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.

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