By Damien Bielli, Vial Fotheringham LLP

The Board of Directors in a homeowners’ association (HOA) are responsible for the functionality and governance of the community. One of the powers and duties delegated to the Board of Directors is the power to negotiate and enter into contracts, which is highly significant to the operation of an HOA. In fact, one of the exceptions to the open meetings requirement under CCIOA is for negotiation of contracts. This means that Boards can meet in executive sessions to negotiate contract terms and then re-convene in an open board meeting to vote on approving a contract.

What is a contract?

In its simplest form, a contract is an agreement between two or more parties where there has been a “meeting of the minds.” To have a contract, there must be an offer, acceptance of the offer, and consideration. Consideration means that there must be value given by each party to the contract. While some oral contracts can be enforced, an association should only enter into contracts that are in writing.  Oral contract can make enforcement more difficult in the event of a breach but may also leave critical details regarding performance of the contract in the eye of the beholder. 

There are a multitude of contracts relevant to association. The most common are maintenance contracts, landscape contracts, cable bulk service agreements, building envelope/construction evaluations, construction contracts, employment contracts, attorney representation agreements, management company contracts, and association lending contracts. With the different variations of contracts, it is important each is negotiated in ways that suit the HOA community and are reviewed and discussed thoroughly by the Board.

When is legal support needed?

If a contract is for ongoing services, or for more than a few thousand dollars, it is highly recommended and encouraged that the HOA brings in an attorney to assess and review the material. There is specific terminology in every contract that can be used if a disagreement arises, which is why it is critical for an attorney to be brought in to help the Board understand the nuances that may be difficult to understand and interpret. Timing of the performance of the contract, conditions precedent to performance and association obligations within the contract should be scrutinized. 

Before entering into a contract, the Board must fully understand the scope of what it addresses and demands, this includes the goods or services that are going to be offered, what the expectations are for performance under the contract, how to terminate a contract, what it will cost the association to terminate the contract, whether arbitration is required, or any other limitation on enforcing the contract, and if attorney fees are to be awarded to the prevailing party in a lawsuit. Without having a grasp on these aspects, the Board is at a vulnerable disadvantage which could cause negative legal ramifications if an issue was to present itself. 

What type of contracts are commonly used?

There are numerous different types of contracts, all with their caveats. Understanding the differences and knowing what to expect before engaging with a contract is beneficial because it streamlines the revision, negotiation, and entering into phases. In general, contractors use standard form contracts, these can have provisions that may not be favorable, or even applicable, to the association. These form contracts are commonly very lengthy and can be very specific about payment, insurance, performance, and limitation of liability. Under no circumstances should the board use a bid as the construction contract. When the Board selects a bid, they should request a copy of the contract to evaluate terms. 

There are also clauses within the contracts that Boards should be cognizant of. Evergreen clauses are a common pitfall, and it is critical associations understand these terms. An Evergreen Clause is an automatic renewal clause. It’s a contractual provision that operates at the end of a contract’s terms to automatically extend the term for a specified period unless one party provides notice of its intent not to renew. These time periods for notice can vary widely and be as long as 90 days, depending on the length of the original contract. Colorado passed a new law in 2022 which requires upfront and specific disclosure of these types of clauses; however, Boards should still be wary. 

Finally, as fiduciaries, the Board of Directors has an obligation to enter into a contract with the best interest of the association at the forefront. Certain negative terms within a contract may outweigh the lower bid price for services and be more advantageous to the association’s needs. The association should always solicit bids from multiple sources for any contractual need and compare price and terms.  

When entering into contracts, the Board needs to fully understand the contracts it enters into on behalf of the association. Questions and concerns about contracts should be discussed with legal counsel.

As a partner in Vial Fotheringham LLP, Damien M. Bielli has a unique background in HOA Law, trial advocacy, insurance defense, professional liability, coverage disputes, labor law, employment law, construction, commercial litigation, and contracts. He may be reached at Damien.Bielli@vf-law.com.

