Winter is a great time to review your association’s governing documents including your declaration and rules and regulations to ensure your association is moving forward in a positive direction. Specifically, you want to make sure that your governing documents match up to how the Board and the community see the Association moving into the future. Does the Association want to continue to prohibit sheds, is there a new color pallet that the Association would like to adopt? This winter is the perfect time to review your governing documents for covenant and rule concerns as the legislature has made some key changes to covenant enforcement with the passage of HB-1137.

HB-1137 amended the Colorado Common Interest Ownership Act (“CCIOA”) and is probably the biggest shift in covenant enforcement that has occurred in the last 10 years. While many can argue about the merit and/or need for those changes, the fact is the law has changed and associations need to comply with the new law.

Some things have remained the same. First, all associations still need to have a covenant enforcement policy. The association’s policy will have to comply with the provisions of HB-1137, so if your association has not adopted an updated enforcement policy, it needs to adopt one in addition to a new collection policy and conduct of meetings policy as soon as possible. Additionally, just like in years past, before a fine can be issued an owner must be provided notice and opportunity for a hearing in front of an impartial decision maker as defined in CCIOA at C.R.S. 38-33.3-209.5.

Since we have covered the old, it is now time for the new. HB-1137 has created two different classes of violations, as well as different rules and standards for those classes. The first class of covenant violations are those violations which the Association reasonably determines threaten public safety or health. Unfortunately, the legislature did not provide us with any examples of violations that might threaten public safety or health. However, it is our belief that these violations would include: a dog that bites another dog or person, but not a dog that growls or merely acts in an aggressive manner; or it might include failure of an owner to allow access to their unit for maintenance of an association fire suppression system, but not to an owner who installs hardwood floors without approval.

Once the association has determined that a health and safety violation exists, the association must provide written notice which complies with HB-1137 to the owner informing the owner of the violation and providing 72 hours for the owner to cure the violation. We would recommend such notice be mailed and posted (with a time stamped picture of the posting) on the unit. If the owner fails to cure the violation, the association may levy fines on the owner in addition to taking legal action regarding the violation. There is no limit on the amount of fines which can be levied for a health and safety violation, however fines may only accrue every other day. Additionally, since the violation involves health and safety, the Association should refer this issue to the attorney as soon as possible for legal recourse.

If the violation is not a health and safety violation, but rather a regular covenant violation, these violations are treated in a different manner. First, when an association determines that a violation has taken place the association will send a violation letter via certified mail in a form compliant with HB-1137 providing the unit owner 30 days to cure the violation and informing the owner they may be fined if they do not cure the violation within the 30 days as well as offering notice and opportunity for a hearing regarding the violation. (Some associations are providing a 10 or 15 day courtesy letter prior to the first 30 day letter in an attempt to gain compliance prior to the threat of fine. This courtesy letter need not be sent by certified mail).

If an owner fails to cure the violation within 30 days, the association after inspection can levy the first fine. The Association would then send a second 30-day violation letter out to the owner again informing the owner they have 30 days to cure the violation and informing the owner they may be fined if they do not cure the violation within the given 30 days as well as again offering notice and opportunity for a hearing regarding the violation. If the owner again fails to cure the violation the association can issue a second fine, and at this point may turn the file over to the association’s legal counsel for legal action. It is important to note that an association’s may only issues fines totaling $500.00 for any specific violation. If there are multiple violations of different covenants or rules, the association can fine up to a total of $500.00 for each violation. For example, if an owner painted their house the wrong color without approval, installed an unapproved roof and widened their driveway without approval, the association could fine the owner after following the covenant enforcement policy a total of $500.00 for the paint violation, $500.00 for the roof violation, and $500.00 for the driveway violation. In this example a total of $1,500.00 of fines could be levied for the three separate violations.

If it is determined that after a 30-day letter has been issued an owner has cured the violation either upon inspection by the association, or if the owner informs the association the violation has been cured and the association confirms this fact, the association must send an HB-1137 compliant letter to the owner stating that the unit owner will not be further fined with regard to this violation and notify the owner of any outstanding fine balance that the unit owner still owes the association.

As you can see from above, the covenant enforcement landscape has changed in the last few months, and while it is important to understand that associations still have the ability to enforce their governing documents there are specific procedures that must be followed. Please contact your management company or your attorney to ensure that your association has all the current policies required to enforce its governing documents, and make sure your association’s governing documents are set up to enforce the covenants and rules most important to your community.

For more information concerning covenant enforcement or if you have specific questions regarding this article, please contact an Altitude attorney at 303.432.9999 or [email protected].

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