April 19, 2019

Colorado Supreme Court: Foundational Documents Insufficient to Create Homeowners Association for Common Land

The Colorado Supreme Court issued its opinion in McMullin v. Hauer on Monday, June 18, 2018.

Colorado Common Interest Ownership Act—Common Interest Communities—Homeowners’ Associations.

The supreme court reviewed the court of appeals’ opinion affirming the trial court’s order finding that the recorded instruments in this case were sufficient to create both a common interest community by implication and an unincorporated homeowners’ association. The court held that the recorded instruments were insufficient under the Colorado Community Interest Ownership Act to create a common interest community by implication. Accordingly, the court reversed the court of appeals’ judgment and remanded the case for further proceedings consistent with this opinion.

Summary provided courtesy of Colorado Lawyer.

SB 14-220: Requiring Mediation or Arbitration of Construction Defect Claims Where Required by Owners’ Association Governing Documents

On April 30, 2014, Sen. Jessie Ulibarri introduced SB 14-220 – Concerning Prerequisites to the Authority of a Unit Owners’ Association to Pursue Resolution of Disputes Involving Construction Defects. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill states that when the declaration, bylaws, or rules of a common interest community require mediation or arbitration of construction defect claims and the requirement is later removed, mediation or arbitration is still required for a construction defect claim based on an alleged act or omission that occurred when the mediation or arbitration requirement was in place. Section 1 also specifies that the arbitration must take place in the judicial district in which the community is located and that the arbitrator must:

  • Be a neutral third party;
  • Make certain disclosures before being selected; and
  • Be selected as specified in the community’s governing documents if possible or, if that is not possible, in accordance with the uniform arbitration act.

The bill adds to the disclosures required prior to the purchase and sale of property in a common interest community a notice that the community’s governing documents may require binding arbitration of certain disputes.

The bill requires that before a construction defect lawsuit is filed on behalf of the association, the executive board of the association must give advance notice to all unit owners, together with a disclosure of the projected costs, duration, and financial impact of the litigation, and must obtain the written consent of a majority of the unit owners.

The bill is assigned to the State, Veterans & Military Affairs and the Judiciary Committees; the State Affairs Committee will take up the bill first at 1:30 p.m. on Monday, May 5.

Since this summary, State, Veterans & Military Affairs Committee referred the bill, unamended, to the Judiciary Committee, which voted to postpone the bill indefinitely.

HB 13-1277: Creating a Licensing Program for Persons Paid to Manage Common Interest Communities

On March 25, 2013, Rep. Angela Williams and Sen. Morgan Carroll introduced HB 13-1277 – Concerning the Regulation of Persons who Manage the Affairs of Common Interest Communities under the “Colorado Common Interest Ownership Act.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Under current law, common interest communities and their unit owners’ associations (HOAs) are not subject to regulation by any state agency. As introduced, the bill requires any person who manages the affairs of a common interest community on behalf of an HOA for compensation, on or after July 1, 2014, to meet minimum qualifications and obtain a license from the director of the division of real estate in the department of regulatory agencies. Licensees are identified as “community association managers.”

The licensing requirement does not apply to persons who perform clerical, ministerial, accounting, or maintenance functions, not requiring substantially specialized knowledge, judgment, or managerial skill, under the supervision of a licensed community manager or directly for an HOA’s governing board. Licensing examinations will be developed and administered by the director of the division of real estate or by a person or entity under contract with the director.

The bill grants the director powers and duties similar to, but less detailed than, the powers and duties of the real estate commission under existing statutes governing the licensing and supervision of real estate brokers. The director is to monitor the operation of the licensing program during its first year and make recommendations for improvements to the general assembly on or before Jan. 1, 2016. The regulatory scheme is also subject to review after five years under the existing sunset law.

On April 11, the Business, Labor, Economic, & Workforce Development Committee amended the bill and sent it to the Appropriations Committee for consideration of the fiscal impact to the state.

On April 17, the Appropriations Committee amended the bill and referred it to the House Committee of the Whole for Second Reading. The Second Reading was laid over.

