tree health contracts 2024 Draft 2024 Budget
September	Board Meeting Garage Door maintenance broadcast email
October	Board meeting  Finalize 2024 HOA budget Prepare annual & budget ratification meeting notice Send Community Reminder – Fireplace Vent Cleaning Community picnic Verify electrical reimbursement amounts with Xcel Mail annual & budget ratification meeting notice
November	Board Meeting Broadcast Email – concrete care (no ice melt) Annual & Budget Ratifications Meeting Confirm owner HOA fees for 2024
December	Election of officers for new Board Update bank signature cards with new board members Confirm parking billing for 2024 Prepare 2024 Planning Calendar for Board Payment for prior year electrical use for 6  units

I provide the Annual Calendar to the Board each month as part of their monthly Board packet and update it as needed. 

Shannon Torgerson is the Director of Metro Districts at Goodwin & Company. She has been building community and advising Managers, Boards and Residents for 22 years.

By Rebecca Ruiz, Highlands Ranch Community Association 

At the Highlands Ranch Community Association (HRCA), our mission and vision serve as the guiding principles behind everything we do. HRCA was honored to have been named CAI-RMC’s Association of the Year to have HRCA’s General Manager, Mike Bailey, appointed Community Manager Excellence in Service in 2024. With over 30,000 residential homes and 1,500 commercial properties, HRCA stands as a model of community-building, bringing people together with a shared sense of purpose and identity. Our mission is more than just words—it’s a clear reflection of our commitment to enhancing property values while providing an unparalleled quality of life for all residents.

A community mission and vision statement are not merely statements of intention—they are vital roadmaps that define who we are, what we strive for, and how we operate. At HRCA, these statements provide focus, clarity, and a shared sense of responsibility among residents, staff, and volunteers.

Why a Mission Statement Matters

A mission statement offers a concise explanation of why an organization exists and what it aims to achieve. For HRCA, our mission is to create and maintain an exceptional living environment for our residents. This means going beyond basic property management to foster a community where everyone can thrive. Whether we’re maintaining our four state-of-the-art recreation centers, enforcing architectural standards, or offering hundreds of fitness classes, everything we do ties back to this core mission.

It’s essential for residents to know and understand this mission because it establishes common goals and expectations. When we all share the same priorities—enhancing property values and promoting community well-being—we can make collective decisions that benefit everyone. This creates a sense of unity and belonging, which is critical for the long-term success of any community.

The Role of a Vision Statement

While a mission statement addresses the present, a vision statement looks to the future. It answers the question: What do we want to become? HRCA’s vision is to continue to build a thriving, engaged, and vibrant community that enriches the lives of all who live and visit here. This vision shapes the decisions we make about everything from recreational programming to the management of the 8,400-acre Backcountry Wilderness Area. It’s the foundation for our cultural, educational, and environmental initiatives, which not only benefit current residents but also ensures that Highlands Ranch remains a desirable place to live for generations to come.

A Unifying Purpose

Having a clear mission and vision gives every resident a sense of purpose and direction. These guiding principles ensure that the services we offer—whether they be fitness programs, educational opportunities, or cultural events—are aligned with the values that make Highlands Ranch a unique and thriving community. When everyone understands and embraces these guiding principles, we create a stronger, more connected community.

In the end, a mission and vision statement are more than just strategic tools—they are the heart of what makes a community like Highlands Ranch not just a place to live, but a place to call home. Together, we’re building something special, and by staying true to our mission and vision, we will continue to grow, thrive, and enrich the lives of all who live here.

Everything we do at HRCA aligns with our mission to create a community that thrives—socially, physically, and culturally. Whether you’re a long-time resident or new to Highlands Ranch, HRCA is here to ensure that you have access to the very best this community has to offer. Together, we’re building not just homes, but a place where people come together, form connections and create lasting memories.

Rebecca Ruiz, a third-generation Denver native, brings extensive expertise in media relations, corporate and marketing communications, and social media to the Highlands Ranch Community Association (HRCA). She has worked with nationally recognized brands in sports, entertainment, indoor and outdoor recreation, and recreation safety. As the Acting Director of Marketing and Communications for HRCA, Rebecca is a key member of the leadership team. She enjoys the passion of the HRCA community, the camaraderie of her co-workers, and the opportunity to creatively tell the story of the association’s resources and impact.

By Derek Brase, EmpireWorks

Fire safety is a critical aspect of homeownership, especially in regions prone to wildfires like Colorado. By selecting fire-resistant m  aterials and implementing specific construction techniques, you can significantly increase your home's resilience to fire. Ongoing maintenance and fire hazard awareness are critical to protecting your community from fire hazards. In this article, we’ll explore key strategies and materials that can help you strengthen your home against fire risks.

Key Fire-Hardened Materials and Techniques:

Exterior:

• Metal Siding: Steel or aluminum siding is non-combustible and offers excellent fire protection.

• Fiber Cement Siding: This material is composed of cement, sand, and cellulose fibers, making it highly fire-resistant.

• Stucco: A traditional choice, stucco is fire-resistant and can be applied in various styles.

• Brick or Stone Veneer: These materials provide excellent fire protection and a classic look.

• Metal Roofing: Metal roofs, such as those made of steel or aluminum, are non-combustible and highly durable.

• Clay or Concrete Tiles: These materials are fire-resistant and can withstand high temperatures.

• Class A Asphalt Shingles: While not entirely non-combustible, Class A shingles are highly fire-resistant and meet strict fire safety standards.

• Interior fire walls: These walls, typically made of drywall, can help contain fires within a specific area, preventing them from spreading to other parts of the house.

• Fire Separation Walls (ASWs): These walls are required between townhome units and must be properly installed to offer the required fire rating.  The continuity and detailed integration of these assemblies is important to ensure the intended fire rating is achieved.

• Proper installation: Ensure that all electrical wiring is installed according to local building codes and standards.

• Fire-resistant wiring: Certain types of wiring, such as CMX cable, are specifically designed to withstand high temperatures and reduce the risk of electrical fires.

• Compartmentalization: Dividing the attic into smaller compartments can help limit the spread of fire.

• Ventilation: Adequate ventilation can help reduce heat buildup and the risk of fire.

• Insulation: Use fire-resistant insulation materials to further protect your attic.

• Regular maintenance: Regularly inspect your home for potential fire hazards, such as faulty wiring, damaged chimneys, and clogged gutters.

• Fire extinguishers: Keep fire extinguishers readily available and ensure that everyone in your household knows how to use them.

• Smoke detectors: Install smoke detectors on every level of your home and test them regularly.

• Emergency plan: Develop a family emergency plan and practice it regularly.

Roofing:

Fire Walls:

Wiring:

Open Attics:

Additional Fire Safety Tips:

While fire-hardening your home can significantly reduce the risk of fire damage, it's important to combine these measures with other fire safety precautions. It is everyone’s responsibility to protect our communities from fire hazards.  While wildfires and building material malfunctions do contribute to house fires, the most common causes are cooking and appliances. By working together to implement these strategies, we can create a safer environment for ourselves and future generations.

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Derek is a proficient and experienced construction professional who has served as Vice President of EmpireWorks since 2015. EmpireWorks Reconstruction is a full-service General Contractor specializing in complex exterior HOA projects.