Saturday, December 27, 2014

Misrepresenting who Represents HOAs and HOA Home Owners

The latest misrepresentation of who represents HOA home owner's interests comes by way of Colorado Public Radio (CPR) and their article "Could limiting defect lawsuits bring more condos to Denver?" .  The article's point person for an opinion on what is best for HOAs and thus HOA home owners is no less than the Community Association Institute (CAI).  The problem is that this organization doesn't and never has represented HOA home owner's interests.  Their members are property managers (PM) and lawyers not HOAs or home owners:  let's get it right!   The CAI spends time and money in State and Federal legislatures lobbying to ensure legislation promotes their interests and mostly at the expense of HOA home owners rights and wallets:  against ending/limiting of the unjustified and illegally applied HOA home sale transfer fees costing HOA home owners millions each year (pocketed by CAI members not HOAs);  oppose limits on fees, fines, and add-on charges on HOA home owner debt (a million dollar+ income supplement to property managers and HOA lawyers and not a dime to the HOA);  blocking efforts to implement a recommendation in a Colorado State study that supports out of court dispute resolution for home owner complaints that would save HOAs and home owners in legal costs and not require lawyers to settle disputes;  and opposing legislation that would require home owner approval prior to using HOA funds on costly litigation or major capital expenditures.

When our State legislature and regulatory agency required guidance on writing legislation, guidelines, and ethical standards to implement a new law to mitigate abusive practices in the  (PM) industry they relied on the CAI for expertise.  Licensing is implemented to protect homeowners against the abusive practices of PMs (the CAI's members) so why the undue influence in writing rules from the very industry that caused the problem in the first place?  This is what happens when an organization is accepted to incorrectly represent HOA home owners.
Then there is the CAI's objection to a requirement in the proposed construction defects legislation that mandates home owners vote on the use of their HOA funds prior to the HOA entering into costly litigation.  This would effectively decrease the number of HOA law suits, ease of access to HOA bank accounts enjoyed by HOA lawyers, and save HOAs millions each year in litigation costs (but the CAI is only protecting home owner interests, right!)

Just one more example to seal the case on misrepresenting the CAI to be home owner centric.  This involves their lobbying efforts with FHA/HUD and the State legislatures to allow the continuance of the abusive HOA home sale Transfer Fee.  The fee is charged by, amount determined by and retained by property managers in the sale of a residence in an HOA to prop up PM income: no benefit to the HOA.  If not paid at home closing it can preclude the home sale.  What else it can preclude is FHA/HUD loan approval/insurance on home sales as HUD doesn't allow the presence of these fees in the home sale transaction.  Thus this fee can dampen home sales and the building of affordable housing that benefits from  HUD loans.

CPR is not alone in getting who or what the CAI is wrong.   The Denver Post, our legislators, television, and other media outlets are all equally wrong.  When confronted they seem to be unaware of who or what the CAI represents, their legislative actions, how they make their money, and who are their paying members.  Informed and accurate reporting and legislating would ask these questions. Interesting to note that when the media indicates the CAI represents HOAs and home owner's organizations they can't or don't try to identify just one: there aren't any!  This ongoing, unquestioning and inaccurate practice of who or what represents home owner's interests is problematic and detrimental to home owner interests and ensures the governance and oversight of HOAs will continue to be skewed against home owners until the media and legislators get it right.

Friday, December 19, 2014

HOA Home Owners: "figure it out yourself" says legislator

HOA home owners seeking solutions to ensure their home owner's rights should not look to some legislators for solutions if the response from one legislator is any indication.  Our organization recently received a response from a State legislator in regards to our request to sponsor legislation to provide for an out of court binding dispute resolution process for home owner complaints (because court is too costly, litigious, and time consuming for ordinary folks).  This legislator said "they (HOA homeowners) should figure out their problems themselves" and the government has no role in HOA issues.  Really! 

Well government caused the problem by allowing legislation to be mostly written by developers, lawyers, and the Community Association Institute (CAI) to ensure their financial interests were protected.  Legislation was written with the absence of any viable means to enforce these laws or HOA governing documents from the home owner's perspective.  If government broke the intended good of HOAs and the laws they created they should fix it. 

I don't see this particular legislator (and others) directing businesses and interest groups to figure it out for themselves.  They are liberal in handing out subsidies to farmers, tax breaks for large corporations, tax rebates and incentives to businesses, imposing tariffs on imports or working to open barriers to free trade, restricting pollutants or chemicals in our food, etc.: all to help "in figuring it out".   This attitude about not legislatively helping HOA home owners from abusive practices and basically unenforceable laws is no less than dismissive of home owners and hypocritical. 

What HOA home owners are asking for, unlike the help provided to businesses and special interest groups, are remedies that don't cost taxpayers a nickel but save home owners, taxpayers, and HOAs millions each year in legal costs and ensure enforcement of property rights.  HOA home owners deserve more respect when asking for legislative support especially when they ask for so little.

Monday, December 15, 2014

FHA-HUD Loans and Affordable Housing Problemed by HOA Transfer Fees

The HOA Transfer Fee charged, retained, and amount determined by property management companies (PMC) on home sales in community associations poses an impediment to HUD loan approval.  This fee was made illegal on residential home sales in 2011 except in HOAs.  Why: 1) legislative influence by interest groups and 2) because the fee is a means to prop up profits for PMCs on the backs of home sellers without having to justify work for the fee (in other words it is charged only because it can with tactic endorsement from Realtors, mortgage companies, HOAs, developers, and home sale closing  agents).  Note, the fee is not mandatory nor can the home seller shop for a better rate (ranging from $50 to $1,000+) and if not paid the home sale is held up.   If you are applying for an FHA/HUD loan and the HOA or condominium charges a transfer fee related to the sale of the home, the loan most likely will not be approved.  This third party fee benefiting the PMC and representing redundant charging by the PMC for work already compensated for in the PMCs's contract with the HOA is not allowed under FHA guidelines.  Thus, the HOA Transfer Fee, costing home owners millions a year in Colorado, unjustifiably and financially burdens home owners and impedes loan opportunities to low and moderate home buyers.  The time to end this fee is now and we at the Colorado HOA Forum ask our legislators to sponsor a Bill to limit/end this abusive, unproductive, and harmful fee.

If you purchased a home in an HOA (single family dwelling, townhome, condominium) over the past two years and your closing documents indicate an HOA Transfer Fee was assessed, please contact the Colorado HOA Forum  We will work with home buyers/sellers to request a refund of this fee and apprise the FHA of this improper fee. 

Sunday, December 7, 2014

Can an HOA do this or that? Ask a different question

The questions too often asked as to whether an HOA can do something;  “is that against the law”; “but State law indicates”; or “my HOA governing documents state I have the following rights but....”.   In most cases the questions reveal a violation of home owner’s rights under the law. The question you should be asking is the one you really don't want the answer to.  You bought your home in the HOA with the understanding that you give up something (home owner’s rights under the covenants, controls and restrictions) to get something (a neighborhood with stable home prices, aesthetically appealing, community amenities, etc.).  You understand that an HOA is a local government of its' own managing the affairs of the community and can collect dues/fees and penalize non-compliance.  This all seems acceptable as you are protected by a full set of home owner’s rights to ensure abusive practices are mitigated, financial accountability is demanded, and governance is executed with open elections, meetings, and management practices. 

