By Geneva Cruz-La Santa, CP&M
It seems that many contractors, property managers, and their communities are being affected by the COVID-19 Pandemic, which has driven the health and safety of employees, customers, suppliers, contractors, and their families to a top priority. As safety measures are put into place to protect people's lives, a system needs to be put in place to help protect everyone's businesses as COVID downturns the global economy.
COVID seems to be ruling everyone's daily routine and holding the reigns on our daily decisions. What appears not to have changed is the demand for material and services; it is volatile right now, creating an array of pricing challenges and contract delays. Contractors that concentrate on long-term value rather than short-term gain are best situated to meet these pricing and contract challenges.
COVID exerts sudden and unprecedented pressures, like price increases due to demand or material shortage, production delays, labor, delivery setbacks, COVID exposure concern, or quarantine measures. New and potential clients seek discounts and contract renegotiations, looking for cheap, temporary, and quick band-aid fixes rather than permanent, cost-effective solutions. Contractors need to sustain value to survive the pandemic and protect their employees' livelihoods and client communities. Contractors have the challenge of managing costs to safeguard competitive pricing against their competitors. They also need to be flexible and creative to support clients in this tough time and work with them to get through the pandemic together. However, planning for a long-term view or commitment during this pandemic may seem like a roller coaster of a ride nearly every day. As contractors, we should be taking the time to communicate and review our relationships with our potential and current clients and their communities.
Our prime focus should be to:
As contractors, we should understand our company's position in the field, anticipate competitors' likely reactions to defaulting contracts and pricing increases, and plan how to best respond to clients looking for assistance in handling and overcoming these concerns.
We should seek opportunities that preserve and sustain communities. We should look for a winning scenario to support clients and employees during the COVID pandemic while remaining flexible and focused on safeguarding lifelong relationships.
My name is Geneva Cruz-La Santa and I have been with CP&M (Community Preservation & Management, Inc.) and its many entities for over 17 years. I have enjoyed watching CP&M grow into a full-service General Contractor with an in-house roofing division R3NG. CP&M specializes in providing solutions for commercial property managers, HOA managed multi-family and single-family communities, REO rehabilitation, apartment industries, and government housing entities.
By Gabriel Stefu, WesternLaw Group
It is not uncommon for HOA Boards to need and want additional help with projects around their HOA community. This help often can come in the form of volunteer Homeowners and self-help projects undertaken by Board members. While this form of help can be cost-saving for many HOAs, the Boards must consider the potential liability and legal ramifications of unfettered volunteer-based projects in their Associations.
Because of the legal complications that may arise when Board members or Homeowners undertake volunteer projects, these sorts of projects should be approached with caution and with consideration of potential legal issues that could occur. One potential issue stemming from volunteer projects is the matter of paying the Board members or Homeowners who perform the task. Although paying a person from the Community may be cheaper than hiring a business or contractor, HOAs must be careful to avoid conflicts of interest and liability to the volunteer & Association. Community Associations in Colorado are required by state law to have a “Conflict of Interest Policy” adopted to govern situations such as these and other conflicts. Such a policy delineates when a Board member is deemed to have a conflict of interest and how such conflict can be resolved. For example, the Board members must be careful to disclose if they will receive a personal benefit from a volunteer project or from volunteering on a project, apart for reimbursement for actual expenses, and should follow the Conflict of Interest Policy if such a situation occurs.
Even if the volunteers are not being paid for their work, HOAs must be mindful of the potential liabilities that can arise from the physical or mental nature of the undertaken projects. If an HOA allows volunteers to help with some community landscaping, for example, what are the potential repercussions should a volunteer get injured on the job or cause injury to another party? The injured party can sue the HOA for damages, which will be both a lengthy and expensive process. In addition, an injury to a Homeowner or the potential lawsuit stemming from it may hurt the sense of community many HOAs are striving to achieve. Thus, an HOA Board must consider how to protect the Association from such liability if a volunteer is injured or causes injuries to another during a project.
One way an HOA can protect itself from liability is through obtaining a Waiver of Liability from the volunteering parties. Your legal counsel can draft these waivers of liability that would need to be signed by the volunteer party before any work is undertaken. These waivers have the volunteer agree to not hold the Association liable if injuries should occur during the work.