HB 13-1276: Imposing Notice Requirements on Owners’ Associations Under CCIOA Prior to Referring Delinquent Owners to Collections Agencies

On March 25, 2013, Rep. Angela Williams and Sen. Morgan Carroll introduced HB 13-1276 – Concerning Limitations on the Actions a Unit Owners’ Association under the “Colorado Common Interest Ownership Act” May Take Against a Unit Owner with Respect to the Collection of Debt Owed to the Unit Owners’ AssociationThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill requires the unit owners’ association of a common interest community (HOA) to adopt, and comply with, a policy regarding the collection of delinquent assessments and other past-due amounts from unit owners. The HOA may not refer a unit owner’s account to a collection agency or attorney without first giving the unit owner notice of the total amount due and how it was determined, offering the unit owner a one-time opportunity to enter into a 6-month payment plan, and listing the legal remedies, including foreclosure, that are available to the HOA.

The bill prohibits an HOA from foreclosing its lien for past-due assessments unless the total amount is at least equal to six months of regular assessments and unless the HOA’s executive board has formally approved the foreclosure action on an individual basis.

The bill specifies the terms and conditions of the repayment plan that must be offered. The plan must permit the unit owner to pay off the deficiency in equal installments over a period of at least 6 months; however, the plan requires the unit owner to remain current on regular assessments as they come due during the period and allows the HOA to pursue collection if the unit owner fails to comply with the plan, has previously been subject to a payment plan, or is a bank that has acquired the unit as a result of default by a borrower. For purposes of section 3, “assessments” include fees, charges, late charges, attorney fees, fines, and interest on common expense assessments.

The bill applies its provisions to common interest communities created before July 1, 1992, the effective date of the “Colorado Common Interest Ownership Act,”, as well as to those created after that date.

On April 12, the House amended the bill and passed in on 2nd Reading; 3rd Reading is scheduled for Monday, April 15.

Since this summary, the bill passed Third Reading in the House; it is assigned to the Local Government Committee in the Senate.

SB 13-183: Prohibiting Common Interest Communities from Restricting Xeriscape or Other Drought-Tolerant Landscapes

On Tuesday, February 19, 2013, Sen. Morgan Carroll introduced SB 13-183 – Concerning Water Conservation Measures in Common Interest Communities. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill amends current law to specify that restrictive covenants or declarations, bylaws, and rules and regulations of common interest communities that prohibit or limit xeriscape or drought-tolerant vegetation or require ground covering vegetation to consist of any amount of turf grass are contrary to public policy and unenforceable. The bill also adds a definition of “xeriscape” to the “Colorado Common Interest Ownership Act” and says that a unit owners’ association (association) may not prohibit the use of xeriscape or other drought-tolerant vegetative landscapes to provide ground covering and may not levy fines against unit owners for violations of declarations, bylaws, or rules and regulations of the association for failure to adequately water when water restrictions are in place and the unit owner waters in compliance with those restrictions. On March 5, the bill passed out of the Senate; it has been assigned to the Local Government Committee in the House.

Colorado Court of Appeals: “Portion” Language in CCIOA Determined To Be Unambiguous; 18% Interest on Attorney Fee Award Upheld

The Colorado Court of Appeals issued its opinion in Vista Ridge Master Homeowners Association, Inc. v. Arcadia Holdings at Vista Ridge, LLC on Thursday, February 28, 2013.

Summary Judgment—CRS § 38-33.3-210(4)(b)—Withdrawal and De-annexation of Lots From a Master Association—Interest on Attorney Fees.

Defendant Arcadia Holdings at Vista Ridge, LLC (Arcadia) appealed the summary judgment in favor of plaintiff Vista Ridge Master Homeowners Association, Inc. (Vista Ridge).The judgment was affirmed and the case was remanded with directions.

Vista Ridge was established by the recording of the Master Declaration of Covenants, Conditions, and Restrictions for Vista Ridge (Declaration). Article V of the Declaration reserved the right to withdraw or de-annex any portion of the community in accordance with the Colorado Common Interest Ownership Act (CCIOA). The Declaration limited this right to the extent that “no portion of the Property may be withdrawn or deannexed after a Lot or Unit in that portion of the Property has been conveyed to an Owner other than a Declarant or a Builder.”

