2011 was an active year for legislation that will affect community associations of all kinds in Colorado.  Overall most bills were generally positive and do not add significantly to the administrative burdens of managing and governing homeowners associations.  But there are new laws that every Colorado homeowners association should be aware of.

The following checklist discusses the three major bills impacting HOAs that became law this session, and explains what boards and managers need to do to comply with them.

New Laws

Short Title Bill Number
What HOAs Must Do to Comply
Transfer Fees SB 11-234 This new law is codified at CRS 38-35-127.  It eliminates many kinds of transfer fees covenants on residential real estate.The good news for HOAs is that transfer fee covenants payable to common interest community associations of any kind are excluded from the prohibition – the law doesn’t change how HOAs collect and use transfer fees.Also good news: transfer fees charged by community association management companies at time of transfer of title of real estate are still valid.Finally, many – but not all – kinds of transfer fees paid to charitable organizations for the benefit of the community also may still be valid. We recommend that community association managers change the name of the fees they charge at time of transfer of title to “record change fees”, to avoid confusion among the general public.HOAs should also be aware that this is a Colorado state law only.  Proposed federal regulations on transfer fees may be adopted soon by the Federal Housing Finance Agency (“FHFA”).  Those regulations could be more restrictive, but lenders relying on federal guarantees would need to follow those federal guidelines.We will keep you posted on any updates to the federal regulations.
Owners Association Conflict of Interest HB 11-1124 This new law amends CRS Section 32-1-804.3 by requiring candidates for election to HOA boards to disclose conflicts of interest, for example, if they currently serve on a Metro District the HOA is located in.The law also amends CCIOA section 38-33.3-209.5 concerning Responsible Governance Policies, by adding definition to conflict of interest policies (which are already one of the statutorily required Governance policies.) It’s time to put “conflict of interest policy review” on your board meeting agendas.  All community association subject to CCIOA must update their conflict of interest policies to:

  • Define when conflict of interests exist
  • Adopt procedures to follow when a conflict of interest exists, including disclosure rules and when a conflicted board member must recuse themselves from voting
  • Require a periodic review of conflict of interest policies
Identity Theft HB 11-1095 This law amends CRS Section 21-21-111 to require the Secretary of State to implement a password-protected system for any corporate filings required for corporations and other entities – like homeowners association — under CRS Title 7.This security requirement should limit the danger of identity theft experienced over the the past year in Colorado when thieves made online changes to corporate records.Corporate information will remain available to the public without a password. Since most community associations in Colorado are non-profit corporations subject to the Non-Profit Corporations Statute, they are required to file periodic reports with the Secretary of State.This law will require the authorized agend of an HOA – either managers or self-managed boards – to keep and use a passwod.
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