Legislative oversight and homeowners associations

A few years ago, the Colorado Legislature began examining how homeowners associations operate and took the first steps toward regulating these private, contractual organizations that set rules for people living in particular subdivisions.

There was good reason for that oversight. In some cases, homeowners associations, or HOAs, were taken over by petty autocrats who issued arbitrary and questionable dictates that went far astray from the usual HOA rules on architectural design or numbers of parked vehicles. In one high-profile local case, an HOA decreed that homeowners in one neighborhood couldn’t display political signs during an election campaign, which raised serious First Amendment questions.

Now, the Legislature is at it again — mostly Democrats, but with the support of some Republicans. Four bills have been introduced so far this year regarding HOAs. One, Senate Bill 183, has already passed the Senate and will be considered in the House, along with three bills introduced in that body.

HOAs are voluntary, sort of. Homeowners don’t have to join them. They have the choice of joining or purchasing a house or condominium in a subdivision not governed by an HOA.

But once they are in an HOA-governed subdivision, they have little option except to abide by whatever the association dictates. Given some of the complaints lawmakers say they’ve heard from constituents, some of those dictates are too often arbitrary and unfair.

For example, some HOA boards of directors or management groups approve special assessments against all properties in a subdivision to pay for desired neighborhood improvements. But they often fail to take into account the ability of homeowners to pay the additional fees, and they quickly file liens against those homeowners who have trouble paying.

House Bill 1276 would prohibit those sorts of liens from being placed on homes for at least six months after a funding dispute arises. During those six months, officials with the HOA must work with the homeowners to develop reasonable payment plans.

Another bill, HB 1277, would require HOA managers to take an exam to demonstrate their knowledge of laws, debt-collection rules and budgeting. If they passed the exam, they would obtain a license from the Colorado Division of Real Estate.

A third bill, HB 1134, would authorize the Division of Real Estate to examine laws in other states that regulate HOAs and ensure that HOAs follow applicable laws already on the books in Colorado. Additionally, it would give the agency the power to require an HOA election if enough homeowners in a subdivision petitioned for such a request.

SB 183, would prohibit HOAs from banning homeowners from using xeriscaping or other water-conserving techniques. In an arid state such as Colorado, that makes sense.

There may need to be some tweaking of these bills, but the Legislature should adopt measures very much like these to provide more oversight of HOAs.


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