The Poudre Overlook HOA Board has proposed a Home Occupancy Policy out of thin air on the heels of a Pandemic that put nearly everyone in their homes for work. According to the Small Business Administration, about 40% of Small Businesses are home-based, doubling since the Pandemic. Small Business accounts for 62% of new job creation since 1995.
So, why does the POHOA Board wish to suddenly change the rules regarding Small Businesses within our community?
More importantly, does this new policy have the detrimental effect of increasing the likelihood of increased legal fees and assessments to cover them, trample actual homeowner rights stated in LarimerCounty Land Use Code, and also reduce the market of home buyers by creating a policy that deters business owners from purchasing in this neighborhood? Are we aiming to be a retirement community where no one works from home?
Prior to this policy, the primary rule was that any home occupation simply not create unreasonable traffic or parking. That’s it. In spite of this, the builder of this subdivision actually physically built into one home a hair studio that operated for 13 or more years with zero enforcement. Now that HB22-1139 passed barring an HOA from regulating the streets at all, the enforceability of any such business regulation was put into question since there has never been any specific type of businesses or business activities banned within the subdivision.
Then Directors Ballweber, Jones, and Flanary decided to attempt to use the CCRs to issue a violation over a Plant Sale by “deeming” the sale a “business” without any actual facts or evidence. When we contested the enforcement and demanded a hearing, they revealed they had not performed any impartial fact-finding, but had merely waved their magic wand and used “discretion” to use this brand-new HOA power of “deeming” something a business – even if it actually was not.
Imagine going into a court to enforce this and saying: “Well, yes, Your Honor, we don’t have any actual facts, but we believe this so much cause someone told us, we “deemed” it to be true.”
The result of this pretzel logic and attempt to reverse-justify their past actions is a convoluted approach to usurping the powers of Larimer County Land Use Code by creating a policy that puts enforcement of such code in their hands. And, not just enforcement of their code, but made-up elements that kinda sorta look like State Law or County Rules – for what ultimate purpose that benefits the community?
The policy was not mailed with the notice on November 3, 2023 (departing from the consistent practices of the HOA), and was only referred to within the notice as being available on the HOA website. Several homeowners reported no access to the website:
Without proper notice, any policy enacted could face legal challenges to enforcement, which can be extremely expensive – with the expenses passed on to all homeowners through assessments. The POHOA Board has ignored its budget in the past, and spent many times its legal budget pursuing projects that returned no value to homeowners. Without such checks and balances, putting in place a policy that has questionable motives combined with elements that may not only be unenforceable, but may contradict state law or county code, may lead to legal liabilities as well.
For this and other reasons, I recommend that this policy be tabled for further review at the Annual Homeowners Meeting to consider amending, if such a policy is necessary at all.
Problems with this policy include:
- Confusing elements requiring interpretation leading to disputes
- Attempting to Regulate Businesses without training or certification
- Conflicting elements with Larimer County Code (not just more restrictive, but creating county violations if followed)
- Attempts to regulate the streets violating the ban in HB22-1139
- Larimer County has enforcement powers that are transparent & accountable
- Private enforcement of Larimer County Code creates private litigation expense and liability
CONFUSING ELEMENTS REQUIRING INTERPRETATION
One thing lawyers love is ambiguity. They make their living over disputing the interpretation of words, and there’s no shortage of attorneys who can find the opposite interpretation of another attorney to rack up tens of thousands in legal fees – often without ever really determining what is or is not the correct interpretation. Policies that are vague, complex, or confusing (as a result) are then fodder for disputes that then create legal expenses.
This is why Larimer County has training for officials assigned to enforce its code, and attorneys we all pay for with our tax dollars to not only serve as a check and balance on usage of the powers of enforcement that would create legal liability, but also recommend terminating such persons who do so. Putting this power in the hands of untrained volunteers who can fire their own attorney (who tell them they are risking unnecessary legal expense or legal liability, and terminate the relationship when they don’t listen) then leaves the rest of homeowners only with the power to remove such Directors with a super-majority vote (67%) which is distorted by proxy votes by members who never attend the meetings or know the issues.
The policy includes a long list of elements that fit this description. But, the very first definition in Article I literally gives us the best example by saying “Advertise shall mean a notice . . . in any medium or form which promotes . . . any . . . thing.” ANYTHING. If you are on social media, and you “like” or comment or post “any thing” about product or service, the HOA has the right to “deem” you are engaged in a “business” that is then a “home occupation” and proceed with grinding you through a violation enforcement process – without any consequence if the action is unwarranted or unnecessary.
I don’t think are senior citizen Board knows or understands the digital economy, or the difference between individual vs. actual registered business income.
For example, one of the prohibited home occupations is “adult uses”. Literally, what in the world is that? Anything that an adult does? What about someone with an Tik Tok or Only Fans account? Are we saying homeowners can’t make videos of themselves in their home if it somehow does “anything” to “relate” to some product or service? Why is this even something the HOA wishes to regulate?
But, there’s even more obvious problems such as the requirement that homeowners limit their homes to 25% of the combined square footage of the interior, including the garage and any sheds or outbuildings. The fact that Larimer County allows 50% isn’t the issue (an HOA can be more restrictive). The problem is the math: Many POHOA homes exceed 4000 square feet in this calculation, which would make 25% exceed 800 square feet, which is the actual limit with the County. The policy misleads homeowners into believing compliance with POHOA is automatically compliance with Larimer County.
