HOA Business & Laws

Being in this industry requires staying on top of state laws that are voted on and affect how an HOA can operate. So many homeowners are under the assumption that an HOA is just a neighborhood with rules they agree upon and that is the end of the story. That is far from the truth.

An HOA is a non-profit business. HOA's have their own EIN (employer identification number) issued by the IRS. The HOA also must be registered with DORA (Dept of Regulatory Agencies) and also Colorado Secretary of State. Because it is a business, there are laws that are set up on how that business can run. CCIOA (Colorado Common Interest Ownership Act) spells out most of the laws that an HOA must follow, along with Colorado State. Colorado State has been going through a House Bill rampage for the past couple of years making it tougher and tougher for HOAs to conduct their business the way they want and because of that, the personal touch is also going by the wayside. 

Compliance and collection issues seem to be the hardest hitting areas that homeowners are struggling with. It amazes me some of the comments homeowners have come back with when they have received a collection letter for past due assessments. On more than one occasion, homeowners have demanded why someone didn't pick up the phone or stop by to let them know they were late before applying the late fee. An HOA nor the management company is not responsible for helping you keep on top of your finances. A mortgage company doesn't pick up the phone or stop by your house to warn you that you are going to be late so hurry and make a payment before a late fee is assessed. They send you your payment invoice and if you don't make the payment by their due date, you are charged a delinquent fee. It works the same with an HOA, as again, the HOA is a business. There are no "warnings". Just pay your assessments on time.

Compliance issues are even stricter. With the new Colorado House Bill that went into effect, pictures with the date time-stamped on it MUST be sent via certified mail AFTER the Board votes on sending the warning, the homeowner is then given 30-days to "cure" the violation. If the violation isn't cured, the steps are repeated. Only after two consecutive 30-day warnings have been mailed and emailed/text or called, can a fine be imposed and no more than $500 per violation. It is not an instantaneous correction.

Now, a new House Bill has taken it further to state that the person/neighbor can no longer stay anonymous when they turn in a violation. The person who makes the claim must be available to testify in court, (assuming it comes to that) on what they witnessed. Normally this wouldn't be a huge concern, but with this new House Bill, the homeowner who has the violation can demand a tribunal to fight the charge. With this option, it eliminates the allowance for a homeowner to remain anonymous. 

Every HOA must have Governing Documents. It helps explain how that particular HOA runs and the regulations you must follow if you buy into that HOA. Many of the governing documents must be adjusted to conform to Colorado State Laws at times, but there are many sections that are still up to the homeowners to vote on. DORA, CCIOA are both excellent places to stay up on how your business is allowed to run. Here is a Quick Guide in Governing Documents that DORA has provided for review. 

Remember, knowledge is power and a lot more affordable than ignorance!