HOA Town Hall Meeting Sponsored by the Colorado HOA Forum

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1 Topics and Plans for Today Colorado HOA Forum: introduction to the organization State Resources for HOA Issues Legislative Update Realtor s role in HOA reform HOA Rental and Pet restrictions Proxy voting Who really manages HOAs Dispute Resolution between home owner and HOA or with and HOA Property Manager (aka Community Association Manager (CAM)) HOA Home Sale Transfer Fees Marijuana and HOAs Brochures/pamphlets on HOA home buying, maintenance, reducing HOA operational costs CAM licensing repeal discussion Question and Answer Session

2 The Colorado HOA Forum should not be used as a source for legal advice or a substitute for a lawyer when making legal decisions. We offer opinion and provide information on HOA issues. ***The Colorado HOA Forum is a limited liability corporation (LLC) registered in the State of Colorado. The registered name is Colorado HOA Forum LLC The Colorado HOA Forum is a not for profit organization, receives no funding from outside sources or from membership dues, and doesn t promote or endorse any CAM, legal entity, real estate firm, or other private business.

3 Our Advice to Home Owners Understand that all Colorado HOA laws and your own governing documents don t provide for an affordable, accessible or fair venue for dispute resolution Don t let your emotions disregard the cost benefit of taking your complaint to court. There is a cost to file a court action, you should seek legal counsel on even the easiest cases, and know that if you lose your case you could be paying legal costs more than your actual claim If you go to court you will be matched against the HOAs unlimited financial resources and their legal counsel Mediation is an option but it will cost several hundred dollars, there is no guarantee of an agreement, and any agreement can be disregarded landing you in court to enforce and litigate. Note, your mediator is not a licensed professional, may have no knowledge of HOA law, and often is chosen by the HOA.

4 State HOA Resources State HOA Office This is an administrative office not involved in investigation HOA home owner problems or complaints, will not provide legal advice The Office will receive home owner complaints, review and classify complaints, issue an annual report on complaints: but does not investigate complaints! State HOA Office web site is a good resource on HOA governance/law Conduct seminars but mostly a review of their annual report to the legislature DORA CAM licensing (law repealed): home owner vs property management company State Laws Fact: there are many definitive and comprehensive HOA State laws but every one of them lacks enforcement from the home owner s perspective

5 Legislative Update Veto of Bill to force HOAs to accept vicious dogs, large dogs: focused on HOA condominiums HOA construction defects legislation utilizing HOA funds must be approved by home owners HOA home sale transfer fees: other states attempting to rein in abusive fee, Georgia has placed limits on this fee of $100, Colorado fee averages $350 and goes up to $1, sessions: bill to require CAMs to provide home owners a receipt/invoice for all assessments not included in HOA dues defeated; bill to require HOA Office to publish names of mediators and officials (no vetting requirement) for dispute resolution and election monitoring and new fees assessment criteria defeated. Bill to allow people to sleep in their cars, mostly anyplace, anytime defeated Repeal of CAM licensing law effective July 2019

6 Realtor s Role in HOA Reform Question all fees assessed as part of home sale process including the HOA home sale transfer fee and Title Company administrative fees: most Realtors don t understand the transfer fee, never ask for an explanation or receipt for the home owner, and encourage the buyer/seller to just pay it Get involved in HOA home sale transfer fee reform Support legislation that requires both the Realtor and home owner to acknowledge (sign) they read and understand the CCR s (restrictions), fees and assessments, pending litigation, etc.

7 HOA Home Buyers/Sellers Seminar What to know before you buy? Home Buyers Must Demand Lacking a legal requirement, home buyers should demand their Realtor obtain for them the below items and the both Realtor and home buyer certify/acknowledge they received, read, and understand them prior to the sale of a home in an HOA A copy of the HOA's governing documents and CCR s The HOA Status Letter indicating any unpaid dues, special assessments, active legal actions, unpaid fines Information on insurance coverage provided via the HOA A current HOA financial statement The amount of HOA dues Any current and/or planned special assessments Status of the HOA reserve fund The number of rentals and foreclosures in the HOA for past year Rental restrictions/rules HOA and meeting needs of disabled residents If any restrictions on the age of residents Amount and detailed list of costs relating to any HOA transfer fees Maintenance responsibilities of HOA and home owner

