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 www.coloradohoaforum.com 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. 

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