HOAs can also treat the volunteers as “independent contractors.” This means that the HOA should require any Board member, Owner, or person that is doing volunteer work to obtain and retain insurance. The insurance that the volunteers hold should cover property damage, bodily injury, indemnification, and possibly reputational harm and other injuries. Having the volunteers carry their own general liability insurance can help protect the HOA’s interest in case of mishaps.
Another main way for HOAs to protect themselves from liability during volunteer work is to make sure they have adequate liability insurance for the Association. By making sure your HOA’s insurance policy has numerous protections for liability, and that those protections are up-to-date and expansive, your HOA will be better protected if a volunteer project is undertaken.
A final consideration before allowing volunteer work to occur is to consider the type of work that is being done. If the project at hand is remedial, using volunteers may be an acceptable way to address issues quickly and affordably. However, for projects that are dangerous or require more physical exertion or otherwise specialized knowledge, it would be best to hire experts to perform the work.
Though allowing volunteer projects to occur on behalf of the Association is generally discouraged due to the potential legal ramifications, the lengthy insurance process, and the chance for injury and damages, should your HOA choose to take these projects on, the Board should be mindful to have the proper protections in place to avoid liability. These protections include complying with and updating your HOA’s Conflict of Interest Policy, maintaining adequate liability insurance for the HOA, requiring volunteers to maintain their own liability insurance (similarly to independent contractors), and having volunteers sign waivers of liability before work begins. If your HOA implements these things, it will have the necessary protections from the multitude of complications that may present themselves during such volunteer-based work.
WesternLaw Group is a Colorado law firm specializing in Community Association law. Our practice focuses on the preventive aspects of HOA procedures and interpretation of governing documents.
Gabriel Stefu is the founder and a senior attorney for WesternLaw Group and specializes in HOA litigation, transactional work, and collections.
By Ashley Nichols and Wes Wollenweber, CAI Rocky Mountain Chapter Editorial Committee
Alaska Airlines recently announced that as of January 11, 2021, it would officially ban Emotional Support Animals (ESAs) from its flights. The decision follows new US Department of Transportation (DOT) rules which gave airlines “control of the cabin” following “feedback from the airline industry and disability community regarding numerous instances of emotional support animal misbehavior which caused injuries, health hazards and damage to aircraft cabins.” The airline will continue, pursuant to the law, to allow accommodations for trained service dogs. This week, United, American, and Delta joined Alaska in the ban of ESAs on their flights.
While there is specific guidance for airlines on this topic based on the rules in place from the DOT, many of our boards often ask what they can do within the limit of the law and their Association’s governing documents when it comes to regulating ESAs in their communities. Especially now, in this time of pandemic, when anxiety and stress levels are higher than normal, and owners are certainly spending more time at home, perhaps in no-pet communities. The number of pet sales and rescues are up and people are turning to animals as a source of comfort and emotional support.
Take the following example: Community Manager advises the board that an owner in your upscale community has installed a chicken coop with a handful of chickens in their back yard. Your Association has a "no fowl" covenant. The nearby neighbors are aware of this and are not at all happy about the noise and prospect of farm-like atmosphere. Worse, the coop owners never brought their chickens to anyone's attention. When your Community Manager issues a warning letter, the coop owners are outraged, and write a letter that the chickens are emotional support animals and are helping their two children with their emotional disabilities that have been made worse by COVID-19 and having to participate in school online.
This, of course, raises a reasonable accommodation request under both the federal and state Fair Housing Acts. An accommodation is a request for an exception to a rule, policy, practice or service. Here, on behalf of their children, the coop owners are asking for an exception to the no-fowl covenant. With the various downsides of a pandemic, requests for emotional support animals (aka companion animal or comfort animal) are on the rise. Unlike the Americans with Disabilities Act, which only provides for service animals (and primarily service dogs), the Fair Housing Act allows for two types of Assistance Animals for individuals with disabilities who qualify for such animals: (1) service and (2) emotional support. Handling requests for emotional support animals properly is more important than ever.
So, can the Association simply reject the request for chickens as a reasonable accommodation based on the fact that it is a quiet suburban neighborhood with rules in place stating that the community does not allow fowl? The short answer is no. Under the pertinent Fair Housing legal authority, the Association must evaluate the request and engage in a dialogue with the coop owners about the request. What are the Association's rights?