8 HOA Rental Restrictions: Complete by changing Declaration via home owner vote Anticipate Airbnb and other short term rental initiatives by changing Declaration Avoid any discriminatory practices such as bias against race, religion sexual preferences Compromise: set limits on percentage of rentals Set policy on how HOA dues are paid: from property owner or renter Set policy on rights/privileges of renters, their registration with HOA, ensure renters understand CCR s Pet Restrictions: HOAs can restrict pets based on breed, size, and numbers. The locality can allow a breed (pit bull, etc.) but the HOA can prohibit

9 Proxy Voting Proxies are not created by or executed for absentee home owners unless approved by the home owner or stated in Declaration: the right to vote for any home owner is not defaulted to an HOA Board or anyone else Absentee owners, speculators, rental units: verify type of proxy, renewal dates and if expired Proxy legal life is generally 11 months unless stated differently in Declaration Directed (issue oriented, special vote) and general proxies

10 HOA Home Owner Dispute Resolution Process No State supported process in HOA Office State Law provides no viable means to settle disputes and no law discusses how it is to be enforced other than go to court Mediation by performance is costly, time consuming, provide no binding resolution and your mediator is not a licensed official nor or they required to have any special training: we all can legally mediate HOA dispute resolution We attempt to pass a law empowering DORA/State HOA Office to implement an out of court binding dispute resolution process: lobbyist kill effort You should avoid court, it can be costly, a play to play venue, and few of us have the experience to litigate a case: don t let your emotions empty your wallet

11 Who really manages HOAs and Home Owner s Rights How it all (is supposed to) works Accountability for violations and compliance with HOA governing documents: CAM licensing weak on defining accountability, State law doesn t address State HOA Law HOA Governing Document Works for HOA: advises HOA, Manages its contract but not the HOA HOA Home Owners HOA Property Manager (and Lawyer) Elect Manages HOA Hires and Manages CAM HOA Board

12 HOA Home Sale Transfer Fees Amount determined, collected and retained by HOA Property Management Company: NO benefit to the HOA Not required to provide home owner payee a receipt indicating work performed to earn the fee, when work was performed First awareness to home owner is mostly on day of closing, no explanation or receipt, if not paid home sale held up The fee can t be justified by work performed as all required work/products associated with fee have already been paid for via HOA dues: Status Letter, name changes in records, security measures, copy of governing documents: DUPLICATE BILLING and such charges/billing often paid by Title Company that charges the home owner (TRIPLICATE BILLING). Average fee $350, can range up to $1,000+, no questions asked $10 MILLION A YEAR in Colorado! The fee is also illegal under State and Federal law! Many States trying to limit this fee as did Georgia

13 Marijuana and HOAs If smoking is allowed in condominium then marijuana can be smoked inside unit and elsewhere as long as not a nuisance HOA can change governing documents to ban (all) smoking in condo HOA can ensure smoking (growing) pot is not a nuisance to others by requiring home owner to vent unit, ban smoking in common areas including hallways, require sealed doors, no smoking on balcony: normally without requiring a vote of home owners Questionable: if smoking is allowed ban only marijuana Generally, HOA governing documents/declaration can be changed to restrict smoking in building and rules/guidelines concerning use of common areas and nuisances can be utilized to address pot smoke. Often restrictions will require a two-thirds vote of approval by home owners.

14 Brochures and Pamphlets Available and Free on our web site HOA Home Buying HOA Home Owner Maintenance Responsibilities Reducing HOA Operating Costs

15 HOA Home Buyers/Sellers Seminar What to know before you buy?

16 HOA Home Buyers/Sellers Seminar What to know before you buy?

17 HOA Home Buyers/Sellers Seminar What to know before you buy

18 HOA Home Buyers/Sellers Seminar What to know before you buy

19 HOA Issues Questions and Answers

20 Repeal of the HOA Property Manager Law: Effective July 19, 2018 DORA Study on continuing law ignored Home Owner Input and mainly addressed supervision by a CAM of other employees, acceptable credentials, and enforcement of rules. Impact of Repeal: ends the accessible venue for home owners to file complaints, have them investigated, render decisions, and apply punitive action as appropriate: all without going to court. What s Next: resubmit to continue licensing with changes: submit Bill in 2019 to continue Your thoughts