Then one day you have a problem with the HOA being in non-compliance with your governing documents.  This could be anything: your rights to records access; meetings and resulting minutes are not conducted according to the by-laws; the HOA reserve funds are depleted or maintenance of common areas is poor and you want answers; the HOA is taking on debt without home owner approval and you want specifics; election irregularities; your fence that was previously allowed and approved is now resulting in fines for covenant infractions; and on and on.  You want answers and an ability to protest for your rights.  You get no answers.  The whole house of cards on HOA home owner’s rights collapses and you ask "can they do that", "isn't that illegal".
In the world of HOA law home owners find out too late that enforcement of covenants, controls, and restrictions is mostly one-sided.  Fortunately, most HOAs comply with their own governing documents and HOA State law.  However, when the all too frequent dysfunctional HOA Board with its' "lifer" and over energetic members govern with secrecy, bullying tactics, and disregard for the law home owners quickly find out what can go wrong and is wrong with our HOA laws.  They are mostly NOT enforceable from the home owner’s perspective. The only venue for complaints and enforceable decisions on HOA home owner complaints is our costly, litigious, and time consuming court system.  This matches the limited funds and time of the home owner against the unlimited funds, time, and HOA attorneys of the Board.  Is this a level playing field?  Any wonder why home owners don’t/can’t pursue their HOA home owner rights?
So the answer to the question "can they do that" is really "what are you going to do about".  The answer you don't want to hear is "not much".   A system where HOA home owner complaints can be handled in an out of court venue with binding decisions that is accessible and affordable is needed.  This will improve upon the enforcement of HOA governing documents ensuring both community and home owner’s rights are affective.   HOA legislative reform is needed and is the only way to handle this imbalance in HOA governance.

Tuesday, November 25, 2014

Enforceable, not more, HOA Laws Needed

The complaints about Homeowners Associations (HOAs) are not that State's lack HOA laws but that they lack enforceable HOA laws from the home owner's perspective. In Colorado there are numerous, comprehensive, and definitive laws governing HOA laws. The problem is that the authors and sponsors of these Bills left out the most important aspect of law: enforcement. This is like having speeding laws without fines for violations. In many cases this was absolutely deliberate to get support for passage from those legislators whose votes are influenced by well financed political machines such as HOA lawyers and the Community Association Institute (CAI). HOA law thus provides very good guidelines and principles but without an accessible and affordable means for home owners to pursue their rights HOA legislation becomes more ornamental and providing mostly the illusion of protection of homeowner's rights.

Home owners who don't comply with HOA governing documents can be readily fined and even have homes foreclosed upon. Violations by HOA Boards and property managers of State HOA law and HOA governing documents, however, leave home owners in a vulnerable and helpless mode. Home owners' only workable means for enforcing HOA law is our costly, litigious, and time consuming court system that matches the limited funds and time of the home owner against the unlimited financial and professional resources of the HOA. Even the most simple right of a home owner that is violated by an HOA Board such as gaining access to HOA financial records, challenging conflicts of interests or demanding full and accurate documentation on private Board meetings or minutes of home owner meetings requires the home owner to go to court: not hardly a fair or workable means for governing the HOA.

What is needed to make HOA governance and HOA laws effective from both the HOA and home owner's perspective is an out of court binding dispute resolution process. This process in Colorado has been endorsed in a State mandated study on dispute resolution and only awaits legislative sponsors. Implement this system and most HOA Board and property manager complaints related to non-compliance with HOA law will quickly be mitigated. The system will save taxpayer dollars as it takes case load out of the overloaded court system; disputes are paid for by the parties involved in the complaint (not taxpayers); it sets up a fair venue for dispute resolution (one based on facts and merits of a complaint and not based on an ability to pay); lawyers are not required; trained arbiters in HOA law are used ensuring knowledgeable people will conduct and make decisions on complaints; the system is low cost, timely, and provides for a guaranteed decision on any complaint; and no home owner is denied to use the court system if they choose.

So enough with more ineffective and mostly administrative HOA laws. What we need is an enforcement system to make the existing laws enforceable.

Sunday, November 16, 2014

HOA Legislation Needed for Majority of Colorado Home Owners

Homeowners Association (HOA) issues are not the most sexy issues but are the most underreported issues affecting a majority of Colorado home owners. These issues are also mostly neglected by our legislators who don't fully understand the economic and property rights issues associated with HOAs. Colorado has numerous, definitive, and comprehensive HOA laws but presently these are mostly unenforceable from the home owners perspective. HOA home owners pay fees and assessments upwards of $10 million a year to sell their homes that are not applicable too other home owners. These home owners are also unknowingly (until they receive a bill) subjected and vulnerable to major special assessments and fees without their knowledge or approval and if not paid can be foreclosed upon. It is also the only living environment that requires a home owner to go to court using their limited funds to defend their rights under the law only to have their own money (HOA dues) used in court by the HOA to defeat such rights. HOA legislative reform is needed, is non-partisan, and will affect the lives of Coloradans equal to any legislation passed. Our organization, Colorado HOA Forum,, will again be seeking legislative sponsors and media interest for this highly affective issue that is more material than sensational in the lives of our citizens.

Monday, November 10, 2014

Colorado HOA Forum's Newsletter Aug - Oct 2014

We've delayed the distribution of our newsletter until after the 2014 election.  We distribute it to legislators and wanted that event to pass and allow for our email with the newsletter to not be mixed in with their election material.  Previous newsletters 
Note, the newsletter will continue to cover Colorado HOA issues but we are attempting to provide readers with a more broad and diverse source of HOA news.  We do this by scanning HOA news from around the nation. We hope this provides the reader with topics we wouldn't ordinarily cover but are of importance.  Although some of these articles are from other states the content is applicable to Colorado.  As always, consult your HOA governing documents and our State laws prior to proceeding with any complaint or legal action and/or write us or the Colorado State HOA Office for comment.
We continue to ask your support in contacting legislators to sponsor our legislative goals to reform HOA governance.  We are available to meet with them at their location, date, and time of convenience.
Please join our cause, receive our newsletter, and get involved in our email campaigns for legislative reform.