The Association has the right to make three inquiries: First, whether the coop owners' children are individuals with a disability as defined by federal and state Fair Housing law; second, whether they truly need the chickens to help them with some particular aspect of their disability in a way that allows the children to enjoy their home in the same manner as an individual without a disability; and third, and final, whether the request is reasonable.
As to inquiry one, a person is an individual with a disability if he/she has a physical or mental impairment that substantially limits one or more major life activities; has a record of a disability; or has been regarded as having a disability. Emotional Support (or Companion) Animals typically arise for individuals with a mental impairment, where the animal's bona fide purpose is to ameliorate (lessen) the impact the individual's disability has on daily life.
As to inquiry two and need, the coop owners must demonstrate a nexus (strong connection) between their children's disability and why they need chickens. The Association has a right to ask the owners to establish the connection. Why do they need chickens for comfort in this pristine neighborhood? Why won't a puppy work? The next big question is always, "what kind of information can we ask for?" Under the United States Department of Housing and Urban Development (HUD) and the United States Department of Justices' Joint Guidelines on Assistance Animals, and as with any reasonable accommodation request, the Association may ask for documentation and proof as to disability and need if they are not obvious. If someone asks for a service dog, such as a seeing-eye dog, and the person with the disability is clearly blind, then both disability and need are obvious and an Association may not request any further documentation. But here, not much is known about the children, other than they have some type of emotional-type disability. So, disability and the need for the chicken is not known. As such, the Association may ask for documentation concerning both.
But wait! Can't we deny this request as unreasonable, based on the third inquiry, before going through all this effort? After all, puppies provide all kinds of comfort. That is a common and valid question. Unlike in various areas of law where "reasonable" is defined to be what a judge tells you it is on the day you are in court, the federal Fair Housing regulations have a definitive definition: A request is reasonable if it is feasible or practical.
Looking at the request, an Association can and should evaluate need and reasonableness together. The Association does not have a right to know extensive details concerning the children's disabilities. However, they can inquire about what substantial limitations will be helped by having an emotional support animal and how. Further, in this context, the Association truly can ask why some other type of animal, which does not violate the no fowl rule, will not work. The basis for this question is the contention that chickens, as emotional support animals, are not feasible or practical in the community. The coop owners may challenge this, but the Association is certainly within its right to make the inquiry. Whether an accommodation is impractical or unfeasible, and could therefore be denied, must be based on objective criteria. If several residents will be up in arms, there is at least an argument that it is not reasonable. The board must gather the information to legitimately asked questions and seek to make a decision that is compliant with law based on the evaluation of need and reasonableness together.
Given that we all need a little extra emotional support at times, and especially in these trying times, when your community is faced with a request for a reasonable accommodation for a support animal in your no-pet community, make sure that you discuss your options with legal counsel. Having your Association’s attorney review the request, the Association’s governing documents, potential impact on the community, input from neighbors, etc. to help the Association determine whether a request is feasible or practical can help avoid missteps that could lead to legal liability for the Association.
Ashley Nichols is the principal and founder of Cornerstone Law Firm, P.C. She has been in the community association industry for thirteen years, providing associations with debt recovery solutions for their communities. Cornerstone Law Firm represents Colorado communities in all areas of common interest community law. You may find out more at www.yourcornerstoneteam.com.
Wes Wollenweber is a founding partner at Pearson Wollenweber Freedman, LLC in Lakewood, Colorado, where his law practice focuses on litigation and mediation of complex community association disputes.
By Tim Moeller, Moeller Graf, P.C.
Over the past year we have been required to spend much more time at home. During that time, some of us have been attempting to tutor our children through virtual schooling. We have cancelled vacations, graduations, and other important events. These stressors have not brought out the best in everyone. Many board members, and every manager, have tales of community members acting less than affably. Perhaps they were upset for not having access to the pool during a pandemic or for not getting elected to the Board. Perhaps they are experiencing financial hardship or experiencing difficult times for other reasons. In any event, when bad behavior arises, we are routinely asked if it rises to something that the Board can or should address. At what point does the community association’s board of directors become the etiquette police?
“Harassment” is defined in Black’s Law Dictionary as “words, gestures, or actions which tend to annoy, alarm, or abuse another person.” To annoy, Black’s suggests, “is to disturb, irritate or cause discomfort. Abuse consists of insulting, hurtful or offensive wrongs or acts.” Ultimately, whether someone was harassed will depend on whether the targeted individual felt intimidated or threatened, not whether the angry individual intended their actions to be abusive or intimidating.
