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Subject: Enforcement of SB 05-100 in Colorado
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CharlesW
(Colorado)

Posts:3


01/31/2006 2:10 PM  
First time to this forum, I have a question concerning Amened CRS section 38-33.3-303 for SB 05-100 Our Board of Directors recently sent out a copy of the 2006 Budget with the January newsletter. They have no plans to hold a meeting of the homeowners to review the budget or allow for a budget veto. Is this not a violation of SB 05-100? and what type of penalty would the Board face by not following this part of SB 05-100.

Thanks
RogerB
(Colorado)

Posts:5067


01/31/2006 4:29 PM  
CharlesW, your are correct. This is a violation of CRS 38-33.3-303. The penalty depends on whether anyone chose to enforce and in what manner. The Board members can be advised in writting of this rule. They can be individually held responsible. Their actions can warrant removal from the Board. And if anyone persues legal action each board member will probably have to pay all legal costs for both parties out of their individual pockets. Insurance would not cover acts not done "in good faith".
CharlesW
(Colorado)

Posts:3


02/01/2006 12:31 PM  
Thanks Roger for replying. Per my question regarding SB 05-100 yesterday, are you saying that if I advise the Board members of CRS 333-33.3-303 and they choose to ignore it that I would have to take the Board to court in order to make them go by the rules? Is there not a statewide phone number that one can call to report an infraction to the law. Did the Senate pass a document that they have no enforcement or penalties that can be put in place?

CharlesW
RogerB
(Colorado)

Posts:5067


02/01/2006 1:44 PM  
That's correct CharlesW. It is up to the members of the association. There is not a phone number, they rely on compliance. They did not set up a mechanism, as far as I know, to enforce.

RogerB
EdR
(Texas)

Posts:170


02/02/2006 10:56 AM  
RogerB:
Do you know if we have such a bill in Texas or can anyone tell me?; this same thing happened in our HOA--there was no newsletter with the budget, and no notice of the a meeting to discuss the budget (with the membership).
EdR
JimR
(Colorado)

Posts:21


02/04/2006 12:14 PM  
I just attended a Town Hall meeting with a CO State Representative this AM, and I asked him that very question. Answer is as RogerB stated, No way to enforce at this time. Your Board is the enforcemnt entity. A new Bill is on the table and it is to help clear up some of the SB100 problems that they created. I also informed him that in my opinion that the SB100 should have gone further and included the voluntary catagories that should be adopted, such as ethics and etc. in with the required catagories.

He stated, "that this started out as a very clean straight forward bill, but there were over a 100 ammendments to it". It probably is the States first attempt at putting some rules on the HOA's as far as governing everyday activitites going for the protection of the members from dictorial Boards, but they did help the Boards in areas of collection and other rule enforcemnt policies.

I feel that this was long over due, and I hope that bad board members get a rude awakening in the near future. One of the things that HOA's members and their Boards can not get through their heads is that a Board is the same entity as your local City government. They have the power to write, make and enforce rules and assessments, according to their legal documents and procedures. A lot of power sits on that Board, and you should not put anyone there that you do not know their ethics level, knowledge, and honesty.
LuciusD


Posts:0


02/05/2006 4:22 PM  
Charles & Jim -- You both might be interested in visiting the following --> http://www.hoalegislate.com/
There is a wealth of SB-100 and SB-06-89 information there.
And then you might feel like emailing some legislators to try to get some enforcement legislation.
Right now the thinking seems to be in the direction pulling some of the teeth of SB-100 because it's really too tough on the honest and trustworthy HOA boards who don't need to be regulated.
LuciusD


Posts:0


02/05/2006 4:53 PM  
Question for CharlesW
When does your normal annual meeting happen?
If it is within 90 days of the adoption of the budget, perhaps there is no reason to have a special meeting just for the budget. But thanks for spotlighting that. We (my HOA) might have missed it in the hassle of trying to comply with other provisions.
And BTW, have you looked at the changes SB 06-089 will probably make in SB-100?
CharlesW
(Colorado)

Posts:3


02/05/2006 8:19 PM  
Jim & Lucius thanks for the information

On the matter of the annual meeting ours was in November 2005.The Board did not adopt a budget until mid January 2006 and that was a concern for a few of the members
RogerB
(Colorado)

Posts:5067


02/06/2006 6:44 AM  
We recommend using the following procedures for approval of budgets:

1. Our Agreements state we will provide a draft of the annual budgets to the Board at least 60 days prior to the annual meeting.
2. The Board reviews, changes as desired, and approves the annual operating and reserve budgets.
3. The Board approved budgets are sent to the owners with the notice, agenda, and proxy for the annual meeting.
4. The annual meeting is usually scheduled in January (after January 2, when year end financials are available).
5. The owners vote to ratify the budgets during the annual meeting. If the budgets are not ratified then the previous year's budgets remain in effect until such time as the Board approves and presents a budget which is ratified by the owners.