And amendment would be necessary to rectify this and other elements. Yet, it’s so far-reaching, vague, ambiguous, and complex as to consider not being done at all.
LEGAL LIABILITY REGULATING HOME OCCUPATIONS
After speaking with the Larimer County official who regulates Home Occupancy code, I was informed that both individuals and an HOA have the right to pursue enforcement through private litigation, if they choose to. Nothing stops them from doing so, and no policy is necessary for doing so. It is therefore curious that the POHOA Board suddenly wishes to put into place a policy which they obviously intend to enforce including the use of litigation, if necessary.
This official walked me through his process of analysis prior to enforcement. First, he looks up the address to see what businesses are registered there with the Secretary of State. These are open public records, which is an inherent requirement of the process that includes enforcement. Transparency is an absolute requirement, and attempting to hide information would result in termination.
Poudre Overlook has a number of businesses registered in homes. The registration with the Secretary of State has both the mailing address and “principal” address, which indicates whether the business-owner actually operates from a different location and wishes to have business mail delivered to their home for convenience.
This list excludes a significant number of businesses registered since POHOA’s inception that are now dissolved.
Larimer County does not require registration. It is voluntary. And, according to Larimer County Land Use Code Section 4.3.10 Article B. Home occupation Section 2: “A home occupation meeting the criteria in sub-section 1 and following the additional criteria are allowed by right” (emphasis is original)
If the County has a voluntary program for registration of home occupation businesses, and explicitly says that if you follow their rules you have an actual RIGHT to such a business, why does an HOA feel it necessary to suddenly, 20 years after the HOA was built, impose a restriction on literal homeowner rights?
Furthermore, the policy attempts to impose a requirement that PRIOR TO OPERATION the home occupancy must seek permission from the county (the county merely registers, doesn’t give permission), and then that permission slip must be submitted to the HOA Board for their permission. What about the 20+ businesses that are already operating here? How does that “prior” function work?
We hear many homeowners say “when I bought my home I . . . “, and we seem to have lost track of the fact that many homeowners intended, when they bought their homes, to operate a home office, or perhaps even “make” things (which the Board wishes to apply the term “manufacturing”) from their home or garage. Many small businesses begin at home, in a garage. Suddenly, anyone who has purchased here has no such right to begin and grow their business in their garage if they aren’t lawyers, consultants, or some other service-industry?
Again, how does this make our homes more widely desirable for potential buyers if we have such limits in place? Doesn’t this limit the market, and therefore harm our home values?
TRANSPARENCY AND ACCOUNTABILITY
One key aspect of the Larimer County official’s job is to assess whether or not there is a cost-benefit to enforcement. They have limited personnel and financial resources, and while some individuals or even HOAs file complaints via the Larimer County website, they may choose to merely contact the homeowner and let them know they need to take action in order to get compliance. If the owner contests the enforcement, the county may choose not to pursue litigation as the benefit is not justified by the expense (time or labor).
This, in turn, motivates some HOAs to take on enforcement themselves. The problem, as the official noted, is that an HOA is not fully equipped to deal with the process in the same way as the county. As mentioned, a Director is not trained nor do they have experience in municipal code enforcement – and there are legal pitfalls that can lead to countersuits or other liability. Selective enforcement is absolutely an issue that they worry about.
The problem then becomes the cost-benefit analysis by the HOA Board. If the Board pursues enforcement without facts (based upon hearsay, assumption, or “deeming”), the resulting dispute and litigation could well exceed an HOA budget. Since there is no accountability for a Director or Board that exceeds its budget, they are technically free to spend everyone else’s money chasing an alleged violation, and it doesn’t matter if they fail. They always have the Business Judgement Rules to protect them from having the costs of their actions assigned to them.
THE SOLUTION
In order to avoid this, the POHOA Board, if they are to pursue any type of policy like this at all, should first require, as a matter of policy, that the County process is done as a predicate to any HOA enforcement. By allowing the County to evaluate and attempt enforcement, the HOA benefits from fact-finding performed by the County, which is then a matter of public record.
If the County chooses not to pursue action, the HOA can then learn the reasons based upon facts, and use that information to avoid unnecessary and unsuccessful legal expenses and liability.
It would appear that an attempt to bypass the Larimer County process is partially an attempt to prevent transparency. The Larimer County website records the information of the party complaining, which is then an open record available to the public. There’s no right to privacy for the complainant – which Larimer County advises is a deterrent from using the process as a weapon against other homeowners.
POHOA, however, has a pattern of failing to adhere to the Open Records Act (a state law that HOAs are required to comply with), and absolute abhors “document requests” – including creating outrageous fees and costs to prevent other homeowners from accessing documents. Furthermore, now that the old email address was abandoned (and distributed to many homeowners), we can see that the “silent people” are those who wish to snitch on their neighbors without them knowing who did the snitching.
It therefore computes that this policy is to help homeowners bypass the protections of the Open Records Act and Larimer County Code and Policy that makes the complaining process an open record. It seeks to make anonymous complaints based upon hearsay the basis for enforcement, which literally opens the door to legal liability in contested actions.
The solution is to table the matter until there is more community input, perhaps by creating a committee that looks into these issues and makes recommendations.
A copy of the proposed policy is below:
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