Criminal harassment is statutorily defined in Colorado Criminal Code C.R.S. § 18-9-111 and is known as Kiana Arellano’s law. In summary, criminal harassment includes, but is not limited to, an individual having an intent to harass, annoy, or alarm another person and with that intent to harass, then doing one or more of the following: striking, shoving, kicking or otherwise touching a person or subjecting them to physical contact; or in a public place, directing obscene language or making an obscene gesture to or at another person; or following a person in or about a public place. Criminal harassment may also include initiating communication with another person anonymously or otherwise in a manner intended to harass or threaten injury to body or property or making any obscene comment, request or suggestion or repeatedly insulting, taunting, or challenging an individual in a manner likely to provoke a violent response.
The association should attempt to deal with actions constituting harassment if the actions are a violation of the association’s governing documents. However, the Board might also consider contacting the local authorities to address the situation.
What is often referred to as “civil harassment” is more about the remedy than the conduct asserted and usually involves the filing of a complaint in court against the abusive individual seeking damages or injunctive relief for a violation of the association’s governing documents. Seeking injunctive relief equates to asking a court to restrain a party from doing certain acts or requiring a party to act in a certain way. A community association, not being an individual, must show that the individual in question has violated the governing documents of the Association.
Some governing documents contain a provision allowing its members the right to quiet enjoyment of their property. Others contain a provision prohibiting nuisances. It is not uncommon for boards, managers, and other members to summarily conclude that a bad actor in the community is a nuisance and seek punishment based on that provision in the governing documents.
However, typically, the law defines a private nuisance as an unreasonable or unlawful use of one’s property in a manner that substantially interferes with the enjoyment or use of another individual’s property. You can find examples of this in cases where odor, noise, or vibration from one property negatively affects the neighboring property. Harassment does not fall nicely within the constructs of nuisance.
Therefore, while there may be some general provisions found in your governing documents, it may be helpful to amend your governing documents to include specific provisions against the harassment of persons within the community, to include managers and vendors. While a rule pertaining to harassment is helpful, having language in the association’s declaration is preferred as the court would likely give more deference to a provision that had been adopted by the vote of the entire community. Be warned, though, that this will obligate the association to enforce the anti-harassment clause, which can further mire the Board and management in being what may feel like the etiquette police for the community.
An amendment to the governing documents may address such issues as abusive language, use of profanity, taunting, threatening others, abusive and excessive contact (including emails, texts, and phone calls), and stalking.
Additionally, associations experiencing harassment issues should consider placing language in its policy pertaining to meetings as well as in any meeting code of conduct that may be provided at the outset of a meeting.
Once these measures are in place, the expectations within the community become clear, as do the parameters for when and how the Board must step in and act to enforce the governing documents of the community. Start with the conduct. Maybe it is criminal. If so or if not, the Board should then see if there exists a violation of the governing documents.
Tim Moeller is a co-founder of Moeller Graf, P.C. and has been practicing community association law for over 20 years in Colorado.
By Alyssa E. Chirlin, Smith Jadin Johnson, PLLC
Community associations, like all other entities in the United States, have had to learn to navigate a new landscape of COVID-19 restrictions in the past year. Associations have had to adapt to the ever-changing situation on the fly, filling in the gaps left by government guidelines and legal requirements in order to fulfill their obligation to, among others, safely maintain common areas. While it seems that the pandemic will unfortunately continue through at least the winter and spring, associations should be prepared for the eventual easing of restrictions, which in some areas is already beginning.
Above all, associations must always follow applicable federal and state law. When the two differ, associations must adhere to that which is most restrictive. As of this writing, Governor Polis’ Executive Order mandating mask-wearing is still in effect. Although its limitation to “public indoor spaces” seemingly excludes association common areas that are only open to residents and guests, the term has been defined to include “all enclosed indoor areas, whether publicly or privately owned or managed, except an individual’s residence.” This means that, in Colorado, wearing masks is mandatory in association common areas, including laundry rooms and stairwells, and associations therefore must require that staff, residents, and guests wear masks in any indoor areas other than individual units.
