By Tracy L. Kinsella, Garfield & Hecht, PC
There are five new pieces of legislation that were signed into law which affect both pre and post CCIOA Homeowners Associations and common interest communities. The new laws relate to: (1) enforcement; (2) access to common areas; (3) public rights-of-way; (4) proxy limitations; and (5) towing. The main legislative changes are to the Colorado Common Interest Ownership Act (“CCIOA”).
THESE NEW LAWS ARE EFFECTIVE AUGUST 10, 2022.
Enforcement of Covenants and Assessments
The Colorado legislature has adopted significant changes to the required policy related to enforcement of covenants, the payment of fines and assessments and foreclosures. The term “covenants” extends to bylaws and rules and regulations. Associations will be required to provide owners with 30 days to cure violations of covenants (except if the violation threatens public safety or heath the cure period is reduced to 72 hours). Owners may specify the language to be used in notices to be sent to them. The default language is English, but other languages (e.g. Spanish) can be specified. Furthermore, notices must be sent by at least two different methods. For this reason, Associations must keep in their records two different contacts for each owner. For example, an e-mail address and a physical mailing (USPS) address will suffice. Further, when such notice is sent, there should be a certificate of mailing by the person who sent the notice on behalf of the Association.
The new legislation is silent as to who or what determines if a violation concerns public safety or health in order to take advantage of the shorter (72 hour) cure period. We recommend that in each instance the Association may make that determination so long as there is some rational basis to apply the 72 hour cure period. This determination can take place in two ways. When a covenant, bylaw, rule, or regulation is first adopted, the language can include a finding of public safety or health. For example, prohibiting short term rentals could be a matter of public safety (i.e. too many cars on Associations private roads) or health (COVID concerns). On the other hand, putting a mailbox in the wrong location is not a matter of public safety or health. The alternative is to make the finding at the time the Association declares a default.
Other changes imposed by this law lower the interest rate that an Association may charge from 21% to 8%. It also forbids penalties from accumulating daily and in any event limits them to $500. Further, the board of an Association must hold a meeting and vote prior to turning a matter over to an attorney or a collection agent.
The new legislation also provides that certain issues may be addressed in small claims court and further provides that owners may file an action against an Association for up to $25,000 plus costs and attorney fees if the owner proves that the Association violated the new foreclosure provisions. Stated otherwise, only non-payment of assessments can be grounds to foreclose on a unit. Fines that are set by the Association documents stated to be enforceable as an assessment are not grounds for a foreclosure. This does not mean the Association is without other remedies to enforce covenant violations other than non-payment of assessments. Association documents can be drafted or amended to provide other remedies such as: (i) no participation or votes on affairs of Association (ii) removal of unit from rental pool, if applicable (iii) injunctive relief (iv) no use of common areas or amenities (v) if applicable, loss of assigned parking space if such space is not a limited common element of the unit (vi) public censor on the HOA website and (vii) withholding any services provided by the HOA, but not utilities.
Access to Common Areas
This new law protects the use and enjoyment common spaces and elements by preventing unreasonable restriction or prohibition of the use of common elements. This applies even during maintenance, repair, replacement, or modification of a common element. There is a mandatory notice provision which requires Associations to provide certain notice when restricting access to a common element. Associations may adopt notice protocol for instances where use of common elements may need to be modified for any reason. There are no affirmative changes to existing Association policies unless the Association has existing covenants, policies, or rules that reduce owners’ access to a common element.
Public Rights-of-way
The Colorado legislature now prohibits an Association from regulating the use of the public right-of-way in or through the community. This act does not require any affirmative changes to existing Association policies unless the Association has limited access to public rights of way within the community. For example, if the Association attempts to impose and enforce parking restrictions on public roads, such restrictions are no longer enforceable.
Proxy Limitations
The new law states a proxy will terminate eleven months after its date unless the proxy itself indicates an earlier termination date. Associations that authorize proxy voting for longer than 11 months may want to update their proxy voting forms. Any attempt to vote a proxy that is more than 11-months old is no longer permitted by law.
Towing
The legislature has also made changes to towing where the Association uses a PUC licensed towing company (e.g. tow trucks). The new law is designed to clarify the rights of an owner of a vehicle and explain the requirements for a towing operator when a vehicle is parked on private property. For example, an operator can no longer tow a vehicle from a common parking area for having expired tags and is prohibited from towing a vehicle from a common parking area if less than twenty-four hours have passed since posting notice. If the towing is to be accomplished by the management company and not a PUC licensed towing company, the new legislation should not apply as a management company is not regularly or primarily in this business and not required to have a license.
Please note that the foregoing is only a general summary of the legislation, and these laws are more complicated in their applicability, implementation, and enforcement. For more information on the legislation or any other issues governing Colorado Common Interest Communities please contact one of our attorneys.
In our Aspen office please contact:
Ron Garfield Phone: (970) 925-1936 e-mail: garfield@garfieldhecht.com
Chris LaCroix Phone: (970) 920-5804 e-mail: clacroix@garfieldhecht.com
Chad Schmit Phone: (970) 920-5817 e-mail: cschmit@garfieldhecht.com
For our Avon and Denver offices please contact:
Tracy Kinsella Phone: (970) 949-1496 e-mail: tkinsella@garfieldhecht.com
Kursten Canada Phone: (970) 947-1566 e-mail: kcanada@garfieldhecht.com
In our Carbondale office please contact:
Kelcey Nichols Phone: (970) 925-1703 e-mail: knichols@garfieldhecht.com
In our Crested Butte office please contact:
John Belkin Phone: (970) 349-6698 e-mail: jbelkin@gaqrfieldhecht.com
For our Glenwood and Rifle offices please contact:
David McConaughy Phone: (970) 920-5801 e-mail: dmcconaughy@garfieldhecht.com
Mary Elizabeth Geiger Phone: (970) 920-5816 e-mail: megeiger@garfieldhecht.com