RogerB
THindman
(Colorado)

Posts:5


02/21/2006 1:49 PM  
This is in response to RogerB's posting on January 31, 2006 regarding whether a Board is in violation of SB100 if it does not hold a budget ratification meeting. Technically, it would be a violation of the Colorado Common Interest Ownership Act ("CCIOA"), and not a violation of SB100. SB100, in large part, amended CCIOA, but did not amend the provision of CCIOA that requires a budget ratification meeting. Also, RogerB states that if an owner pursues legal action against the association for the failure of the Board to hold a budget ratification meeting, each Board member will probably have to pay all legal costs for both parties out of their individual pockets. This is not necessarily true. The association may have D&O insurance or indemnification provisions in its governing documents that would protect the Board members against individual liability.

Thomas J. Hindman, Esq.
Official HOATalk.com Sponsor
HindmanSanchez
Attorney Licensed in the State of Colorado
www.hindmansanchez.com
* See "HindmanSanchez Legal Notice" below, at bottom of page or go to www.hoatalk.com/legal
RogerB
(Colorado)

Posts:5067


02/21/2006 8:15 PM  
Tom, from your experience what are the chances that D&O insurance or indemnification would cover Board members when they act in bad faith by knowingly disobeying the law and ignoring a direct request of homeowners and probably their bylaws?

Thanks for your input,

RogerB
EdR
(Texas)

Posts:170


02/22/2006 6:31 AM  
Ditto. I would like to know how they can get by without a ratification, especially after it has always been protocol to have that meeting in Nov. before election is in Feb. and it was not done at all. The board approved the budget without notice to the members of a meeting (they decided outside of a meeting on the budget) and also never informed of expenditures or budget in any sort of newsletter. There is more going on in our assn. than meets the eye--the takeover was for social special interest groups to have control of the finances. When they finish completely renovating the clubhouse, tennis courts and pool (for their selective swim team members) for a portion of the members and all outsiders they wish to invite as their guests for free, and have total control of the facilities and monies, they'll resign from the board. We'll be a poor association with great facilities.
EdR
EdR
(Texas)

Posts:170


02/22/2006 7:13 AM  
One other question: Don't corporate rules apply at some point if there is not a rule otherwise?
EdR
YvonneL


Posts:0


02/23/2006 4:37 PM  
Is there a website for South Carolina?
hoatalk
(California)

Posts:574


02/23/2006 5:06 PM  
Posted By YvonneL on 02/23/2006 4:37 PM
Is there a website for South Carolina?
This web site covers all states.  If you mean for statues, have a look here.  Once you click the link, then search for Horizontal Property Act.


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THindman
(Colorado)

Posts:5


02/24/2006 9:56 AM  
Ed R. raises the question of how a board can get by without a budget ratification meeting. If a Board does not hold a budget ratification meeting (assuming it is required by the association's governing documents or the association is subject to that provision of CCIOA or the applicable statute in your state), the Board would technically be in violation of the governing documents or the statute. As stated earlier, it is up to the owners to police and enforce such issues. At least in Colorado, there is no governmental licensing or similar such body to impose penalties on Boards that do not follow the law. The chances of the Association's D&O's policies covering Board members in a case like this is dependent not only on the specific facts of the case, but also on the specifics of the D&O policy.

As Roger has pointed out, D&O insurance or any indemnification provisions would not apply to board members who willfully and knowingly refuse to comply with the applicable law. If, however, a board does not hold the required budget ratification meeting because they were ignorant of the law or misunderstood its requirements, it is likely that insurance or indemnification would apply.

Thomas J. Hindman, Esq.
Official HOATalk.com Sponsor
HindmanSanchez
Attorney Licensed in the State of Colorado
www.hindmansanchez.com
* See "HindmanSanchez Legal Notice" below, at bottom of page or go to www.hoatalk.com/legal
THindman
(Colorado)

Posts:5


02/24/2006 10:09 AM  
EdR also posted a question about the relationship between corporate statutes and associations in Colorado. If organized as a nonprofit corporation(as most associations are), an association must comply with the applicable provisions within the Colorado Revised Nonprofit Act. However, if a conflict exists between the Nonprofit Act and the Colorado Common Interest Ownership Act (“CCIOA”), CCIOA’s provision will take precedent due to its “supremacy clause.” This clause provides that in the case that any applicable provisions in the Nonprofit Act or any other applicable state law conflict with any provisions in CCIOA, the provisions of CCIOA will control (38-33.3-319).

Thomas J. Hindman, Esq.
Official HOATalk.com Sponsor
HindmanSanchez
Attorney Licensed in the State of Colorado
www.hindmansanchez.com
* See "HindmanSanchez Legal Notice" below, at bottom of page or go to www.hoatalk.com/legal
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Forums > Homeowner Association > HOA Discussions > Enforcement of SB 05-100 in Colorado



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