Wednesday, November 5, 2014

Your Voice: FHA May Resolve Insult to Colorado Home Owners by Realtors, Property Managers, and the CAI on HOA Transfer Fees

Realtors, more specifically, the Colorado Association of Realtors (CAR), is not only misrepresenting but insulting home owners with their support of the abusive HOA Transfer Fee .  This is the fee charged by HOA property managers that has never been justified by work completed, is not mandatory but if not paid you won’t be able to sell your home, the fee amount can range from $50 to $1,100+ and is not negotiable or even supported by a detailed invoice, and  the money is not pocketed or benefitting the HOA but is retained by the property manager to enhance profits off the backs of home sellers.  This fee costs home owners in Colorado upwards to $10 million a year
During its’ push for legislation to end or limit this fee in early 2014, the Colorado HOA Forum, ,  interviewed CAR.  Not only did CAR have a deflective non-opinion status on this fee but had the facts as stated above all wrong concerning this fee.  They didn’t realize the excessive amounts charged, who determined and retained the fee, and that the fee was not mandatory.  CAR apparently got its’ information not from its’ members but from the Community Association Institute (CAI) whose members pocket these fees each year and worked to oppose, change, and make ineffective this proposed legislation.  In an interview with the Denver Post in 2014 CAR couldn’t define its’ stand on Transfer Fees.  CAR’s position is a costly and insulting blow to their customer’s bank accounts.
Now the FHA is stepping forward with anticipated new guidelines for approving FHA home loans that would in part put an end to the abusive transfer fee.  Specific in their proposal is ending FHA home loans when transfer fees are involved.  Let’s hope influence groups such as the National Association of Realtors, CAR, and the CAI don’t get this positive action stopped.  These groups have petitioned the FHA to allow transfer fees on HOA home sales.  Note, a few years back it appears that the CAI worked to get an exception in Colorado law that made transfer fees on all residential home sales illegal except on, you guessed it, HOA home sales (CAR never objected).  Don’t these interest groups whose income depends on home owners understand how insulting it is to continue raiding people’s pocket books with these unjustified fees for their own selfish benefit?
The FHA proposal to end this unwarranted fee on FHA home loans is a beginning to rectifying this financial wrong in the real estate market where the customer (home owner) is not defended by the very folks (Realtors) who depend on them the most and who butter their bread.  The Colorado HOA Forum will again work this legislative session to pass a Bill to end or limit this fee.

Your Voice: HOA Oversight in Colorado Raises Questions: Part II

This is part two of a two part article on HOA governance in Colorado and the role of a government agency in influencing (or not) HOA law.
DORA is also chartered to seek out multiple providers for educational requirements under CAM licensing and to develop testing procedures. To date, and after one year, DORA has not posted on its’ web site the competing educational providers with the CAI remaining the sole source. CAI legislative sponsors promoted the CAI courses and DORA gave tacit approval and to date there has been nothing indicating that DORA has reviewed and certified the courses, that the courses are reflective of current HOA changes in the law, and a process to mandate annual review of such courses will take place. Also, by not early on posting alternative sources for educational classes the CAI can charge what they want and CAMs are left with a sole source of “approved classes?” An unintended (again) promoting of a private company via a government agency.
DORA is now considering allowing the CAI to conduct its’ own testing and grading of exams and granting partial license certification to PMs. This is contradictory to the law that indicates a professional testing company shall complete testing and grading with only DORA granting license certification in part or in full. Furthermore, the oversight, review, and update of CAI class material, testing and grading procedures, and security over such tests have not been reviewed by DORA. We know of no plans to do so. If the CAI request is granted, we will have the same folks (CAI) that have been “leaders” in CAM education and leadership in Colorado for two decades and resulted in the in the need for regulatory oversight be the guiding light in “cleaning-up” the industry. This arrangement (along with CAI involvement in guidelines) is equivalent to allowing a company that is polluting a lake and waterways write their own rules and standards and complete testing of waters for safety, and issue their own licenses. DORA needs to take full control of this program to maintain the integrity of the licensing program.
Then there is the recent event whereby a Bill was proposed to end/limit the unwarranted, unjustified, and illegal (in Colorado) HOA home sale Transfer Fee. Our legislative sources at the Colorado HOA Forum and articles on the CAI legal web site indicate the CAI lobbied hard to defeat this Bill. As a result the Bill was totally diluted into a disclosure law thus ensuring nothing would change and million of dollars would continue into the bank accounts of CAI members. DORA was to address disclosure of all fees and the HOA home sale Transfer Fee in their guidelines for CAM licensing. Not surprisingly, the first release of CAM licensing guidelines included only vague directives on fees disclosure. DORA’s ambiguous and loose disclosure mandates for HOA Transfer Fees don’t require justifying the fee in detail. DORA CAM guidelines don’t mention in disclosure requirements that the HOA Transfer Fee is not mandated by law nor hold up the sale of a home hostage in the event the fee is protested by the seller. Also, with no requirement to justify the fee by cause with an itemized invoice, it will make it difficult for home owners to protest this fee. The opportunity for DORA to protect consumer rights, as their charter indicates, will be missed if fees disclosure of all types are not required to be detailed and justified.
The next test for DORA is coming this legislative session. Our organization will be pursuing legislative sponsors for an out of court binding dispute resolution process for home owner complaints Bill. The CAM licensing program includes a home owner complaint resolution process handled out of court through DORA. Also, a State HOA dispute resolution study completed by DORA endorsed this process. The CAI and legal types, however, oppose this process. DORA will be asked to speak on this issue and if they reject it they are rejecting and invalidating the very work they will be doing under CAM licensing and other licensing programs they administer. DORA should also speak to allegations that this out of court process will result in home owners losing legal rights and the process is as costly as a court appearance: both NOT true.
Citizen trust in our government institutions is at an all time low and HOA home owners need look no further than the examples above to take that trust down another notch. If DORA was fully operating within its’ mission statement (see below) and being an active participant in the legislative and regulatory process there would be no reason for this article:
“DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission.”

Thursday, October 23, 2014

HOA Oversight (in Colorado) Raises Questions: Part I of II

The length of this article requires it to be published in two Parts. This topic could have been written in two paragraphs without background and factual content but then the it would appear to be just another article of allegations and rambling without explanation or supportive discussion.

You've seen it before. An industry pollutes or its' practices cheat citizens so much resulting in regulation of the industry. You've also observed the very industry to be regulated writing the rules and getting too involved with the regulatory process. In Colorado the Department of Regulatory Agencies (DORA) implements HOA law, issues HOA property manager licenses, can levy fines for violations, hosts the State HOA Office, and provides oversight.

DORA's independence in HOA legislative proposals and implementing the law raises questions. In particular, their relationship with the with the well financed lobbying organization (the Community Association Institute (CAI)) that represents HOA property managers (also referred to as Community Association Managers (CAMs)) and HOA lawyers. Although we don't suspect any criminal violations or anyone in DORA receiving financial benefit, we do observe events that make the impression that the CAI is influencing regulatory guidelines and legislation at the expense of home owners.

A recent Colorado law licensing CAMs was jaded with DORA's tacit approval of a highly unusual precedent in regulatory legislation. DORA was aware of and never spoke up about questionable verbiage inserted in the law that defined educational requirements. The law listed one provider's (CAI) educational courses to satisfy when other's were known to be available. This is using regulatory legislation to promote a private business! DORA should have made known that they neither reviewed or certified any of the CAI courses since they would be stuck with using them if in the law (even if subsequently they found them to be deficient).

DORA has also been directed to write property manager guidelines. Their proposal seems very much like CAI guidelines that were developed several years arlier. How questionable is it to have the very industry you are regulating write the oversight rules and regulations? Will the dozens of proposed guidelines received by DORA from the public get equal importance?