By Jason Helzer

Leadership consultant and retired Navy Seal Officer Jocko Willink, Author of the New York Times’ best-selling book “Extreme Ownership” advocates for a principle he states as “Discipline Equals Freedom.” This concept emphasizes that by developing self-discipline and adhering to a set of structured behaviors, individuals can achieve greater freedom and success in their lives. This principle also holds very true for Associations when they implement a preventative maintenance program to address the needs of the property, systems, and buildings in their communities. 

Preventative maintenance is a proactive approach to keeping equipment, facilities, and buildings in good working order. By implementing such a plan, Boards can help ensure that their property is maintained in good condition, reducing the chances for expensive, extensive and inconvenient repairs. 

It’s not hard to see the many scenarios where Associations - be that Condominium, Townhouse, High Rise or Single Family – greatly benefit from a disciplined approach of evaluating all of the various items that they have the responsibility for as outlined in their governing documents.  Starting with a review of the Association’s reserve study is a great way to begin to make a list of all the areas that the Board should be considering. 

Once that list is complete, the Board should then work with their trusted vendors to identify what a comprehensive maintenance plan would entail and start prioritizing and performing that work. This could be as simple as taking a look at the fence around the community and deciding if it needs a new coat of stain, to having the drain piping in the building scoped and jetted to prevent backups and the costly damage a backup can cause. 

Below is a list of just a few of the various items that a Board should consider when looking at implementing a preventive maintenance plan. 

Single Family	Townhome	Condo	High Rise
Concrete/Asphalt	Roof	Roof	Roof
Fencing	Siding	Siding	Decks
Irrigation	Decks	Decks	Windows
Playground	Concrete/Asphalt	Mechanicals	Elevators/Mech
		Fire Safety	Fire Safety
			Garage

Also, by creating and following a preventive maintenance plan, the Association is better equipped to budget more accurately for the year.  Even when the time does come that something is at the end of its useful life and it needs to be replaced rather than maintained, having the discipline to follow the plan will give the Board much greater visibility of that issue sooner, and make it easier to prepare for the expense when the time comes. This may mean that there are smaller, incremental increases in annual assessments along the way, but those are vastly preferable to large unexpected special assessments that many homeowners have a hard time accommodating, especially in these uncertain financial times. 

Additionally, by taking this proactive approach, Boards are able to much more effectively perform their primary fiduciary responsibility, which is to maintain and enhance the value of the properties in the Association. It goes without saying that it is easy to tell a well-maintained property just by looking at it. The care and attention are obvious. 

By Andy Denker, Denver Commercial Property Services  

Asphalt and or Concrete parking lots and driveways are the first interaction point a visitor or resident has with your facility. Keeping your asphalt and concrete in excellent condition starts with effective maintenance. A well-maintained property helps to attract and retain clients or homeowners.

With both asphalt and concrete cleaning, crack filling and sealing are necessary to maximize the life of the pavement. 

Cleaning:

Cleaning asphalt and concrete surfaces is the most basic part of maintenance. Cleaning helps to keep the surfaces free from debris which can become hazardous and delivers a clean and appealing appearance. Due to the vehicle and foot traffic that asphalt parking lots incur daily, it is essential to conduct a periodic extensive cleaning. Cleaning enables the removal of vegetation, oil, paint, and other substances that accumulate on the surface. For concrete areas such as swales, pans, curbs, and gutters, it is best to check for obstruction or blockages and remove trash, debris, and sediment in a timely manner.

Crack filling:

Whether you have an asphalt or concrete surface, cracking is inevitable. Cracks occur over time due to the change in moisture levels in the material, which can occur with fluctuations in temperature. It is important to fill cracks as soon as they appear. If left untreated, cracks can become larger, and pavement failure, such as potholes, can occur. Approximately 75% of unsealed cracks develop into potholes within 3 years, while only 1% of sealed cracks become potholes in that same amount of time. Crack filling slows the deterioration and extends the life of the pavement surface up to 5 years. It is a low-cost protection method for cracks that are greater than 1/8 inch. 

