New Year, New Maintenance Schedule

s we ring in the New Year, it is an ideal time to think about planning for the regular maintenance of your community. If your community is a single family home community with few common elements or recreational areas, then there may not be as great of a need for scheduling maintenance. However, if your community is of the type that has many common elements or recreational facilities or both, then creating a community maintenance schedule may be just the thing to keep your Board and any management on the right track.

Besides providing a gameplan for your community’s leadership, a well made maintenance plan will be able to provide your association with many benefits, including:

• Maintenance that can be accomplished within budget limits;

• Prevention of minor issues becoming major issues through preventative maintenance;

• More energy efficient equipment, and;

• Preservation of property values.

When starting to draft a maintenance plan, consider having a reserve study done. This will allow the Board to get an idea of what’s coming up as far as maintenance and repair is concerned, and what the financial status of the HOA is in regards to availability of funds for maintenance. Next, collect all maintenance related information such as maintenance requirements for keeping warranties valid; maintenance recommendations in owner manuals; expected costs and timeframes for replacing equipment or making major repairs to components, and; your association’s maintenance responsibility policy, which is typically found in your governing documents.

Once a reserve study is done and you’ve collected maintenance related information, you’re ready to begin creating your maintenance plan. This is going to look different depending on the association and the amount of maintenance needed, but you should definitely involve your manager if your association uses a management company. If your association is self managed, consider including any professionals you may be using. This might include maintenance workers, contracted professionals such as landscapers, snow removal companies and pool maintenance companies.

Keep in mind that the creation of a maintenance plan may likely be an ongoing task. As the year progresses, take notice of issues or concerns that may arise which were not initially addressed in your first draft. Don’t hesitate to make adjustments as necessary and always include each member of the Board, especially the Treasurer, so as to be sure your plan keeps the association’s budget in mind.

You may find a very general Sample HOA Maintenance Schedule here. While this sample will definitely not be one size fits all, it provides a good example of what an association maintenance schedule might look like and what areas of the community it might address.

What CCIOA Says About Voting and Annual Disclosures

Voting

If you’ve never lived in a homeowners association before, you may be surprised to learn how much authority the association’s Executive Board has in making decisions for the community. Sure, there are many HOAs whose governing documents provide for greater membership input on a variety of issues. But by and large, most HOAs delegate the majority of the decision making authority to the Executive Board.

This does not mean that the membership of an HOA is powerless - quite the contrary! One of the most important roles an HOA member undertakes is actively participating in the governance process by attending meetings and voting on community matters. Generally speaking, the Executive Board will make decisions regarding the day-to-day operations of the association. However, section 303(3)(a) of the Colorado Common Interest Ownership Act (“CCIOA”) prohibits boards from unilaterally adopting certain amendments to the governing documents and requires owner approval for such revisions to be valid. Specifically, boards cannot act on behalf of the association to take the following actions:

Terminate the community

• At least 67% (or more) of all allocated votes in the Association must affirmatively agree to terminate the common interest community in a Termination Agreement. The declaration may have a percentage requirement higher than 67%.

• For more information on terminating a common interest community, please see Terminating a Colorado Common Interest Community by Conner Wilden & Jerry Orten of the Community Association Law Firm Orten Cavanagh Holmes & Hunt, LLC

Elect members of the board (except to fill vacancies)

• See governing documents for election procedures.

  • CCIOA section 38-33.3-310(1)(b)(I)(A) requires that votes for contested positions on the executive board shall be taken by secret ballot.

Change qualifications of directors; Change powers and duties of directors; and, Change terms of the directors

• See governing documents for procedures to amend these items.

In addition to the above, the Colorado Revised Nonprofit Corporations Act prohibits boards from unilaterally amending their documents to change quorum and requires all quorum changes to be presented to the members for approval.

It may also surprise you that secret ballots are only required under the following circumstances:

• When the association’s bylaws require the use of secret ballots;

• When voting in a contested board election (i.e., more than one candidate for the same position);

• At the discretion of the board; and,

• Upon the request of 20% of the homeowners present at a homeowner meeting

Annual Disclosures

The HOA Information and Resource Center frequently receives complaints from homeowners in HOAs regarding a perceived lack of transparency by their association. One way to combat this notion is to ensure the association is complying with section 38-33.3-209.4(2), which provides a list of association information and records that must be provided to the membership annually.

An association must make the following information available to its membership within ninety days of any change:

• The name of the association;

• The name of the association's designated agent or management company, if any;

• A valid physical address and telephone number for both the association and the designated agent or management company, if any;

• The name of the common interest community;

• The initial date of recording of the declaration;

• The reception number or book and page for the main document that constitutes the declaration.

An association must make the following information available to its membership within ninety days of the end of each fiscal year:

• The date on which its fiscal year commences;

• Its operating budget for the current fiscal year;

• A list, by unit type, of the association's current assessments, including both regular and special assessments;

• Its annual financial statements, including any amounts held in reserve for the fiscal year immediately preceding the current annual disclosure;

• The results of its most recent available financial audit or review;

• A list of all association insurance policies, including, but not limited to, property, general liability, association director and officer professional liability, and fidelity policies. Such list shall include the company names, policy limits, policy deductibles, additional named insureds, and expiration dates of the policies listed.

• All the association's bylaws, articles, and rules and regulations;

• The minutes of the executive board and member meetings for the fiscal year immediately preceding the current annual disclosure; and

• The association's responsible governance policies that were adopted under section 38-33.3-209.5 of CCIOA.

The Importance of HOA Registration: Can it Affect Revenue?

Homeowner Associations in Colorado are typically organized as nonprofit corporations. As such, they are considered businesses. And while HOAs in Colorado certainly do bring in revenue (by way of regular and special assessments, as well as fines and fees), as a nonprofit, any revenue received above expenditures should be reinvested into the community by means of capital expenditures or contribution to reserves.

Section 38-33.3-401 of the Colorado Common Interest Ownership Act (“CCIOA”) requires every unit owners' association to register annually with the director of the Division of Real Estate. A registration is valid for one year. If an association fails to register, or whose annual registration has expired, their right to impose or enforce a lien for assessments under section 38-33.3-316 or to pursue an action or employ an enforcement mechanism otherwise available to it under section 38-33.3-123 is suspended until the association is validly registered pursuant to this section.

A lien for assessments previously recorded during a period in which the association was validly registered or before registration was required pursuant to this section is not extinguished by a lapse in the association's registration, but a pending enforcement proceeding related to the lien is suspended, and an applicable time limit is tolled, until the association is validly registered pursuant to this section. An association's registration in compliance with section 38-33.3-401 revives a previously suspended right without penalty to the association.

Since an expired registration results in the suspension of an HOA’s right to impose or enforce a lien for assessments or to pursue other enforcement action available to it under section 38-33.3-123, HOA leadership should be aware of it’s registration status at all times and should create policies and procedures to ensure compliance. Without proper registration, an HOA may miss out on or delay the receipt of revenue generated by assessments, fines or fees.

As a Board member, you should carefully review sections 38-33.3-401, 38-33.3-316 & 38-33.3-123, and familiarize yourself with the requirements therein. Consider reviewing your association documents regarding the roles and responsibilities of Board members and amending, if necessary, to include registration and renewal as responsibilities of a specific Board member. As a unit owner, you should always contact a licensed attorney before deciding to not comply with an association’s request for payment in connection with any assessment, fee, fine or charge. The failure to pay an assessment, fee, fine or charge because your association is unregistered or expired may result in additional fees.

For more information please see the Colorado Common Interest Ownership Act & The Division’s HOA Registration Services.