More in Part II

Sunday, October 19, 2014

Colorado Construction Defects and HOAs: the simple made complicated

The issue of construction defects litigation just shouldn't be this complicated.  The reporting on this issue has focused on civic organizations and the construction industry contending that too many law suits made too easy by HOAs and condominium associations make building affordable housing too difficult and costly.  Then from the HOA lawyers perspective who get their hands into the bank accounts of HOAs to fund costly and in many cases financially devastating law suits argue that HOAs and home owners can't have their hands tied in defending home owners against shoddy construction practices.  The contentious issue behind all this is whether HOA home owners, and this includes condominium complexes with community associations, would be required to vote on whether to use HOA funds prior to the Board pursuing construction defects litigation.  Simple HOA legislative reform in existing HOA law requiring home owner approval prior to using HOA funds in law suits would seem resolve most if not all issues in this controversy.  This would empower home owners in the use of "their funds" and require HOA Boards (and their lawyers) to inform and educate the home owner on the proposed legal action including the cost/benefit and risk in legal action and in the event of an unsuccessful legal action the estimated, if any, resulting special assessment on home owners to pay legal fees. It would surely cut down the number of construction defects cases but at the same time keep in tack the ability for home owners (HOAs) to arbitrate (which is already mandated in many HOA governing) and/or pursue legal action.  Why is the easy made so often so difficult?

Thursday, October 16, 2014

Enough, the CAI Doesn't Represent HOAs and HOA Home Owners

Enough, the Community Association Institute doesn't represent Homeowners Associations (HOAs) or HOA home owners.  This organization represents the interests of HOA property managers (PMs) and the legal industry involved in HOA governance and representing HOA Boards in court.  No problem with this but the press, AARP, the legislature, and the general media get it all wrong.  In fact, the CAI is known among home owner advocacy groups as a mostly anti-home owner organization.

The Denver Post in the past months has published articles on the topic of construction defects and HOAs and the right of home owners to vote on the use of HOA funds prior to the HOA Board entering into costly and potentially financially devastating law suits.  The articles misleadingly indicated the CAI represents home owners and HOA organizations.  No evidence exists of any HOA organization or their organizing home owners to protect their interests.  The CAI opposed any mandate to have home owners vote on the use of their own funds in law suits. Is this pro home owners? 

Then there was the CAI's recent opposition to ending/limiting the HOA home sale Transfer Fee that has never been justified and is illegal on all home sales except in HOAs (wonder who got that exception into legislation?).  This fee lines the pockets of PMs (not HOAs), costs HOA home owners millions each year, and a PM can charge amounts ranging from $50 to $1150 for like services and the fee can't be negotiated by the home owner (and if not paid the home sale is held up).  Does this sound like they represent home owners?  Examples abound and can found on our web site

One final thought on this.  For the past decades the CAI in Colorado has been the primary if not the sole source on issues of HOA governance, home owner rights, and in writing HOA legislation.  They promoted their professionalism, altruism, and oversight of the HOA PM industry and were recognized leaders to our legislators.  As a result of their "leadership" and the thousands of PM related home owner complaints received by legislators and the State HOA Office, legislation was passed to clean up the PM industry.  Doesn't sound like leadership or protecting HOA home owner rights?

So enough of the CAI misrepresentation.  The press and our law makers should seek out the opinions of HOA home owners (organizations) in HOA issues and not simply default to those who profit and have the interests of PMs and lawyers as their focus.

Tuesday, October 14, 2014

Colorado Construction Defects Issue is an HOA Issue

A construction defects Bill was introduced to the Colorado legislature last session.  It got caught up in the legislative process (purposely) and never got voted upon.  The issue is back.  It touches directly on home owner rights and limiting the ability of an HOA Board to spend HOA funds on law suits without the knowledge of, awareness of, or approval (via a vote) of home owners.  Below is the most current correspondence issued by the Colorado HOA Forum to State legislators and to our members.  Colorado is not alone in home owners pursuing legislative reform on limiting the authority of HOA Boards.  I can't go without apprising you of the fact that the Community Association Institute (CAI) opposes our recommended legislation (it would greatly reduce the opportunity for litigation). 
To our members:
The below was sent to all legislators.  A construction defects Bill will most likely again be worked on in the next legislative session.  Our perspective on this is to protect home owners from bankrupting and/or using HOA funds on law suits when home owners are not aware of, provided justification of, or approve of such actions.  This would also allow litigation in construction defects when approved of by home owners.  Note, the CAI, whose interests with the legal industry, objects to our proposed legislative Bill and appears to promote law suits over home owner's rights.
To legislators:
The issue of construction defects litigation is directly impacting on HOA legislative reform.  The Denver Post's most recent article on this issue prompted our below letter to the editor.  We know that a Bill that would limit the authority and ability of HOA Boards to embark on costly law suits without the knowledge, awareness, and approval of home owners would resolve many construction defects litigation issues.  It would not preclude legal action but require home owners, who pay the tariff, to make decisions on these costly and potentially financially disastrous.  It would seem to satisfy the want of the construction industry and protect and empower home owners.  This HOA legislative reform is needed regardless of construction defects.  I ask your sponsorship for such a Bill should you continue to serve in the State legislature.  Thank you.
Email to Denver Post:
Construction defects litigation proposals hit at the core of problems in Homeowners Association (HOA) governance.  Passing legislation to empower HOA home owners by limiting the ability of an HOA Board to use HOA funds for legal actions without their approval will be a win-win on this topic.  HOA Boards can (legally) embark on costly law suits without justifying or informing home owners of their intentions and without their approval.  Legal costs have financially drained and/or bankrupted many HOA's.  HOA legal actions can and have resulted in draining HOA reserve funds and costly special assessments on home owners.  Opposition to limiting HOA Board authority comes from the legal community and the Community Association Institute (CAI).  Their constituents prosper with an ability to access HOA funds to pay for costly litigation without having to "bother" with home owner approval.  Legislation to limit HOA Board authority in spending on legal actions would empower and protect home owners from costly, baseless, and home owner "unsupported" legal cases.  Such a Bill would not preclude legal actions (in construction defects and other areas) but ensure that those who pay the tariff, the home owner, know who is spending their money, on what, and how much. 

Thursday, October 9, 2014

Why HOA State Law and Governing Documents are (not) enforceable

There are plenty of definitive and comprehensive State HOA laws.  HOAs have their own governing documents defining controls, covenants, and restrictions.  HOA Boards ensure compliance of covenants through their authority by issuing fines, court actions,  and/or foreclosing on property for unpaid fees, fines and special assessments:  This is part of living under HOA governance and home owners must understand the HOA governing documents were developed with the intention of enforcement.
Now that takes care of enforcement of home owner compliance.  What about when an HOA Board violates the governing documents or even State HOA law?  The rules of enforcement change and home owners begin to understand that enforcement may be a one way street and they are running into oncoming traffic.  The only means of enforcement from the home owner's perspective is our costly, litigious, and time consuming court system.  Most home owners simply can't afford or compete with the unlimited funds of the HOA and their paid attorneys in even the most simple court case.  Yes, lawyers are allowed in Small Claims court.  Furthermore, if the home owner loses they most likely will pay the HOA legal costs.  Under the current environment of HOA litigation most home owners quickly understand that the cost of pursuing a violation by their Board, management company, or HOA attorney far outweigh the benefits and their chances of justice in a "pay to play" court system preclude pursuing their complaint.