Sealing:

Sealcoating can help stop water from penetrating the asphalt, causing degradation which can lead to the formation of potholes. Additionally, sealing asphalt can improve the appearance of your surface as well as improve road safety by boosting color contrast between the pavement and road markings. 

Because concrete is porous, sealing can protect the surface from weather, UV rays, and damage. Concrete parking garages are subject to weather, de-icing chemicals, thermal expansion and contraction, and more. Parking garages have an estimated life expectancy of 30-40 years, but that can be extended with good preventative maintenance, which includes applying a waterproofing traffic coating to prevent moisture from seeping into the concrete. Typically, many associations will opt for the cost-effective approach for caulking and isolated repairs. This method is only for treating visible cracks and will only extend the life for a limited time.

To extend the life of asphalt and concrete surfaces, it is recommended to seal every 2-5 years, depending on the existing conditions.

Just as it is with your health, the longer you wait to address issues the more dangerous and costly it can become. Cracks, debris, and uneven surfaces can be trip and fall hazards, leaving HOAs potentially liable for claims. Preventative maintenance for asphalt and concrete is necessary. 

About the Author

Andy Denker has over 25 years of experience in the construction industry, having worked for national-ranked construction contracting companies. He leads the Asphalt and Concrete Division as Denver Commercial Property Services, a single-source provider of commercial property services across Colorado. 

By Emily Schosid

Denver's goal is to eliminate carbon emissions from buildings by 2040. Buildings and homes account for 64% of Denver’s greenhouse gas emissions. Electrifying buildings and making them more energy efficient both lowers those emissions and improves the environment. 

A crucial way the City reaches the zero emissions goal is through the Energize Denver ordinance. City ordinances can be hard to navigate, but knowing what parts of Energize Denver will apply to you and your building is the critical first step for your building and Denver to reach their goals. The requirements change depending on your building’s size, so knowing this will help you know what you need to do to comply. Building size is calculated by the gross square footage of the building, including common areas and individual condominium or apartment units.

Buildings 25,000 sq. ft. and larger

About 3,000 buildings in Denver are 25,000 square feet or larger. One third of those are either condominiums or apartment buildings. These buildings are required to report their annual energy data through a benchmarking report and meet a series of energy efficiency targets between now and 2030. When Denver reviews the benchmarking data each building submits, they look at the building as a whole: the sum of every individual apartment or condominium unit and any common spaces. The building owner, building manager, or HOA have a couple of options for collecting this information, but ultimately, they will have to add together the energy use from each individual unit.

The energy efficiency performance requirements work the same way. The building is required to meet a certain energy use intensity (the amount of energy used per square foot of area) by 2030. There are two interim goals the building must meet on its way to its 2030 goal: one in 2024 and one in 2027. Everyone who lives in a multifamily building must work together to help the building reach its performance target. This work can be organized by a building owner, manager, or HOA.

The City wants to see all buildings reach their performance targets. While there are penalties for buildings that do not make the required progress towards their goals, there are several alternate compliance options available, as well as target adjustments available for taking steps like electrifying a building or utilizing renewable energy sources. The City’s help desk is available to help you figure out the best compliance options for your building. Contact at energizedenver@denvergov.org.

Buildings 5,000 – 24,999 sq. ft.

There are about 6,000 commercial and multifamily buildings in Denver between 5,000 and 24,999 square feet. About a third of buildings in this category are either apartments or condominiums. These buildings are not required to submit annual benchmarking data or meet a specific energy use intensity. Instead, these buildings will be required to either upgrade at least 90% of their lighting load (measured in kilowatt-hours) to LEDs or source at least 20% of their building energy demand from renewable sources. The deadline to complete these upgrades occur between 2025 and 2027.

The City is still finalizing the rules, alternate compliance options, and technical guidance for these buildings. The City recognizes that condominiums will face unique challenges in trying to meet these requirements, and will provide updates on how you can work with the City to achieve your Energize Denver requirements. In the meantime, you can the City at energizesmallbuildings@denvergov.org.

