New Law Creates State Office to Prevent HOA Disputes

Thursday, July 1 2010

NBC Denver News 9
By: Jeffrey Wolf
June 30th, 2010

DENVER - Colorado lawmakers hope a new law will help both homeowners and homeowners associations avoid disputes that could land them in court.

House Bill 1278 will create an office inside the state's Division of Real Estate to provide basic information to both parties about their rights and responsibilities in the process.

"The law is not easy to find your way through and read, so we want a very consumer-friendly, user-friendly tool," Sen. Morgan Carroll (D-Aurora), who was the Senate sponsor of the measure, said. "The goal of that is to actually help prevent problems, acrimony, tension. The best and cheapest way is preventing problems in the first place."

The measure also calls for all of the HOAs in Colorado to register. Advocates for HOAs say they are often asked about their numbers and cannot answer definitively. The current assumption is that there are roughly 12,000 HOAs and 1.5 million Coloradans who live in them, but those are just assumptions. Each HOA will pay $15 to $20 to staff the state office.

"We think the information gathering and the services that will be provided as a result of this bill will have a positive impact on HOAs and the people who live in them in Colorado," said Chris Pacetti with the Rocky Mountain chapter of the Community Associations Institute, an organization that helps HOAs statewide.

Pacetti says he expects the registry and the complaint line will show there are not widespread problems with HOAs in Colorado.

"I think it will help to define the problem," he said. "What is the problem? How much of a problem is there?"

Carroll, who first learned about the issue years ago while knocking on doors asking for people's votes, says it is important Coloradans understand the power of HOAs.

Under Colorado law, they are allowed to place liens on homes and foreclose on properties if dues are not paid, even if homeowners are 100 percent current with their mortgages. Homeowners, meanwhile, are allowed access to an HOA board's financial documents, meeting notes and rules regarding displaying political yard signs during an election season. She is excited to learn the true scope of the issue when the new law goes into effect in January.

"For the first time, we will have rather than anecdotal information and some of the horror stories we've all heard about HOAs, we can get a sense of how common these problems are," she said. "While we didn't go looking for HOA reform, HOA reform kind of found us."