HOA home owner complaints simply don't belong in our court system.  They mostly involve violations of HOA governing documents and when pursuing financial losses the amounts are low.  The cases are not complicated and should not require lawyers.   Such cases unnecessarily add to court work load and costs.  What is needed, and has been endorsed by a State sanctioned study on HOA dispute resolution, is the implementation of an out of court binding dispute resolution process.  This venue is affordable, accessible, and provides an environment in which facts and fairness trump financial resources.  It is also a process that is easy to understand, is expedient and simply involves filing a complaint with the State, the complaint is vetted for substance, and a hearing is completed by a State sanctioned med-arb (mediator with arbiter (decision making) authority) trained in HOA law.  If the parties in the complaint can't come to a binding agreement the med-arb will make the binding decision.  In affect, this is what happens in a court venue: someone, the judge, makes a decision and it is enforceable.  The process has a beginning and end all out of court and affordable.  Placing this process into law only awaits legislative sponsors (and overcoming objections from the Community Association Institute (CAI) and lawyers who profit by HOA court actions).

Tuesday, September 30, 2014

Colorado HOA Forum Begins it's Legislative Initiative

The Colorado HOA Forum has begun its' efforts on HOA legislative reform for the 2014-15 legislative session.  Our approach on changing Colorado HOA law is to gain legislative sponsors for our proposed initiatives through email and telephone campaigns, meeting with our law makers in person, and getting media coverage to promote our efforts.  Emails and notices sent to our legislators and the media.

We again will face the opposition of the Community Association Institute (CAI), legal community, and property managers in our efforts.  These are very well funded lobbyist with a history of obstructing HOA reform and they have many legislators in support of their self serving agenda.  Home owner groups must continue in their efforts to dispel the belief in State legislatures that the CAI somehow represents home owner interests: this is the current environment.  Once legislators consider home owner organizations opinions and initiatives equal to those of the CAI we can begin to implement HOA reform. 

We encourage HOA home owner organizations and individuals in Colorado and throughout the U.S. to continue lobbying their legislators and the media on the need for HOA reform. 

Saturday, September 13, 2014

HOA Transfer Fees Still Burden Home Owners

HOA Transfer Fees will continue to financially burden HOA home owners despite new disclosure guidelines in the Colorado HOA property manager (Community Association Manager, CAM) licensing Bill effective July 2015.  This is a fee imposed on home sellers to subsidize the CAM industry, is not mandated by law, and funds are retained by the CAM not the HOA.    The fee, ranging from $100 to over $1,000 has never been justified by work performed, must be paid or the home sale can't be completed, and is not negotiable in amount (it's whatever the CAM decides, no if's, and's, or but's).  The cost to Colorado HOA home owners is over $10 million a year and nationwide the tab runs to several hundred million dollars a year.
Colorado began a road to reform on this fee with the introduction of a Bill in 2014 to limit the fee in amount, require CAMs to justify the reason and amount of fee, and show how they were not already compensated for all Transfer Fee work in their contract with the HOA (which to date they have never done).  The Community Association Institute (CAI) effectively killed the Bill and our legislators allowed them to re-write the Bill to preclude any dollar limits, negotiation of fees, or require justification and itemized disclosure of amounts charged.  Instead, HOA home owners got the issue pushed to the CAM licensing guidelines in the form of "requesting" the fee be disclosed ensuring nothing will change and it will continue to be a "pay it or you can't sell" situation.  The detail of disclosure can be a one liner "Transfer Fee" on a closing statement with no specific explanation or justification.    Also tacitly supporting this abusive fee was the Colorado Association of Realtors who refused to take a stand on the fee to help the folks who put bread on their plates: home sellers and buyers.
Our organization, Colorado HOA Forum, will again in 2014-2105 seek legislative sponsors to limit or end this fee.  The CAI will also be there to peddle their influence and kill any home owner efforts to end/limit this fee.

Friday, September 12, 2014

HOA complaint resolution requires HOA homeowner involvement

Silence is not golden!  Seems that too many Homeowners Association (HOA) home owners can get long on complaints but short on acting on their concerns.  If you have/had an HOA complaint or feel you’ve been wronged by your HOA Board or property management company (PMC) you’re not alone but you must be heard.  The State HOA Office and your State representatives have received thousands of HOA complaints over the past two years.  This represents but a fraction of HOA complaints.

HOA home owner apathy is no different than in our general population.  What drives apathy in HOA disputes is an inability of  home owners to successfully exercise their rights.  In Colorado we have many HOA laws and nearly two-thirds of our population live under HOA governance.  Home owners encountering problems and simply trying to get their HOA to comply with their own governing documents quickly find out that what is in the law and their by-laws is not always enforceable from the home owners perspective.  The number one reason for our HOA laws being basically unenforceable is that they all lack a viable, affordable, and accessible means for dispute resolution except our costly, time consuming, litigious, and “pay to play” court system.  This dilemma on HOA governance increases home owner apathy and disengagement but doesn’t dampen individual disenchantment with the HOA living concept.

The solution to enforcement of HOA home owner rights rests with implementing an out of court binding dispute resolution process.  A process that is affordable and accessible and has a definite beginning (filing a complaint) and end (a decision).   Such a process was recently passed into law for HOA home owner complaints with PMCs that will go into law in July 2015.  This process is also used when filing complaints against licensed professions in the State via the Department of Regulatory Agencies (DORA).   Why not for HOA home owner complaints?

The State of Colorado completed a study that identified out of court binding dispute resolution for home owner complaints.  This process would handle 95% of home owner complaints that involved non-compliance with HOA law and HOA governing documents but not be applicable to felony cases or those over a certain dollar limit in damages.  Home owners could still opt to go to court vs this process and thus no one’s legal rights to a court case are forfeited.  The process levels the playing field by not requiring lawyers and costly court proceedings, decides cases on current HOA law and HOA governing documents not legal maneuvers in court, allows for home owners to have their “day in court”, provides no advantage to those with financial resources, keeps frivolous complaints out of court, saves home owners and HOAs in court costs, and provides finality to complaints.  It is the solution to HOA complaints.

Implementation of an out of court binding dispute resolution process only awaits  legislator sponsors in the upcoming Colorado legislative session.  I can assure you that those opposed to reform such as the Community Association Institute (CAI), property managers, and HOA lawyers are already at work with their lobbyists, lawyers, and financial influence to stop such HOA reform in Colorado.

Our organization, Colorado HOA Forum, knows your State legislators are finally beginning to understand HOA issues from the home owner’s perspective.  They know what should be done but to date have no done it.  In the past, legislators only listened to well paid lobbyist such as the CAI to craft legislation and pursue HOA issues.   Of course this ensures nothing changes.  HOA home owners must contact their legislators asking them to support the State HOA study and implement an out of court binding dispute resolution process.  This can easily be done by visiting the Colorado HOA Forum’s web site.