Beyond the statewide mask mandate, Colorado has also instituted the COVID-19 dial, which assigns one of six colors to each county based on that county’s assessed risk level. The color assigned to a county is based on a number of metrics, including local case numbers and hospitalization rates, and provides counties with a framework for restrictions to implement based on its risk level. Associations must be aware of the current color level of the county in which it is located and should use it as a first step when considering whether to open or close amenities. For example, depending on a county’s risk level, indoor gyms may be entirely prohibited from opening, while all six levels prohibit them from operating at maximum capacity.
Associations should adhere to CDC guidelines as well, which include social distancing and sanitization recommendations. We recommend that, at a minimum, associations advise residents to practice social distancing, conduct meetings virtually, provide hand sanitizer throughout open common areas, and implement an increased cleaning schedule.
Furthermore, associations can always implement rules and regulations that are stricter than those imposed by federal and state laws. CCIOA affords associations, subject to their governing documents, the ability to “regulate the use, maintenance, repair, replacement, and modification of common elements.” This entitles associations to implement regulations regarding common areas that enforce the law, such as a mask mandate, but also stricter measures should the association so decide. For example, while CDC guidelines that require six feet of social distancing may limit elevator capacity to two unrelated parties, an association may institute a rule that limits elevator capacity to only one family at a time.
When deciding whether to open certain amenities in accordance with COVID-19 dial restrictions, Boards should examine each amenity individually. An outdoor playground and an indoor pool present different considerations. Specifically, Boards should consider any increased costs that will be incurred in adhering to local restrictions and CDC guidelines, such as increased staffing costs to enforce capacity limitations or institute increased sanitation. The association’s general liability insurance policy should also be consulted. It may contain exclusions regarding bacteria and/or communicable diseases, which may open the association to liability for possible COVID-19-related claims. If the decision to open an amenity is made, and even before such a decision is made, Boards should develop a plan for its safe reopening and should communicate this plan to the community.
In fact, one of the most important things an association can do regarding any safety precautions it implements is to communicate them to the community. We recommend frequent, substantial communication to residents, via email and signage in common areas. Communications should identify community requirements and, crucially, the underlying rationale, whether prompted by law or by concern for residents’ health and safety. Transparency is invaluable in encouraging community compliance and thus in minimizing the spread of COVID-19 as much as possible, which should be the goal of any association.
Alyssa E. Chirlin is an attorney at Smith Jadin Johnson, PLLC, a law firm focused on the representation of HOAs, including throughout the insurance claim adjustment process. If you have any questions about HOA legal requirements or insurance coverage, please call her at 720-550-7280.
By Lindsay Smith, Winzenburg, Leff, Purvis & Payne, LLP
Community-to-community disputes often come down to one issue – money.
Shared Use Agreements
Developers often create shared use agreements for things like access roads, open space, clubhouses and pools, and other recreational amenities. While these agreements attempt to create structures that allow members of both communities a full and equitable opportunity to make use of the shared improvements, more often than not, they kick the can down the road and force future homeowner leaders to try to work out philosophical differences with neighbors who may be less than neighborly.
A shared use agreement will describe the shared property, and if you’re lucky, the proper method of allocating costs and use rights. When these agreements are poorly conceived, drafted without significant input from the developer, or not reflective of what was actually constructed, the inherent ambiguities can lead to litigation. Sometimes, agreement terms are included in the Declaration meaning that two Boards have to obtain homeowner approval to revise the terms of the agreement.
When you face a dispute about a shared use agreement – whether the dispute is based on funding, use rights, or something else – call the Association’s attorney early, before positions become entrenched. The attorney can review the agreement and help to determine whether any options exist for termination, the proper method to amend provisions, and provide guidance and suggestions that may not be apparent to the board members who are living with the agreement. If the dispute is emotional, the attorney can help bring objectivity and clarity to the discussions.
Shared Non-Agreements
More problematic are the informal non-agreements. For instance, where a community has used access over private property for years, and the new owner decides to stop the practice, the community may be faced with no option short of litigation. The Association may or may not have defense coverage in such litigation; this determination is specific to the individual policy, the nature of the claims asserted between the parties, and the presence of any exclusions to coverage related to pre-existing disputes.
It is axiomatic that communities that are able to work things out without litigation will spend less money on attorney fees. As with the analysis of shared agreements, the attorney’s early involvement can help mitigate future expenses by providing guidance before emotions cloud the dispute. Also, important for litigation, the attorney’s early involvement can help a community avoid errors that could subsequently impair litigation posture.
