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Legal Requirements for Management of Home Owner Associations

Most Colorado Home Owners Associations must comply with The Colorado Common Interest Ownership Act (CCIOA). HOA’s subject to CCIOA must adopt uniform policies and procedures for managing their business.

Policies Required by Statute

CCIOA requires that HOA’s adopt and follow certain minimum policies, including (1) the adoption and amendment of policies, procedures and rules; (2) collection of unpaid assessments; (3) handling board member conflicts of interest; (4) conduct of meetings; (5) enforcement of covenants and rules, including notice and hearing procedures; (6) owners’ right to inspect and copy records; (7) investment of reserves; (8) dispute resolution; and (9) a reserve study policy.

CCIOA doesn’t specify details for any of these policies.  As a result, each HOA should develop procedures suited to its own needs.

Other Policies

All HOA’s are similar, but each is unique in some ways.  Therefore, in addition to minimum policies, well run HOA’s will develop other special policies to manage important issues. For example, most HOA’s own common assets such as green space.  Each HOA board should consider adopting policies addressing responsible use and maintenance of its own facilities.

Enforcement Restrictions

CCIOA restricts HOA’s from certain enforcement actions unless they have adopted policies mandated by law.   For example, the HOA may not fine a unit owner for alleged violations unless it follows a written policy. In addition, the policy must provide the unit owner notice and an opportunity to be heard before an impartial decision maker.

Conclusions

Failure to adopt and follow policies required by CCIOA will lead to inconsistent application of HOA covenants and rules, which can lead to serious conflicts. Furthermore, failure to comply with the law may completely prevent an HOA from enforcing some covenants.  For more detailed information about these requirements and other legal issues affecting creation and management of HOA’s, call or visit our offices today.

Posted in General Law Tips

Deed in Lieu of Foreclosure

Even in our difficult  economy, inability of a homeowner to make timely payments on mortgage or trust deed debt does not always lead to foreclosure.  A deed in lieu of foreclosure may avoid the foreclosure process for both lender and borrower.  With a deed in lieu of foreclosure, the property owner deeds the property back to the lender   in exchange for release of the debt. The lender typically promises not to initiate foreclosure proceedings and to terminate any existing foreclosure proceedings.  The lender may also  forgive any loan deficiency (the amount of the loan  not fully recovered by the lender upon subsequent resale).

In today’s real estate market, many borrowers may offer seller-carry lenders a deed in lieu of foreclosure.  Whether accepting the deed makes sense for the lender depends on many factors, including: value of the property, buyer/borrower’s over-all financial situation, amount remaining on the mortgage/trust deed, and whether the buyer/borrower has further encumbered the property since purchasing from the seller/lender.  If the property has no other encumbrances and substantial market value in excess of the amount outstanding on the note carried by the seller, a deed in lieu may be a good way for a lender to resolve the situation and avoid the cost of a foreclosure.  On the other hand, if the value is questionable, or if the buyer has created junior encumbrances, a deed in lieu may be a mistake for the lender.

For more detailed information about deeds in lieu of foreclosure and other real estate law issues, call or visit our office today.

Posted in General Law Tips, Real Estate