Your Voice: HOA fees: it’s not the amount but the value and justification

Two thirds of Colorado residents live under Homeowners Association (HOA) governance.  All live under covenants, controls, and restrictions and are assessed dues and fees in return for community provided services and amenities.  Amounts vary and so do the range and quality of service.  Dissatisfaction arises when the value of services for fees is not in line with home owner expectations and/or the justification for fees is poorly supported and can’t be contested.  So what causes this misconnect between expectation and delivery.

Problems can occur when HOA home buyers/owners are unaware of what services are to be provided by the HOA.  Providing this information to home owners prior to closing on the sale of a home and having buyers certify they read it should be a legal requirement.  Problems also occur when HOAs mismanage funds resulting in an inability to provide services at a quality level.  This includes not funding HOA reserve funds for planned maintenance, using intended maintenance funds inappropriately on Board special projects or on costly and mostly avoidable law suits, over paying and not competing contract work, and just poor financial planning and management with no oversight or accountability.  Then there is the problem of HOA dues being too low for too long to deliver services.  Another significant and less discussed problem relates to the lack of oversight and control over the property management companies (PMC).  In most HOAs, the PMC runs the community and yes this is the tail wagging the financial dog with little oversight or disclosure to home owners.  One more but necessarily the last problem is that HOA Boards have almost zero accountability and unlimited authority in making financial decisions for the community without apprising or with the approval of home owners.  This includes raising HOA dues, making special assessments, embarking on high cost law suits, and funding special and high cost projects all without home owner approval or having to justify their actions to home owners.

Then there are fees assessed HOA home owners by PMCs that are not in any HOA documents or approved by HOA Boards.  For example, the HOA Transfer Fee.  This fee is NOT imposed by, determined by, or retained by the HOA but pocketed by the PMC upon the sale of a home in an HOA.  No justification or legal requirement is given, the amount is arbitrary ranging from $100 to over $1,000, can’t be negotiated, must be paid or you can’t sell your home, and worst of all you don’t know about the fee until the closing on your home.

HOA fees and financial accountability are an ongoing problem for HOA home owners.  Although Colorado has many HOA laws they all lack an ability to hold the HOA Board and/or PMC accountable for financial mismanagement, reckless behavior, or to provide quality services.  The laws lack mandates for home owner involvement and approval on spending HOA funds.  Home owners are left paying the fees and assessments unless they choose to challenge the HOA in our costly, litigious, time consuming, “pay to play” court system and most simply can not afford this venue.  The good news is that most HOAs and PMCs operate with a good degree of integrity but when bad apples arise the financial consequences can be catastrophic and costly to home owners.  Until our State laws are modified to empower home owners with a means (out of court binding dispute resolution process) to hold HOA Boards and PMCs accountable home owners will remain vulnerable to financial abuse and unexpected financial obligations.

Sunday, August 24, 2014

Colorado HOA Law and Enforcement: the Illusion of Home Owner's Rights

HOA home owners are locally governed by the HOA's covenants, controls, and restrictions (CCRs) and by-laws.  There are also State laws that describe and establish a clear, comprehensive, and uniform framework for the creation and operation of common interest communities (HOAs).  So it appears we have plenty of laws both within the HOA and in State HOA law to protect home owners from abusive Boards and property management companies, inappropriate and illegal practices, and to promote open governance.

A reality check from the home owner's perspective will shock most HOA home owners.  If you read these laws you will find that enforcement verbiage from the home owner's perspective is missing, lacking, or unworkable.  The main and most widely used means of HOA home owner's rights suggested in Colorado law are mediation and our court system.  To date, and from the thousands of inquiries and complaints received by an unknown State HOA Office, these two remedies in dispute resolution have been a failure.

Mediation has been practiced for decades and has at best not served home owners well.  Think about it.  A home owner must gamble hundreds of dollars on a mediation session (if the HOA is willing to mediate) and there is no guarantee a solution will be reached.  Even when there is an agreement an HOA can ignore the agreement and that leaves the home owner back to our court system attempting to gain enforcement or re-litigate their case.  Most home owners simply can't gamble hundreds of dollars on a process that has no guaranteed outcome.  The Colorado HOA Forum's web site has an extensive discussion on mediation vs other methods of dispute resolution.

Then there is our litigious, time consuming, costly, "pay to play" court system.  Most HOA complaints simply don't belong in court.  They are simple matters related to such issues as non-compliance with HOA governing documents or State law and complaints against the HOA property management company.   HOAs are not adverse to going to court.  The HOA understands they use their unlimited funding from HOA dues to fight your limited personal means.  The HOA lawyers get paid win or lose.  No HOA Board member will be held personally accountable in the event you win.  If you lose you end up paying for your lawyer and most likely the costly HOA legal fees.  This is a sad venue for justice for home owners and thus most home owners simply don't pursue enforcement of their rights.  The track history of too many home owners in court is financially disastrous and thus court should be avoided.

Another means of enforcement is through arbitration and this is mentioned in State law but rarely pursued and not understood.  A form of arbitration called med-arb (mediation-arbitration) allows for conducting a mediation session with a definite and enforceable outcome: a beginning and end in the complaint process.  Basically, if the parties can't agree to a solution the empowered mediator - arbiter will decide for them.  Actually this not different from our court system in which the judge decides for the parties but avoids the high cost, litigious processes and procedures, mitigates the time to litigate, and doesn't require lawyers.  It ends the "pay to play" legal venue and saves both home owner and HOA the expense of litigating and saves taxpayer money by removing these cases from our already over burdened system.  No legal rights are forfeited by home owners as they can still opt to go to court.  This process is being pursued in several States and most recently has been advocated in a Colorado State mandated report on HOA dispute resolution.  Implementation only requires legislative sponsorship.   Med-arb is a recognized legal process and in fact a similar process will be used in handling home owner complaints against Colorado HOA property managers upon implementation of the property manager licensing law in 2015.  If this is good enough for property manager complaints why not for home owner vs HOA complaints.

Until HOA home owners get an out of court binding dispute resolution process such as med-arb our State HOA laws remain more of an illusion of home owner protection than realtity.

Friday, August 22, 2014

Will Colorado HOA Home Owners be Ignored by Legislators, Again?

This past Colorado Legislative session was a loss for home owners with proposed legislation to save HOA home owners millions of dollars in unjustified fees reduced to a meaningless disclosure Bill.  Another proposal to preclude HOA Boards from using HOA funds on law suits without home owner approval died.  Then there was just a lack of interest by legislators when asked to sponsor Bills to limit the amount of special assessments a Board can levy without home owner approval, limiting fees and administrative charges on HOA debt (not pocketed by the HOA), and follow-up on a State mandated study that would provide for an out of court binding dispute resolution process for most HOA home owner complaints.  The big winners with HOA home owner legislative efforts were the Community Association Institute (CAI), lawyers, and property managers who lobbied to ensure HOA Bills and issues were not addressed and/or when introduced as legislative Bills were killed or watered down to retain the status quo.

