Colorado law requires common interest communities to adopt nine “responsible governance policies” addressing processes for key association issues. While many associations may have adopted such policies in the past, the law continues to change and oftentimes requires updates to various policies. Therefore, associations should periodically review their policies to ensure they remain consistent with current practices and evolving requirements of Colorado law.
This article is intended to provide a brief overview of the nine good governance policies currently required by Colorado law.
- Adoption and Amendment of Policies, Procedures, and Rules
This policy outlines the procedures the board follows when adopting, amending, or repealing association policies and rules. Generally, the policy addresses owner notice and comment procedures, board review, and the process for formally adopting policies at an open meeting. A clear policy helps ensure transparency and consistency when implementing new rules and policies in the community.
- Collection Policy
This policy governs the process for addressing delinquent assessments in a community. Specifically, the policy includes notice procedures, payment plans, late fees, interest, and referral to legal counsel. Associations should pay particular attention to this policy in light of recent changes to Colorado, which revised several collection requirements, including notice procedures, communication methods, and information required in payment plan offers. If your association has not updated its collection policy in the last 12 months, you should have the association’s attorney review the policy and tell you if revisions are needed.
- Conduct of Meetings Policy
The conduct of meetings policy establishes procedures for running board and membership meetings, including meeting notices, proxy voting, owner participation, and voting procedures. Associations should also ensure the policy also addresses executive session requirements.
- Inspection of Records Policy
The inspection of records policy explains how owners may request to inspect and/or copy association records. The policy identifies what documents are open to inspection by owners and identifies records that may or must remain confidential.
- Covenant and Rule Enforcement Policy
This policy sets forth the process for enforcing covenant and rule violations. Because Colorado law contains some very specific requirements with respect to content and timing of notices, associations should ensure their enforcement policies are drafted and reviewed by their legal counsel. If you have not made any revisions to your enforcement policy in the last four years, it should be reviewed by the association’s attorney.
- Conflict of Interest Policy
The conflict-of-interest policy establishes procedures for associations entering into transactions where a director has a conflict of interest. The policy generally defines what constitutes a conflict of interest, how disclosures should be made, and how the board evaluates and addresses conflicts when they arise. This policy helps promote transparency and protect the integrity of board decision-making.
- Investment of Reserve Funds Policy
This policy addresses how reserve funds will be managed and invested on behalf of the association. Typically, the policy outlines the board’s investment standards, financial objectives, and risk considerations when investing monies held in reserve accounts. Proper reserve management is an important part of maintaining the association’s long-term financial stability.
- Alternative Dispute Resolution Policy
The alternative dispute resolution policy establishes procedures for attempting to resolve certain types disputes without having to resolve to litigation. The policy typically addresses mediation and allocation of costs. These procedures can often help parties resolve disputes more efficiently and cost-effectively.
- Reserve Study Policy
This policy identifies whether the association has conducted a reserve study and whether the association maintains a funding plan for future repair and replacement obligations. The policy generally addresses reserve planning, projected capital expenses, and funding considerations for major common element repairs and replacements. Regular reserve planning helps associations prepare for long-term maintenance obligations and avoid unexpected financial burdens.
If your community does not currently have all nine of the above-described policies, you will need to consult with the Association’s legal counsel as soon as possible.
For more information, or if you have any questions, concerning the required policies, please contact one of our attorneys at 303.432.9999 or [email protected].