Energize Denver Electrification Program

The final part of Energize Denver is the Electrification Program. This part of the ordinance uses the Denver Commercial Building Code to require buildings to replace gas-fired space and water heating and cooling equipment with electric alternatives at the end of the equipment’s life. These requirements apply to all commercial and multifamily buildings in Denver, regardless of their size.

Replacing heating and cooling equipment is expensive, and building managers may delay until it becomes an emergency. There are exceptions to the electrification requirements if you find yourself in an emergency, but the best course of action is for building owners, managers, and HOAs to plan ahead, rather than wait for their equipment to fail. Later this year, Denver will have financial incentives to make it easier to switch to energy efficient electrified equipment. Ultimately, Denver will be a very different city when its buildings meet their Energize Denver requirements. Making your building greener will make your tenants and residents more comfortable, help improve Denver’s air quality, and increase Denverites’ quality of life.  

By Meaghan Brown, AGS Construction

Community managers are tasked with submitting requests for proposals (or RFPs) day in and day out.  As a vendor, we see RFPs come across our desks in various forms, some more detailed than others. It is not uncommon to receive a few words scratched onto a sticky note, with the expectation of accurately submitting a bid based on those few notes alone.  

A properly written RFP is important for various reasons. Not only does it help vendors understand the Board’s expectations and how they would like the job to be outlined or broken out, but it also helps the Manager in obtaining apples-to-apples bids from the various vendors. This leads to a quicker turnaround time in obtaining the estimate, as it reduces back and forth questions from the vendor to the Manager. It also allows the Board to make a clear decision and better understand that in which they are investing. 

Having a clear understanding of your Board of Directors (BOD) is an integral first step to writing an effective RFP.  Knowing the level of experience the BOD has with projects, who from the BOD will be spearheading the project, and overall BOD goals as it relates to the project are essential considerations to start from. 

At a minimum, the Board of Directors should take a physical look at the work and agree on the desired outcome. A community’s needs must be fully addressed in the scope and specifications. The Board of Directors should be involved in the scope development, so they know exactly what they are investing in and to ensure proper expectations are set. Ideally, the BOD should walk the project with the Manager and bidding contractors to determine details prior to the formal RFP being issued. 

Setting and managing the Board’s expectations is another crucial step to this process. The timeline is key here… for example, is this project something they’d like to take care of this year or are they simply looking into budget numbers? When would they like all of the bids turned in? What is the timeline of when they plan on making a decision and when they want the project to start? Will they be holding interviews to meet the contractors before making the decision or would they hire someone based only on their resume? These are all fundamental questions to ask your BOD and information to provide to the vendors that are bidding the work. 

Next, you need to develop the scope. Based on BOD input, create a specific written scope of work. Ask a trusted business partner (such as a contractor or engineer) for assistance. For example, if the Board is interested in an exterior repaint, find out exactly what is to be painted (siding, trim, fascia, eaves, mailboxes, garage structures, trash enclosures, etc.) and what type of paint is to be used. Include written job processes and expectations (spray and back roll, two coats, schedule, etc.) The goal here is to develop a comprehensive scope that all vendors will bid thus ensuring apples-to-apples bids. 

An easy way to get some help with this is to reach out to manufacturer representatives. Specifications are typically provided by a material manufacturer and should accompany the scope of work. A specification details material used, preparation process, application procedures, etc. These are factors that can drastically affect the price. For example, when renovating balcony decks, there is a big difference between using a multi-layer balcony waterproofing system and using a cheaper elastomeric deck coating instead. They both look similar but perform differently. 

Subsequently, to ensure everyone is on the same page, the Community Manager should schedule a pre-bid site walk with all bidding contractors. Ideally, this happens all at once with all bidding contractors present at the same time. Don’t be afraid to insist that all contractors follow the scope of work and specifications provided (and feel free to state that in your RFP). At the same time, other ideas may be recommended by a contractor, so be sure to encourage the bidding contractors to provide alternate materials/methods as a separate line item. 