Our group, Colorado HOA Forum, , will again begin our efforts to gain legislative sponsors to reform HOA governance.  This should be a somewhat easy task with over two thirds of Coloradans living under HOA governance, with thousands of complaints received by the State HOA Office, and equal amounts of emails and telephone calls received by legislators about HOA concerns.  However, opposition groups are well funded and influential in our State legislature.

This is an election year and HOA home owners need to ask their legislators questions about who they represent in HOA issues.  HOA issues for this voting group affect their lives financially, legally, and socially as much if not more than any issue.

Friday, August 15, 2014

Who or What is the Community Association Institute (CAI) and HOA Reoform?

Homeowners Associations (HOAs) are comprised of three entities: home owners, HOA Boards and their legal counsel, and the property management company (PMC).  Problems can arise from any of these but for those who follow HOA issues the involvement of PMCs can be most problematic. PMCs affect HOA governance with their direct involvement in operational and financial matters and through their trade organization, the Community Association Institute (CAI), which has undue influence in HOA legislative activities that craft HOA law.  For decades the sole source for Homeowners Association (HOA) information for the media and the State Legislature has been the CAI.  Why not?  Their name implies they represent the concerns of community associations and home owners: aka HOAs.  Legislators "trust" this organization to represent home owners and citizen interests but most have no idea who or what they represent.  Legislators actually think their membership and funding comes from HOA home owners and HOAs:  WRONG.   They have trusted this organization for decades and have allowed them to set the rules in HOA governance and financial management.  Yes, they craft the legislation that sets the rules for their industry and interests and ensure through their actions that HOA State law and HOA governing documents are highly enforceable from the HOA Board’s and PMC perspective and very weak for home owners. Due to this close relationship between the CAI and legislators across the country, HOA legislative reform has been very difficult and the few Bills that have passed have been watered, are more cosmetic than effective, and in no way help with enforcing home owner’s right

If you visit CAI or their legal affiliate web sites and read their literature you would think they represent HOA home owner interests.  Wrong!  Their membership is mostly comprised of PMCs and lawyers.  The CAI is an organization that derives most of its’ income from selling their educational classes.  Nothing wrong with this but read below on how they commingle this business with legislation.  Then there is CAI “the trade organization” for PMCs.  Not hing wrong with this either except that they have ensured all State HOA laws aren’t written to hold PMCs accountable for their actions.  Then there is the connection between the CAI and HOA lawyers who have ensured through their legislative influence that no binding, affordable, and accessible out of court dispute resolution processes is available to resolve HOA home owner complaints. This of course ensures HOA legal enforcement from the home owners perspective against abusive HOA Boards and PMCs remains in our litigious, time consuming, pay-to-play court system making HOA law mostly ineffective. 

The CAI and the entities they represent and work with in State legislatures have thwarted HOA legislative reform for decades.  Recent examples: killing an HOA Transfer Fee Bill that would have limited the fee and required explanation and justification of the fee (this costs home owners in Colorado $10 million a year); opposition of a Bill that would have required HOA home owners to approve the use of HOA funds prior to entering into expensive legal actions; opposing an out of court binding dispute resolution process for home owner complaints (leaving home owners with only our pay to play court system for the most minor dispute resolution); their involvement in writing Colorado legislation to license property managers resulted in using such legislation to promote their sales of educational courses and hence drive up the cost of such required educational courses for property managers; opposing the limiting HOA fees, fines, and administrative and legal fees on HOA debt; opposing term limits on Board members when others are available to serve; obstructed legislation on protections of home owners against liens and foreclosure for HOA debt; attempts to promote legislation that would expand the independent authority of Boards in governing HOA operations (without home owner approval); and the list goes on and all anti-home owner.  You can blame the CAI for the lack of HOA reform with their legislative intervention but much blame also goes to our political process that makes money the name of the legislative game and places unfunded citizen groups at a disadvantage. 

The CAI and its constituents are the most anti HOA home owner group in the nation and in Colorado they most certainly are a wolf in sheep’s clothing and our legislators and the media are only beginning to realize their role. The beginning of HOA legislative reform and improved governance thus begins with dispelling the belief that the CAI represents home owners; revealing their history and actions in HOA legislative reform; curtailing the CAI’s influence with our Government agencies, media, and legislators; and having HOA home owner groups recognized in our legislature and in the media to offer a home owner centric perspective to improving HOA governance.



Colorado HOA Forum: Newsletter May - July 2014

The Colorado HOA Forum has just published its' latest newsletter:  May - July 2014.  The newsletter can be accessed on their web site  

CAM Licensing Provides for Out of Court Binding Dispute Resolution, why not same for HOAs ?

We would like to see the Colorado Department of Regulatory Agencies (DORA) speak out in support of our out of court binding dispute resolution proposal  Regardless of what they may claim, they do get involved on some level with legislation.  This was exhibited when they tacitly endorsed an empty disclosure law to rein in HOA transfer fees vs a direct law to limit this abusive fee.  They were quoted by legislators and the CAI as not endorsing a law to limit transfer fees.  Furthermore, DORA has directly allowed interest groups to write their regulatory guidelines as is the case with property manager licensing with CAI input.   

This Office completed a study on HOA complaint resolution in which our proposal for an out of court binding process was recommended.  The proposal awaits a legislative sponsor and surely DORA’s opinion will be sought.  We hope DORA points out when questioned by legislators in the next legislative session that they will be providing an out of court dispute resolution for property manager complaints.  If it is good enough for property managers (and all others that DORA regulates) it is a valid process for HOA home owner complaints.   

FHA Loans, CAI, and Transfer Fees

The CAI is continues to attack home owner wallets in their defense of transfer fees assessed on HOA home sales.  If you recall it was the CAI that led the effort to kill the Bill in Colorado that would have limited/ended transfer fees.  That cost home owners over $10 million a year and fattened their constituent bank accounts.   

The FHA will be issuing new rules to limit or end transfer fees assessed by third parties.  Basically, any home sale involved with assessing buyers transfer fees will not be eligible for an FHA loan.  This supports what we advocate and maybe our legislators will get it this time around and vote for home owners and not property managers and lawyers with legislation limiting HOA transfer fee. 

The National Association of Realtors has come out to oppose transfer fees that developers and others assess home buyers to generate private revenue and profit.  They still are not on board with prohibiting or limiting HOA transfer fees assessed by property managers that our group has written extensively on and lobbied our legislators in Colorado.  When will the Colorado Association of Realtors (CAR) and our State representatives stand up to the lawyers and the CAI to end transfer fees and defend the folks who put bread on their plate: home owners?  Ask CAR?  Email: 

If the new FHA guidelines limit or prohibit the assessment of transfer fees on their loans this would be a good first step and help in promoting legislation in Colorado to end this abusive and unjustified fee.  The new rules will be published later this year.  



Colorado HOA Forum's 2014-2015 Legislative Initiative

The Colorado HOA Forum’s legislative Goals and Objectives for 2014-2015.  If you support a goal (s) please take time, using our web site, to write your State legislator asking them to sponsor legislation to make it the law.

