While HOAs have been around since the 1960s, they’ve experienced a variety of changes over time due to changes in the law, culture, and preferences of homeowners. While restrictive covenants were once used as a tool of discrimination, CAI has recognized in a new paper written in January of 2021 that Attorneys, Community Area Managers (CAMs), and Board Members must become educated about the new environment that requires HOAs to respect the civil rights of homeowners and tenants vs. a system whereby property rights trump all other rights.
While the Community Association Institute (CAI) is fond of citing its private polling of HOAs in 2018 to promote the idea that everyone loves their HOA, even their own survey revealed that a significant percentage of homeowners are dissatisfied with several aspects. Even if, per CAI’s own measure, it is only 10-25%, that is still a large number of people, even in a small state like Colorado – hundreds of thousands of people.
While DORA (The Department of Regulatory Agencies, State of Colorado) has an Information Officer that tabulates about 1500 formal complaints annually, it was denied the opportunity in 2011 to have an Ombudsman program similar to what exists in Nevada, and several other states. The office is not allowed to mediate disputes, nor is it allowed to enforce any of the statutes that affect HOAs with administrative action. It can merely take a complaint and then send the list to the legislature to tell them how many people have grievances.
While there is a wide variety, many of them fall into three buckets: Transparency, Education, and Justice.
We see HOA Boards all over Colorado that to some degree fail to perform openly, including those that operate with only the barest minimum compliance for open meetings, participation, and access to documents. Even in the ones that think they are operating transparently, they erect barriers such as high fees for copies of documents to deter transparency.
At POHOA, Board Meetings were not opened to homeowners with a good system of giving notice from its inception through the 2018 calendar year. It was only at the end of that year that some Board members were even aware of CCIOA (the section of Colorado’s Revised Statutes) existed, let alone their obligations to have open and announced meetings that required the Board to allow homeowners to participate prior to every vote.
Even though CCIOA requires that the Association have some type of education for Board members and homeowners as it relates to knowing the law, duties, and responsibilities, nothing had ever been done in more than a decade. It was a legitimate surprise to everyone, including myself. I had joined the board with the understanding that those claiming to have years of experience were therefore knowledgable. It was a bad assumption.
Within 2 weeks of this revelation, 3 of the 9 Board members, including myself, took a free class that was offered by an attorney from Altitude Law, paid for by the City of Fort Collins. It was very informative. Yet, other than a sign-up sheet, there was nothing received to demonstrate we had actually accomplished anything other than attend it. No tests, credentials, or any other formality. We each received a Q&A deck of cards, which was a good flash-card way to learn the basics.
However, concurrent with this revelation, POHOA was going through a contentious matter related to enforcement of rules. In hindsight, major errors were made throughout the ad hoc process – a process that ignored several duties invoked by our governing documents and state statute. And, even months later, many of those involved still didn’t seem to have learned lessons, and actually contested the ultimate decision.
One of the most disturbing aspects for me was listening to Board members rationalize thousands of dollars of fines against homeowners who, in the opinion that won the day, were actually following the written rules – rules so vague, they could not be enforced upon them. But, some of the Board members started talking about punishment – and that they knew the motives and intentions of the homeowners, without ever granting them a hearing to speak for themselves. In fact, some intimated that because they hired an attorney, that alone was reason to abandon duties and processes, and to, once again, punish them for “lawyering up”.
Why did this bother me? Because I had been educated by attorneys who made clear that under no circumstances were fines to ever be used to punish. Their purpose must only be to motivate compliance. And, they must be reasonable and proportional to the infraction.
When I tried to reason with my fellow Board members and offered a compromise, one of them told me that I “didn’t have the stomach to enforce rules . . . or be on the board.” That stuck with me. Enforcement of rules shouldn’t be a stomach-churning affair, limited only to those who have a thirst for punishment. Something was very very wrong here – yet, it was impossible to raise the issue as part of the agenda. Or get a vote on anything related.
That leads to the near ubiquitous calls across the USA for HOAs to take a different path in finding justice when there are disputes. At this time, most HOA statutes are written, often with the urging or ghost authoring of CAI, to have only one means of definitively resolving disputes – litigation. It’s no irony that CAI, an institution created by attorneys that has purpose in protecting the profits of member attorneys, wants all disputes to require their services – a clear profit motive.