Recognizing how this process works for the bidding vendors will facilitate being able to set proper expectations for your Board and the contractors alike. Once the RFP is received by the Account Executive or Business Development Representative, the estimating team reviews the RFP and scope of work to clarify details. The estimator will then inspect the property and determine the means/methods for project execution. Once the estimating team quantifies and calculates scope of work, the team then reviews the bid for accuracy, feasibility, schedule, exclusions and unforeseen conditions. At that point, the Account Executive formats this information into a bid-packet presentation and delivers the proposal to the manager. It’s important to note, that on average, the bidding process takes vendors 40+ hours on a $100k project. This is not including the community manager’s time or any revisions. 

Below is the information that should be included in the RFP: 

1. General Information: Address, year built, number of buildings/units, access codes, site map. 

2. Detailed Scope of Work: Paint, concrete, siding replacement etc. 

3. Specifications: What materials are being used and what is the application process. 

4. Pricing: How would the client like the pricing broken down? 

5. Additional Requirements: References, insurance requirements, schedule demands, staging. 

6. Protection of Property: What is the expectation for any damage that occurs during the project? 

7. Warranty: Make sure everyone is offering the same duration. 

8. Deadlines: When do you need everything submitted? 

Lastly, upon receipt of the bid, comes bid review. Be sure to review bids with the Board of Directors to ensure each item that is spelled out in the RFP is covered. Utilizing a ‘bid comparison worksheet’ comes in quite handy here while evaluating the multiple bids. Interviewing potential contractors with the Board will also help to speed up the process and reduce back-and-forth questions. 

All in all, there are several factors that can make it difficult to create the perfect RFP, but we all know a bad one when we read it. Be sure to take the time to develop an RFP correctly from the get-go, as it will ultimately save you time in the long run. By following the aforementioned steps, not only will you receive higher quality responses, but you also will be more likely to end up with a vendor who will give you the results that you desire.

About the Author: Meaghan Brown is the Director of Business Development AGS Construction and works with HOAs, multifamily, and commercial properties for their exterior, communitywide reconstruction projects. Meaghan acts as the liaison between their production team, the community/property manager, board of directors, and residents throughout the course of each project. Some of their core services include roofing, carpentry, EIFS/stucco, concrete, painting, decks/ walkways, steel fabrication, and construction defect services.

By Geneva Cruz-La Santa, CP&M

Crawl spaces are built when a basement is unwanted or is otherwise not feasible. They are vital to a residence to provide access to electrical wiring, mechanical systems, and plumbing. When adequately sealed and maintained, crawl spaces provide a defensive buffer between the damp ground and the interior structure of a home and can additionally aid in radon mitigation.

 

Due to changes in code and new construction practices, crawl spaces in buildings constructed ten or more years old may need updates to comply with current standards. Serious consequences can occur if your crawl space is not routinely maintained. For example, debris left in a crawl space from the original construction in combination with poor interior grading and moisture problems can result in mold growth. Mold can develop from condensation or groundwater entering the crawl space. Inadequate exterior drainage measures can also create moisture problems; this often results in water accumulating around the outer foundation walls and making its way into the crawl space. Structural damage from either cracks or gaps in foundation walls can allow water to seep into your crawl space exacerbating problems.  Also, plumbing leaks from cracked or corroded pipes can cause water to accumulate in crawl spaces. Mold growth needs to be identified; mold mitigation plans must be conducted to eliminate the cause and address severe issues adequately.

Often Associations and Managers are not aware of what to watch for with crawl space maintenance. The following can be red flags when walking properties:  

• Standing water (both inside and outside of the crawl space);
• Humidity build-up, including a damp, wet, or musty odor; 
• Missing visqueen or other barriers;
• Sagging floors & deteriorated floor joists;
• Damaged or missing concrete caissons; 
• Rusted steel support beams and posts;
• Missing or non-functioning sump pumps;
• Construction debris;
• Missing or damaged insulation; and/or
• Inadequate ventilation. 

Preventive maintenance begins with a simple inspection. A specialized professional can identify pre-existing or potential problems that need to be appropriately addressedbefore they lead to more extensive and costly repairs.

