Required And Recommended Policies: Do You Have All Of Them?

What are policies and why do they exist?  The purpose of policies is to set forth a process to be followed with respect to various issues.  A policy, in most cases, is a safety net for associations to ensure everyone is being treated the same and the same processes are followed every time.

Nine “good governance” policies have been mandated by the Colorado Common Interest Ownership Act (“CCIOA”) and must be adopted by associations in Colorado. Failure to adopt any one of these policies means an association is in violation of Colorado law and faces liability exposure.  The nine required policies are: 

1. Adoption and Amendment of Policies, Procedures, and Rules: Discusses procedures boards use to review, adopt, repeal and amend policies, procedures, and rules.

2. Collections: Process used in collecting delinquent assessments, including time frames of notices, late fees and interest, indicate when an account gets turned over to legal counsel, and how payments are applied, etc. 

3. Conduct of Meetings: Acceptable means of communication and behavior during both homeowner meetings and board meetings.

4. Inspection of Records: Sets forth what records of the association are open to inspection and which records are not.  Discusses process for requesting records and associated fees.

5. Covenant Enforcement: Includes fine schedule, notice and hearing procedures, process for complaint submissions and investigation.

6. Conflicts of Interest: Process for directors to disclose conflicts and the criteria to be used by the board in determining if a conflict exists, defining conflicts, procedures used when a conflict exists, and requiring periodic review.

7. Investment of Reserve Account Funds: Discusses methodology and standards to be used when deciding if/how to invest and manage association reserve funds.

8. Alternative Dispute Resolution: Procedures to be followed involving certain owner/association disputes.

9. Reserve Study: Identifies whether the association has prepared a reserve study for those portions of the community it has responsibility to maintain, repair, replace or improve, and discusses how often the study will be updated.

In addition to the nine required policies, there are a number of other policies that, although not required by law, are essential to associations.  Below are a few policies, and their descriptions, that are essential to the well-being of associations:

• Insurance Claims Submissions Policy: This policy addresses the process of submitting homeowner claims to associations’ insurance carriers.  Because CCIOA treats owners as additional insureds under an association’s policy, this policy can help associations manage owners who continuously demand claims be submitted on their behalf.

• Insurance Deductible Policy: Even when an association submits a claim, the question typically exists of who pays the deductible.  This policy addresses the process for determining who is responsible for the deductible amount and protects associations from owners’ individual carriers trying to recoup their payments from associations.  This policy may be combined with the Claims Submissions Policy.

• Retention and Destruction of Records: This policy sets forth timelines for how long various association records are retained and when they will be destroyed.  This policy helps associations defend claims alleging they purposely destroyed records or “evidence”.

• Virtual Meetings: In this day and age, virtual meetings have become the norm, but nobody is sure on how they should work.  This policy is intended to supplement the conduct of meetings policy and set forth the process for calling and conducting virtual board and membership meetings.

• PII Policy: This policy addresses how personal identifying information of owners in possession of associations, will be protected.

• Sign/Flag Policy: Because associations are no longer allowed to regulate signs or flags based on content, any regulations adopted by associations must be content neutral and regulate size, number, and other non-content-based items.  Without such policy, owners can arguably put up as many signs and flags as they want and associations will not have a basis for regulating them.

• Reasonable Accommodation/Modification Policy: Associations are oftentimes accused of discrimination based on disability when an owner does not get a parking space closer to his/her unit or is not allowed to bring his/her emotional assistance turkey into the community.  This policy sets forth a process for requesting reasonable accommodations and modifications by residents, the process for reviewing the requests, and making decisions on same.

• Towing Policy: Due to recent changes in the law when it comes to towing from private property, any association that tows vehicles should have a towing policy in place to ensure the association complies with all the new requirements and regulations.

The above list is not exhaustive, and there are many more policies that are recommended and could benefit your particular community.  If you are not sure what types of policies can benefit your community, discuss your options with the association’s legal counsel.

Please do not hesitate to contact an Altitude attorney at 303.432.9999 or at [email protected] if you have any additional questions about required and/or recommended policies.