One instance in which Colorado law favors transparency in homeowner associations is in the form of open Board meetings. Specifically, Section 308 of the Colorado Common Interest Ownership Act (“CCIOA”) provides that meetings of an association’s Board of Directors are generally open to attendance by all homeowners. The spirit of the law is to allow these meetings to serve as a forum for interested homeowners to provide comment and feedback to the Board and to provide an opportunity for homeowners to stay informed of the operational issues facing the community.
However, there are certain limited instances when it is proper and advisable for the Board to restrict attendance and to exclude homeowners from being present at a portion of the Board meeting. This limited circumstance is known as a closed-door session or an “executive session.” During an executive session the Board may restrict attendance to the members of the Board of Directors and other such individuals as requested by the Board.
Historical Use of Executive Session
Until recently, the use of executive session at a Board meeting was limited only to discussion of the following matters listed in CCIOA at C.R.S. §38-33.3-308(4):
(a) Matters pertaining to employees of the association or the managing agent’s contract, or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association;
(b) Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client;
(c) Investigative proceedings concerning possible or actual criminal misconduct;
(d) Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure;
(e) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; and
(f) Review of or discussion relating to any written or oral communication from legal counsel.
These were the only reasons why a Board could exclude homeowners from a portion of a Board meeting and all other matters were to be discussed and decided in an open meeting. Prior to going into executive session, the chair is required to announce the reason for the executive session and the general matter of discussion in relation to the authority in paragraphs (a)-(f) above.
House Bill 22-1137
Legislation known as House Bill 22-1137 went into effect on August 9, 2022. This law significantly revised the process and requirements as they relate to covenant/rule enforcement and debt collection for community associations. However, several of these changes are also relevant to executive sessions.
First, pursuant to House Bill 22-1137, a homeowner’s delinquent account may only be referred to a collection agency or attorney for collection if a majority of the Board of Directors vote to refer the matter to collections in a recorded vote at a meeting conducted pursuant to C.R.S. 38-33.3-308(4)(e). This contemplates that referrals of homeowner accounts to an attorney for collection qualify as an unwarranted invasion of individual privacy and are now to be considered and voted upon in executive session.
Next, the list of permissible reasons for executive session was revised in C.R.S. 38-33.3-308(4)(e) to accommodate the requirement of Board consideration and vote in executive session for collection matters. Specifically, HB22-1137 revised the language in C.R.S. §38-33.3-308(4)(e) by adding the underlined language below.
(e) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy, including a disciplinary hearing regarding a unit owner and any referral of
delinquency; except that a unit owner who is the subject of a disciplinary hearing or a referral of delinquency may request and receive the results of any vote taken at the relevant meeting.
You will note from the underlined language above that the newly added language not only speaks to the referral of delinquencies as a reason for executive session, but also for disciplinary hearings concerning a homeowner. The language suggests that matters such as hearings requested by a homeowner in connection with allegations of covenant and rule violations may be considered an unwarranted invasion of individual privacy and therefore such hearings may be conducted in executive session.
In light of the changes in law, it would be prudent for the members of the Board or Directors to familiarize themselves with HB22-1137 as well as the association’s Bylaws and policies in terms of meeting requirements, procedures, and the proper use of executive session. In addition, the association’s Collection Policy, Covenant/Rule Enforcement Policy, and Conduct of Meetings Policy should be updated to comply with the new requirements of HB22-1137 including those pertaining to executive session.
If you have questions or would like to discuss meeting requirements, your community policies, and/or services offered by Altitude Community law, contact an Altitude attorney at 303.432.9999 or at [email protected].