Geneva Cruz-La Santa has over 19 years of experience with CP&M and its related companies. CP&M specializes in providing solutions for Commercial Property Managers, HOA-managed multi-family communities, REO rehabilitation, apartment industries, and government housing entities.  

By Kevin Olmstead, Western States Fire Protection

The life safety of a commercial or residential building has many aspects. One vital concern for life safety is the maintenance and inspection of your fire system. A building may also have a fire alarm panel and a sprinkler system.

If the building has a fire panel, several electrical devices are connected to the fire panel to detect a fire and send out notification if one is detected. The basic design of a fire system will include smoke or heat detectors, pull stations, and horns/strobes. Depending on the building size, there might be other devices as well. 

If the building also has a sprinkler system as part of the design, the building will have sprinkler heads throughout the structure. The sprinkler system is wired to the fire panel and has various switches to indicate water flow or system tampering.

The fire panel is like a laptop on the wall wired to all system devices described previously. These various devices can communicate system issues that cause the panel to beep and indicate an abnormal status. When the panel is beeping, please don’t ignore it; instead, you need to call for service.

If an actual fire is detected by an activated sprinkler head or smoke/heat detection, the fire panel will alert residents by activating the horns and strobes throughout the building. Everyone should evacuate immediately. The fire panel will automatically contact the monitoring call center, which dispatches the fire department and contacts emergency on-call personnel for that building. 

If there are sprinkler heads in the building, these heads are activated to release water or a mixture of water with glycerin/glycol. The sprinkler head is only activated by heat (not smoke), causing the head to release. 

However, if an object accidentally damages the head, that will activate the head as well.

All fire systems need regular maintenance and annual inspections to operate correctly continuously. 

There are national and local fire codes that provide specific requirements for each district. 

Generally, a system needs to be inspected by a licensed fire protection company at a minimum of once a year (maybe more, depending on the local jurisdiction codes). The local fire department may also do spot inspections at any time to check if a property complies. If the fire department finds deficiencies during their inspection, they will write up the violations that must be addressed promptly. The fire department’s random inspections do not replace the properties’ requirements to complete annual inspections and repairs with their fire protection vendor.

Whenever the fire panel starts to beep (driving you crazy), it indicates something is in trouble status; this is NOT an alarm unless the horns go off. This beeping indicates that the fire panel and/or sprinkler system needs service to determine the issue. When the fire panel is in a troubled status, the property must contact its fire protection vendor for service. Don’t wait until you have more severe issues.

Maintaining the rooms where your fire sprinkler systems are located is crucial. The fire sprinkler rooms are labeled as the “riser room .”If the fire panel is in the same room as the sprinkler systems, then you will likely see that door also marked with “FACP” (fire alarm control panel). Most fire panels are in the same room as the fire sprinkler controls, but they can be in another location in the building. If the fire sprinkler rooms are on a building’s exterior, they need proper heating to prevent freezing damage. It is recommended to turn your heaters on in these rooms at Halloween and off at Easter. Don’t forget to turn off heaters in spring because excessive heat damages electronics and batteries.

You can opt to have a temperature alert placed in the sprinkler room and wired to the fire panel. 

This device will communicate whenever the temperature drops too low in the room. This simple temperature alert can save thousands of dollars of damage caused by a frozen sprinkler system during a cold snap.

Always include a line item in your budget for annual inspections and ongoing fire alarm and sprinkler repairs. Plan ahead in your budget for more oversized ticket items. As the system ages, you will need repairs and replacements. The average lifespan of a fire panel is 12-15 years. 

Inquire with your fire protection vendor for an approximate cost for repairs or replacement.  

The fire systems in a building are designed to protect lives and property; therefore, they need to be regularly inspected and maintained to operate when required appropriately.  

Kevin Olmstead has worked with Western States Fire Protection for 12 years. Western States Fire Protection is a full-service fire protection company with over 40 locations across the United States.