Other Disputes
Other common disputes relate to things that the developer determined weren’t important enough to justify a written agreement. It is common for perimeter and boundary wall and fence repair, replacement, and maintenance, to not be the subject of a stand-alone agreement. This repair and maintenance may be dictated by documents that are not included in the Association’s regular governing documents, such as a development agreement between the developer and the municipality. These disputes might not even arise for thirty or more years after development.
If the work performed in one community causes damage to a neighboring community (e.g., where new development changes drainage and grading patterns), call the lawyers first. A good quality builder will act promptly to correct problems caused by the work, but a builder who is short on funds may take shortcuts that are unacceptable.
Takeaways
Note that while legal advice is recommended and necessary to resolve these disputes with minimal (literal or figurative) bloodshed, I don’t speak to who pays for the legal advice. Many times, legal advice in community-to-community disputes must be borne as a business expense. Sometimes, the agreements between the parties will provide for a prevailing party attorney fee provision. We have also experienced courts that are willing to award attorney fees under CCIOA to a prevailing party in a dispute with someone outside the community association. However, unlike assessment collection and covenant enforcement, you should not assume you will be awarded attorney fees in a community-to-community dispute.
The risk of paying your own attorney fees is substantial, but the risk of paying litigation attorney fees – and perhaps the litigation attorney fees of your opposing community – is more so. Investment in good legal advice at the beginning of a dispute can help mitigate these risks, and create a stronger foundation for what comes next.
Lindsay Smith is a partner at Winzenburg, Leff, Purvis & Payne, LLP in Littleton, a full-service community association law firm. Lindsay focuses her practice on general community association law, including covenant enforcement, document amendment and interpretation, governance advice, and litigation.
By Wes P. Wollenweber, Pearson Wollenweber Freedman, LLC
The recent ADR survey that the Legislation Action Committee circulated to CAI-RMC membership led to questions about alternative dispute resolution. The survey was designed to obtain member feedback concerning potential legislation related to ADR for community disputes because of the belief that ADR for these disputes will be legislated one way or the other. In fact, the forthcoming bill is expected to address ADR yet again. As a mediator and arbitrator in this industry, it seems like great timing to discuss the nuts and bolts of ADR and its future role concerning community association disputes. While most of us in the industry understand what ADR entails, there are aspects of it in the HOA context that can be confusing. In order to make decisions and provide input concerning future legislative bills targeting ADR, understanding the different types of ADR and how they apply to community disputes is beneficial.
What are the Types of ADR that Best Serve Community Association Disputes?
1.Mediation: This form of ADR involves the parties to a dispute mutually selecting a third party to act as an intermediary or a neutral and facilitate a possible resolution between those parties. The most common questions concerning mediation are: (1) Is mediation binding - meaning, can mediators determine the outcome of a case? (2) Who has to pay for them? (3) How much do they cost?
Mediators do not decide the outcome of a legal dispute. Rather, they negotiate with the parties and facilitate settlement discussions, with the hope of helping the parties find a resolution. If the parties to a dispute reach an agreement, then the written agreement that results is often a binding agreement that each party to the agreement can enforce if the other side breaches it.
Typically, mediators charge by the hour or a flat-charge for the day, and prices vary depending on the complexity of the dispute and the experience of the mediator. The parties to the dispute equally split the total cost of the mediator unless they agree otherwise of a covenant or community rule requires something different. Many mediators are attorneys but there is no requirement in Colorado for mediators to be attorneys and there is no credentialing requirement. While there is no credentialing process, many mediators take extensive ADR training.
If mediators are not able to help the parties resolve the case, then the parties are free to move forward with litigation or arbitration.
2.Arbitration: As many know, arbitration is a private, out-of-court process where the parties to a dispute mutually select a third party (an arbitrator) to oversee their case, and ultimately make a decision concerning the dispute. Most arbitrators' decisions concerning HOA disputes are binding, meaning the parties have to live with the outcome of the decision. Most often, the parties split the cost of the arbitrator and any associated administrative costs.
3.Med/Arb: This is a hybrid, where typically the parties choose a mediator to try to settle the case, and if it does not settle, the mediator converts to being the arbitrator, who then makes a binding decision on the case. This form of ADR is controversial, many believing a third party cannot transition from being a mediator to an arbitrator and maintaining impartiality when weighing the evidence presented at an arbitration hearing. Yet, it is a growing form of ADR used in HOA disputes in certain states.