Arcadia’s predecessor in interest recorded Vista Ridge Filing No. 9, which platted ninety-four single family residential lots. They were annexed to Vista Ridge by the recording of a Declaration of Annexation and Amendment to the Declaration (Declaration of Annexation). At the time of this action, Arcadia still owned seventy of these lots. Arcadia recorded an Amendment to the Declaration of Covenants, Conditions, and Restrictions for Vista Ridge in which it purported to withdraw and de-annex its remaining seventy lots. Vista Ridge challenged the de-annexation in a complaint for declaratory judgment and damages. The district court granted summary judgment in favor of Vista Ridge and entered a monetary judgment for past-due monthly assessments on the seventy lots plus attorney fees, all accruing interest at an annual rate of 19%.

Arcadia argued it was error to find the de-annexation invalid, and the Court of Appeals disagreed. The Court found CCIOA determinative on this issue. The applicable subsection is 210(4)(b), which states, “[i]f any portion of the real estate is subject to withdrawal, it may not be withdrawn after a unit in that portion has been conveyed to a purchaser.” The parties disagreed as to the meaning of “portion.” Vista Ridge contended it meant the ninety-four lots in Filing No. 9, and Arcadia contended the meaning was arbitrary and the statute ambiguous. The Court found it clear and unambiguous. Filing No. 9 was clearly a separate portion of Vista Ridge. Therefore, following the sale of one of the ninety-four lots constituting Filing No. 9, that portion may not be withdrawn. The relevant portion was the ninety-four lots.

Arcadia also argued it was error to order a monetary judgment that accrued interest on the attorney fees award at a rate of 18% percent. The Court disagreed. Section 7.6 of the Declaration stated that “[a]ny assessment not paid [is] subject to fees authorized by Section 7.2, including . . . interest from the due date at the rate of eighteen percent (18%) per annum.” Attorney fees are referred to in the Declaration as “assessments” three times; therefore, they are considered a type of assessment.

The judgment was affirmed. In addition, pursuant to § 38-33.3-123(1)(c) and the Declaration, Vista Ridge was entitled to recover its appellate attorney fees and costs.

Summary and full case available here.

HB 13-1134: Empowering HOA Information and Resource Center to Perform Certain Regulatory and Investigatory Actions

On January 18, 2013, Rep. Su Ryden and Sen. Morgan Carroll introduced HB 13-1134 – Concerning Unit Owners’ Associations Under the “Colorado Common Interest Ownership Act.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The HOA information and resource center (center) was created in 2010 to track inquiries and complaints related to unit owners’ associations (a/k/a homeowners’ associations or HOAs) and report them to the director of the division of real estate (director). The center also serves as a clearinghouse for information concerning the rights and duties of unit owners and associations. The center does not have regulatory or investigative power. The bill empowers the center to perform certain regulatory and investigative actions. The bill directs the director to calculate the annual fee paid by associations to support the center’s operation on a per-unit basis and provides a formula for the director to use to calculate each association’s fee. The bill amends the annual registration provisions. The bill is assigned to the Business, Labor, Economic, & Workforce Development Committee.

SB 13-126: Requiring Unit Owners’ Associations to Allow Tenants or Unit Owners to Install Vehicle Charging Stations

On Tuesday, January 29, 2013, Sen. Lucia Guzman introduced SB 13-126 – Concerning the Removal of Unreasonable Restrictions on the Ability of the Owner of an Electric Vehicle to Access Charging Facilities. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

As introduced, the bill prohibits a landlord or the unit owners’ association of a condominium or common interest community, respectively, from restricting the right of a tenant or unit owner to install an electric vehicle charging system for his or her own use, at the tenant’s or unit owner’s expense, and subject to reasonable safety and insurance requirements.

The bill allows grants to be made from the electric vehicle grant fund to apartment owners, condominiums, and common interest communities to install recharging stations for electric vehicles. On Friday, February 15 the amended bill passed 2nd Reading in the Senate.

Since this summary, the bill passed Third Reading in the Senate and was introduced in the House and assigned to the Transportation and Energy Committee.