By Stephane Dupont, Dupont Law Firm

The words “fiduciary duty” are ones that many of us in the community association industry come across frequently. It is especially common to hear these words thrown around loosely when one or more members of a community association board of directors are “misbehaving”. In legal terms, it can be simply defined as owing a duty of good faith and loyalty to the association with an obligation to act in its best interests. But what does this mean in practice and layperson terms?  

Pretend for a moment that you are one of three owners of a small culinary business that prepares meals for residents of a small group of assisted living facilities. Let’s assume that you are also a single parent of ten (10) young children, so it is critical that the business succeeds to make ends meet.  Would you show up every day and get it your best? What would you do to ensure that your business flourished and stood out from others? Would you ensure the financial stability of your business by providing a high quality of service to your customers? How would you deal with customers, especially difficult ones? In the event of a dispute between business owners, would you make sure to respect the majority decision of the owners to ensure that the business can move on to ‘bigger and better’ things and convey an image of stability and productivity to your customers? As a board member, embodying that same passion for success and order is critical towards ensuring that fiduciary obligations are met. So how can members of the board minimize their liability against claims that they violated their fiduciary responsibilities? Here are suggestions that may help board members stay on track and out of legal trouble:

1. Be Present and Informed. Attend meetings and come prepared to discuss and resolve agenda items. If you received a ‘board packet’ prior to the meeting, make certain to read through it prior to the start of the meeting. 
2. Act professionally and transparently. Respect your fellow owners in the community even if you disagree with them. NEVER hide or fail to disclose information to owners unless the law requires that certain information remain confidential.
3. Avoid ‘personal agendas’ that control your decision making. If you or someone that you are close to have something individually to gain from a board decision, make sure to disclose that conflict of interest to fellow board members and owners and, to the extent possible, abstain from voting.
4. Follow the law and covenants. Doing what ‘feels right’ is not enough. Become knowledgeable about Colorado law and your governing documents and make decisions accordingly. If you are not certain or need clarification, hire the proper professionals to assist. 
5. Ensure that the Association has sufficient income to meet its expenses. Prepare budgets with a realistic assessment of anticipated expenses and reserve contributions. If assessments are unpaid, at a minimum, follow the terms of the association’s Collection Policy and ensure that delinquent notices are sent on a timely basis.

Stephane Dupont is the owner and an attorney with The Dupont Law Firm that provides comprehensive legal services to common interest communities throughout Colorado.

By Alyssa Chirlin, Smith Jadin Johnson PLLC

It is an issue that every community association faces homeowner requests for association documents. But what are homeowners entitled to, and what documents, if any, can an association withhold?

 

Colorado law establishes some requirements which an association's governing documents may supplement. Colorado community association law is focused on increasing the transparency of associations' operations and, along these lines, requires that specific documents be maintained as association records and that those records be available for inspection to all owners.

 

The list of documents to be maintained as records by an association is extensive and includes meeting minutes, an association's most recent reserve study, ballots, proxies, and written communications among board members related to any action taken without a meeting, among other documents. These documents must be made available for inspection to owners upon request. An association does not have to compile or synthesize information; it can require that owners submit their requests in writing and describe the documents requested with reasonable particularity. However, the association can never require owners to provide a purpose for their request. Their membership in the association alone entitles them to this information.

 

There is certain information that the association must withhold from inspection for privacy reasons. This information includes personnel, salary, or medical records of individuals and any personal identification and account information of members and residents. Personal identification information consists of obvious bank account information, social security numbers, and driver's license numbers, but it also includes telephone numbers and email addresses, which may only be disclosed with the owners' prior written consent.

 

The association may withhold any document that is not specifically required by Colorado law to be maintained as a record. This includes specific documents listed in Colorado law as able to be withheld, including architectural drawings, contracts under negotiation, and records relating to individual owners other than the requesting owner. It also includes documents that an association maintains pursuant to requirements in its governing documents if those documents are not also specifically required to be held as an association record by Colorado law. While this allows associations some discretion in its productions to homeowners, it also allows for inconsistent handling of homeowner records requests.