When is ADR Required in HOA Legal Disputes and How Might Legislation Change this?
As of right now, parties to any legal dispute, including community disputes, are required to mediate when there is an existing court case and the court mandates mediation. Arbitration is only required when there is a covenant in a Declaration that mandates arbitration. While most communities have the statutorily required Conflict Resolution policy, most such policies are not written to mandate mediation. Current legislation efforts are aimed at mediation. However, one longstanding homeowner advocacy group is pushing for Med/Arb to be legislated for HOA disputes.
As the recent survey touched on, there are two primary ways that legislation could play out. Members of our industry need to be prepared to weigh in. One, legislation could amend the Colorado Common Interest Ownership Act, making mediation mandatory in some situations, and possibly even Med/Arb in others, regardless of a court order for ADR. Under this type of legislative scheme, Conflict Resolution policies may have to include mandatory ADR language. Two, legislation could create a process within the Division of Real Estate (which is under DORA), where the State oversees a list of mediators or implements some type of specific credentialing for HOA disputes. A third possibility is a CCIOA change and DORA intervention combined.
As to which route seems best, it is worth discussion. Many involved in HOA disputes want their day in court. Nevertheless, the legislative landscape is shaping on this issue and weighing in on the best way to negotiate this legislation is crucial.
By CAI-RMC Editorial Committee, CAI Rocky Mountain Chapter
2020 was such an action-packed year that you may have missed some of the bills that passed during the 2020 Colorado legislative session. As a quick overview, here are the bills that may have an impact on the future of Colorado community associations.
This bill grants homeowners in a community governed by the Colorado Common Ownership Interest Act the ability to operate a licensed family childcare home, as defined under state law. The association will need to make reasonable accommodations for any exterior fencing requirements applicable to licensed family childcare homes. The association may require the family childcare homeowner or operator to carry liability insurance covering the operation of the family childcare home. This law is not applicable to communities that qualify as housing for older people under the federal “HOUSING FOR OLDER PERSONS ACT OF 1995" law.
This bill grants the board of a sanitation district, water and sanitation district, or metropolitan district to provide solid waste and residential waste collection and transportation on behalf of the district. The board may impose fees for this service and the board may require that the residents of the district pay charges for residential waste services. If the board contracts with a third-party service provider, then the board will need to publish a notice that they are requesting a proposal no less than thirty days prior to awarding the contract. The board shall not award a contract that exceeds three years in duration. The board cannot collect waste without the consent of the municipality, city, and county.
This law grants the board of your local county commissioners the authority to license and regulate short-term rental owners or an owner’s agent who advertise or rent the owner’s lodging unit as a short-term rental; and to set the fees, terms, and manner for short-term license issuance and revocation.
If a mobile home park owner intends to change the use of the land comprising the mobile home park, the mobile home park owner will need to give written notice to each homeowner at least twelve months before the change in use will occur.
No earlier than thirty days after giving the notice required by this subsection, a mobile home park owner may post information in a public space on allowing the homeowners the opportunity to purchase the mobile home park.
After the notice is provided, the homeowners will be granted a 90-day period to negotiate an agreement to purchase the park. However, if at least fifty percent of the homeowners who reside in the park provide signed writings to the mobile home park owner expressing no interest in purchasing the park, then the opportunity to purchase will terminate even if the ninety-day period has not yet elapsed.
By Loura K. Sanchez, Burg Simpson Eldredge Hersh & Jardine, P.C.
A mere five years ago, CAI undertook an extensive project to speak with over 50 different stakeholders about the future of the community association industry, which resulted in a report entitled Community Next: 2020 & Beyond. Here we are, about to close out 2020, so it is time to look into the next five years. There are currently 70 million residents in community associations nationwide, and 69% of all new construction is within a community association. Our industry's evolution will continue to change and will be driven by many factors beyond our direct control.
As leaders in the community association industry, we must think and plan how to best respond to the evolving trends, including how we govern, lead, support, and manage our associations.
Below are ten trends that should not be ignored:
1) Millennials - The Millennial generation is now the largest generation in the world (72.12 million as of 2019). In five years, millennials will be 29 to 44 years old. They will be residents and owners in our communities. Millennials believe in civic duty and are often motivated to engage on a grassroots level. They are used to working in teams and seek positions of influence without formal structure.