1. Include an out of court binding dispute  resolution process in all Colorado HOA laws (replace courts and mediation).
2. Improve upon Colorado legislation that licenses HOA property managers
3. Limit fees and administrative assessments on HOA debt.
4. Increase the roles, responsibilities, authority, and enforcement capabilities of the Colorado HOA Information Office and Resource Center including involvement in administering an out of court binding dispute resolution process
6. Require realtors and HOA home buyers to be provided with the following information and certify they received and read them: a copy of the HOA's governing documents; information on insurance coverage provided via the HOA; any HOA homeowner debt or HOA liens associated with the home; 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; rental restrictions and other items identified in our HOA Home Buyers Guide.
7. Term limits on HOA Board members when others are willing to serve. 
8. Include as part of the HOA registration process a certification that HOA Board members read their own HOA governing documents and applicable information posted on the State's HOA Office’s web site concerning State HOA law.
9. Limit the amount of special assessments an HOA Board can levy without approval of home owners.
10. Require HOA Boards to gain home owner approval prior to entering into law suits using HOA funds.






Friday, June 6, 2014

HOA Home Owners Push for Workable Dispute Resolution

Colorado home owners mostly live under Homeowners Association (HOA) governance. This living environment has many advantages but one trait currently gives HOAs a deserved bad name.  If a home owner has a dispute with their HOA Board or property management company (PMC) they are mostly left with our costly, litigious, and time consuming court system which doesn't work for home owners.  The State's HOA Office completed a mandated study on dispute resolution offering several out of court solutions.  One recommendation was an out of court binding dispute resolution process whereby complaints are filed and settled in an out of court venue at an affordable cost.  Home owners don't want a costly dispute resolution process (court) or discussion of their complaint with the hope of a solution that costs them hundreds of dollars without any guarantee of a decision (mediation).  Home owners deserve a process already used in Colorado for some professions and is planned for HOA PMC complaints: out of court binding dispute resolution. It's quick, fair, low cost, non-litigious, doesn't require high cost lawyers, no cost to taxpayers, and renders finality to a complaint.  It's time to provide HOA home owners with a workable, affordable, and accessible dispute resolution process that promotes vs hinders problems resolution.

Tuesday, May 27, 2014

HOA Special Assessments: Costly Without Home Owner Oversight

If you live in a Homeowners Association (HOA) you are subject to special assessments with or without your knowledge or approval.  Your HOA Board is empowered to levy a special assessment for most any reason at any amount, at any time on each property owner.   Special assessments can occur when HOA Boards approve self-interest projects or community beneficial capital improvements, to pay for costly law suits approved by a Board, or to replenish depleted reserve funds due to mismanagement or unexpected expenses.  Special assessments can range from hundreds to thousands per household and must be paid.  Don't pay the assessment and your financial obligation can compound through interest and administrative charges.  Wait too long to pay and your property can be foreclosed.  Special assessments can happen without home owner knowledge or approval and without  dollar limit and it is all legal.

Colorado State HOA law and HOA governing documents empower Boards to financially manage the community and only indicate they must act in a fiduciary capacity (a statement that is open to a wide range of interpretation with little accountability).  Nothing in HOA law requires a Board to discuss, notify, or gain approval through a vote of residents when spending HOA funds on costly endeavors .  Boards are also empowered to create enforceable special assessments, no questions asked.  Problematic in this issue is that even when special assessments result from Board financial mismanagement, extravagant spending, or reckless decisions home owners only find out about the dire financial consequences after the fact and through their wallets.  Unless criminal intent is involved, no Board member will be held accountable

Reining in the independent authority of HOA Boards to spend without the consent of home owners that often results in special assessments will require legislative action.  Until this happens, home owners are left with our costly, litigious, and time consuming (pay to play) court system to challenge HOA Board actions and this simply doesn't work for home owners.


Tuesday, May 20, 2014

HOA Home Owner's Wallets Emptied Over Fees

HOA dues, transfer fees, debt collection fees, special assessments, legal fees (law suits and HOA lawyers) can become overwhelming and home owners have little control over any of these financial obligations.  Worse yet, if these fees and assessments aren't paid on time you can be fined without limit and have your home foreclosed for the smallest amount.  Add to this the infamous $100 a month debt notification letters from the HOA lawyers that are not contestable.  Try to sell your home in an HOA and you can be assessed a transfer fee ranging from $150 to over $1,000 without any justification or explanation.  If you don't pay it you can't sell the home.  Then you can be stuck for the cost of your HOA Board entering into costly litigation or a capital improvement projects without home owner knowledge or approval resulting in thousands, if not tens of thousands, of dollars in special assessments.  If the HOA Board is reckless with finances and drains the reserve funds all home owners can be assessed an amount to replenish the fund and this can be very substantial: don't pay it and the amount owed will compound and also can lead to foreclosure.  Your monthly HOA fee can also increase without home owner approval and without limit and it's pay it, pay it on time, or more excessive fees and assessments.  One more thought about all these HOA fees if you live in a gated community.  Even though you pay county and other state and local taxes for street maintenance and snow removal, the local governmental entity will not provide snow removal or street maintenance and repair in your HOA (you pay through HOA dues).
Most HOA dues and assessments are legitimate and support the operations and maintenance of the community.  It is also true that what one home owner doesn't pay in dues others must make up for so reasonable penalties are appropriate.  However, the abusive and reckless authority of some HOA Boards in (mis)managing a community are weakly constrained by HOA governing documents or State law.  These ruling documents mostly require home owners to contest HOA Board behavior and burdensome assessments in our costly, litigious, and time consuming court system.  Thus HOA law enforcement from the home owners perspective involves the limited financial resources of a home owner against the unlimited bank account of the HOA: a pay to play legal system favoring HOA Boards.
The HOA living environment can provide home owners with a rewarding life style.  Most communities involve some form of HOA governance and it is mostly impossible to buy a home in a new development without an HOA.  Understanding HOA governance and home owner's rights and financial responsibilities prior to moving into an HOA is incumbent upon the home buyer and will mitigate post purchase problems.

Wednesday, May 7, 2014

CAI Chalks Up Wins in HOA Reform Off Wallets of Home Owners

The defeat of Colorado SB 14-220, Construction Defects, joins HB 14-1254, the HOA Transfer Fees Limitation Bill that morphed into a token and ineffective "Disclosure" Bill, delivers a double blow to HOA home owners.  SB 14-220 would have saved home owners millions of dollars by moving litigation from the court room to out of binding arbitration and protected home owners from HOA lawyers raiding reserve funds with frivolous law suits and pursuing costly court cases without home owner approval.  HB 14-1254 was addressing the $15 million a year in unjustified and non-contestable fees on HOA home sales.  It was changed to a Bill to require that home owners be notified of the fee without any specific details on charges, the fee amount (ranging from $50- to $1,150) was left to be determined without question by the property management company and let stand the practice that if the fee wasn't paid the home couldn't be sold.  Both Bills were heavily lobbied for change/defeat by the Community Association Institute (CAI) whose members and the legal industry stood to lose tens of millions of dollars in fees income off the backs of HOA home owners.  The success of the CAI in stifling any meaningful HOA legislative reform and controlling information and votes in the legislature must change or home owners will lose.