 

In order to combat these potential inconsistencies, associations should draft comprehensive inspection and copying of records policies. Not only are such policies required by Colorado law, but they provide necessary guidance to associations. Colorado law does not dictate the contents of an inspection and copying of records policy, but an effective one should not only address what discretionary documents will and will not be produced but should also contain provisions regarding the submission of owner requests, timelines for responding to such requests, the ability of the association to charge for fulfilling the requests, and how the association will fulfill the requests. A thorough policy can act as a quick- reference guide and eliminate the need to analyze the statute every time the association receives a records inspection request.

 

Once adopted, consistent compliance with the policy can minimize the risks of discrimination allegations against the association and of financial consequences for an association's failure to allow inspection of requested documents in a timely manner. If an association receives a written request from an owner via certified mail with a return receipt requested, and does not allow inspection within thirty days, the association may be liable for fines of fifty dollars a day. An association's inspection and copying of records policy should therefore provide a turnaround time of fewer than thirty days for inspection of records upon receipt of an owner request.

 

In these ways, a comprehensive records inspection policy will meet legal requirements and increase owners' transparency while protecting the association from liability. While it may seem inconsequential, the inspection and copying of records policy is an important tool in an association's arsenal that should not be overlooked.

 

Alyssa Chirlin is an attorney at Smith Jadin Johnson, PLLC, a law firm that handles all an association's legal needs, from daily governance issues such as collections and drafting governing documents to insurance claims and construction defect matters.

By Amanda Ashley, Altitude Community Law

HB22-1137 revises the “pre-turnover” steps that the association must take before it may proceed with a foreclosure action.  Most importantly, and perhaps the biggest point of contention giving rise to this portion of the bill, is that an association may not foreclose on a unit if the lien consists only of one or both of the following: (i) fines; or (ii) collections costs or attorney fees that the Association has incurred and that are onlyassociated with assessed fines.

And of course, the association must follow all required steps of the statute, including the new requirements set forth by HB22-1137, before it can turn the matter over to an attorney to proceed with foreclosure including a board vote on whether to turn the matter over for foreclosure.

Prior to initiating foreclosure, the association must first contact the owner at least one time and send the required delinquency notice just as it would need to if it were turning the action over to an attorney for collection.  

However, one of the primary differences here is the information that must be in the delinquency notice if the Association intends to proceed with foreclosure. While the owner must be offered the repayment plan as s/he would have been for the collection action, the owner is allowed to choose the monthly repayment amount, as long as the monthly repayment amount is at least $25.00 per month. What does this mean for balances that will not be paid off over 18 months at $25.00 per month? HB22-1137 remains unclear, but theoretically, it means there will likely be a large balloon payment in month 18 to cover the remaining balance due at that time. 

Once the above Notice of Delinquency has been sent to the owner, the association must wait 30 days to see if the owner declines the repayment plan.  If declined, then the Association may proceed with turning over the file to an attorney to initiate foreclosure proceedings. HB22-1137 is silent as to what happens if the owner simply fails to respond to the payment plan notice rather than expressly declining the repayment plan.  At this time, the general school of thought seems to be that the failure to respond is, in effect, the same as declining the repayment plan. 

However, if the owner does accept the repayment plan, then the association may not proceed with a foreclosure proceeding unless and until the owner defaults on the repayment plan at least three times during the 18-month plan. The owner has up to 15 days after the due date to make each monthly installment, so the owner is not in default unless the monthly installments have not been remitted by the 15^th day after the installment is due. 

Keep in mind that if an association has violated any foreclosure laws (whether discussed above or any other applicable foreclosure laws), the owner may file a lawsuit against the association to seek damages for the violation. The owner must file the lawsuit within 5 years after the violation occurred and, the association may face up to $25,000.00 in damages, plus costs and attorney fees, if the Court finds that the foreclosure violation occurred.  Lastly, if the association does foreclose, the law now prohibits board members, an employee of a management company that represents the association, or an immediate family of board member or employee, from purchasing the property at the foreclosure sale.