2) Ethnic Diversity - By 2060, it is predicted that 39% of the United States population will be Hispanic or Asian, and there will be no clear majority. Our political climate continues to raise awareness of bias and needed improvements to be inclusive.
3) Working From Home - Experts say that the work from home flexibility that the COVID pandemic necessitated will continue to be a part of our culture in the foreseeable future.
4) Obsolete Community Infrastructures - Communities formed in 1970-80 are now 40+ years old. Most have not been maintained or updated to be fully usable and functional, thereby necessitating high assessments, large special assessments, or economic failure of communities.
5) Connection Demand - While virtual meetings may be here to stay, the pandemic has heightened the importance of human connection and community belonging.
6) Baby Boomers - This generation represents the second-highest segment of our population, and as they continue to age, they prefer to do so in place.
7) Community Association Management Profession - There is a growing recognition that community association management is a profession. With this comes formalized education with multiple colleges, including Arapahoe Community College, offering course work to train community association managers. In addition, the demand for specialization and broader skill bases will grow.
8) Conflict Resolution - The push towards less litigation and more alternative dispute resolution, either voluntarily or mandated by courts or governing documents, continues but with seemingly little effectiveness in community associations.
9) Urban Migration - Migration from urban/metropolitan cities to smaller towns was predicted over 20 years ago but has been slow to materialize. Now it is in warp speed. With remote workforces commonplace post-COVID, 5G wireless communications rolling out, and a national infrastructure bill likely that will make connectivity even easier, there is no need to live in an urban area with high housing costs and low quality of life. The National Association of Homebuilders reported its housing index (used to track single-family home sales expectation over the next six months) at 78. This is the highest in 35 years.
10) Cancellation Culture - Ghosting. Bailing. Cancelling. The trend of committing then not showing up means you can't count on a "yes" at all, so we must figure out how we can curate community volunteers and those we rely on to get stuff done.
While there is no guarantee that any of these trends will continue, using them to strategize how a given trend may impact your community or business is prudent. Without the benefit of a crystal ball, it may be worth considering these potential and many other outcomes from the above trends:
As with all trends, you can ignore it, lead it, buck it, or be impacted by it. Your choice - but, as leaders of community associations, it is our responsibility to do so with knowledge and thoughtfulness.
Loura K. Sanchez, Director of Marketing Construction Defect Group, Burg Simpson Eldredge Hersh & Jardine, P.C. Burg Simpson helps community associations remain healthy by addressing problems with construction of both new and major renovations.
By Amy Ostwinkle, Pacific Premier Bank
The Board of Directors has worked with the community manager, planned a major renovation project or improvement, evaluated their finances, reviewed the current reserve study, and has ultimately decided that obtaining a loan appears to be a suitable option. . . but what’s next?
Board members, homeowners, and community managers are becoming increasingly aware of the many benefits of association loans. Financing provides immediate funds to complete capital improvement projects or manage unanticipated major expenses, all while continuing to build and maintain healthy reserves and improve property values. Associations understand that they can take advantage of better pricing and minimize impact to the community by completing projects at one time instead of phasing over many years. The questions now become, where do we start, what is the process, and how do we know if the association will qualify?
Where to Start?
What Will be Required?
What is Next and What Should We Expect?
Depending on the size, complexity of the loan, and requirements within the community’s governing documents, the process will typically take anywhere from a couple of weeks to a couple of months. There are a few things that the association can do to make this process seamless.
Are We Approved?
How Exciting… let the underwriting process begin!
The Finish Line
The management company and Board of Directors will be notified of the approval and collection of final closing documentation will take place.
A well-organized community, working with a dedicated association lender, can successfully navigate the association loan process with ease and enjoy all the benefits of their project in just a short period of time.
Amy Ostwinkle is an experienced HOA Banker and Lending Expert who began her career in the Community Association Industry in 1993. In her 27 years of experience Amy has worked directly with industry specific software companies to train and broaden the scope of finance technology knowledge to Community Management Companies in the Greater Southwest. Prior to joining Pacific Premier Bank, Ms. Ostwinkle was a founding member of a large Community Association Bank where she performed her duties as Senior Vice President for 12 years.
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