The problem, however, is deeper. While many HOAs, including POHOA have written policies that allude to Alternative Dispute Resolution processes such as Mediation or Arbitration, the simple fact of the matter is that any HOA Board can simply decline to participate with absolutely zero consequences.
And, this is where it gets interesting: CCIOA and many other sets of state laws governing HOAs are written so that the only party that can enforce them are homeowners, and the only venue for which they can seek enforcement is through a state or district court – a very expensive proposition, with minimum costs of $20-30k IF the issue is settled prior to trial. Contested issues regularly exceed $100k.
But the dirty little secret is that all CAI educated attorneys know that the first thing to do is try to defeat a homeowner claim with a Motion to Dismiss. And, the first thing the judge will do is ask the Plaintiff if they went through mediation. When the homeowner has to admit that they have not, it does not matter that the HOA is the party that refused to participate. No mediation, no litigation. Case dismissed – without the merits ever being considered – and often with the HOA looking to collect fees to scare the bejeezus out of the other homeowners who might contemplate enforcement of rules against that HOA ever again.
Once an HOA Board realizes that CCIOA, for most intents and purposes, is not enforceable, it is not a far leap for some to then pivot to intentional abuses of power. And, any review of the complaints at DORA (they are a matter of public record) demonstrates widespread problems that involve not just HOA Boards, but also CAMs (Community Area Managers) which are no longer licensed since 2019.
Colorado is once again poised to make changes to CCIOA in 2022. Several bills have been drafted, and some will soon be sponsored. Included in these legislative agendas are efforts to follow trends in other states like Nevada and Washington, as well as to pick up on issues that did not make the cut in 2021 with HB-1229 and HB-1310.
While I’ve been working with activists and legislators for nearly 3 years on these issues, I keep finding that there’s a pattern that can no longer be ignored – CAI, the organization that promotes itself as the center of all knowledge on HOA management and law, as well as the only organization that hands out credentials, appears to be arguing to legislators that the state laws NEED to be vague so that HOAs can customize their documents to fit their needs.
However, when CAI-member attorneys give HOAs direct advice, they argue that an HOA should seek minimum compliance with the law, and rarely advocates that the documents should be customized in the manner that they argue with legislators. In fact, prior to July of 2021, that is exactly the type of legal advise POHOA has been receiving.
The good news is that since VF Law has been hired we now have a document review that appears to recognize that the lack of specificity is what gives rise to disputes in interpretation of the governing documents or state law, and that the solution is to have community-driven changes to actually customize our documents.
And, as someone who has studied the materials offered by CAI on a wide variety of topics, I find over and over that good advice is given in both free and paid materials. Not to mention the fact that CAI now offers credentials for Board Members that costs just $99, and takes just 5 hours to complete.
It is therefore puzzling to still hear at recent meetings Board members who continue to say that they neither have the time nor interest to know or understand their duties under the law, or the law itself. This doesn’t fit with CAI’s own advice on the matter.
If we wish to build a better HOA, it is therefore necessary for the Board to have at least one member who knows and understands the foundation necessary – Full transparency, not only at meetings, but also in documentation; A formal education program for Board members, Committee Members, and homeowners themselves; and some system and process in place that ensures that disputes are handled in a reliable and consistent manner that seeks dispute resolution and justice, and avoids the concepts of punishment.
I will continue to advocate this agenda both within POHOA and with legislators. If POHOA cannot see the trends that are moving in the opposite direction, it will, like the recent changes to sign policy, find itself reversing decisions made just 1-2 years prior. We should not be seeking additional powers and authorities leading to foreclosure of homes, when other states are seeking to limit fines to make them proportional to infractions, decouple them from the foreclosure process, and to offer a means of homeowners to enforce rules upon the board without retaliations such as labeling them harassment and imposing fines – when they are merely performing a duty that no other parties can perform if CCIOA is actually enforceable.
It’s time for an open discussion the many details related to these core issues, and I will be publishing additional articles that delve into each both before the upcoming election, and as long as it takes to get them into our POHOA agenda for investigation, consideration, and a vote.