Electronic Dues Payments
In Colorado we love our trees. And, everyone appreciates money saving efficiencies. With that in mind, ASAP strongly encourages all of our HOA community members to pay their dues electronically. Assessment invoices are sent to association members via email and contain a link to their Customer Portal in bill.com where members can access;
- update contact information
- view invoice history
- view payment history
- set up one-time ePayment
- set up and manage recurring payments
Paying Dues Electronically via ePayment (ACH)
Instructions for setting up an ePayment or an automatic payment are included in the link below:
Budget Preparation Tips
5 Tips to Ensure Budget Success
- Update year-to-date (YTD) numbers for expenses AND revenue to confirm they are tracking as expected/confirm if there is anything unexpected that needs to be accounted. Be on the lookout for any expenses that increased above what was anticipated budget to actual. Review revenues closely and follow up with any outstanding dues or assessments to minimize revenue shortcomings. This is an excellent time to review collection procedures to make sure they are working for your organization. Be sure to review the proposed budget with the year to date budget AND actual financials for the past 3-5 years.
- Reach out to all utility/insurance/service providers to determine if estimated rates for next year’s services are reasonable. Reassess services and vendors where applicable to determine if you can increase efficiencies and decrease costs.
- Be sure to separate any non-recurring or discretionary items from the operating budget. These are items that may be included in the budget for a particular year, but not expected to be annual expenditures. Likewise, any one time income (ie: special assessments) should be accounted for separately from operating income (regular annual dues).
- Check in with your reserve balance/reserve goals if applicable as well as your organization’s 5 year plan of potential major projects/expenses. Perhaps the timing of these projects have changed, something needs to be taken care of earlier or could be pushed back to a later year.
- Share proposed budgets with board of directors and members to get feedback.
HOA Accounting Basics (Cash vs Accrual)
- Cash Method of Accounting – Income and expenses are only recorded when cash changes hands. Financial reports only reflect cash transactions. This is a relatively simple system for simple situations. Because all obligations are not recorded until cash changes hands, this method does not provide an accurate portrayal of the financial condition of the association at any given time.
- Accrual Method of Accounting – Keeps track of all financial activities, including revenue as it is earned (as opposed to when it is received) and expenses as the obligation is incurred (as opposed to when it is paid). This makes a more accurate determination of the financial condition of the association possible at any point in time. Also, this is a better method for multi-year tracking of capital reserve credits and deficiencies. The primary disadvantage is the greater complexity and technical knowledge that is needed to maintain the records, understand the reports, etc.
- Capital Reserves – The board has the obligation to repair and replace major capital facilities, buildings, and equipment of the association. The ideal method of providing for these future expenses is the establishment of a capital reserves system and budget to assure that such funds are available when needed. With knowledge that the future holds predictable major expenditures for repair and replacement of facilities and equipment, the association could begin the gradual accumulation of funds through a reserve account to meet all or a portion of that expense when it comes due.
Worker's Compensation for Community Associations
But, We Don’t Have Any Employees!
In addition to your association master policy, we have included a Workers Compensation and Employers Liability quotation. This insurance would cover Colorado mandated medical and income benefits for employees who become injured or sick as a consequence of their employment. The estimated annual premium for this one year policy is $300 to $500. This is a minimum premium and is based on your having no employees as of the policy commencement date. Unless you have employees during the policy period, it will be your final, total premium.
Even though you have no employees, currently, and do not anticipate hiring any, you still need this important coverage. Here are the two principal reasons for that and the answers to frequently asked questions.
- Reason #1: Employees of Independent Contractors
- Reason #2: Part time, Casual , Seasonal and Unanticipated Employees
- Isn’t the contractor responsible for its own employees? Normally, independent contractors with employees are required, by State law, to maintain Workers Compensation insured. However, when a contractor fails to maintain the required insurance, a sick or injured employee may—and often does—recover direct from the association…even though he or she is not an association employee.
- Are all employees covered by Workers Compensation? The State of Colorado Workers Compensation statue determines the scope and application of its benefits. This is usually based on some combination of number of employees, number of hours an employee works each week and types or categories of employment. Each State’s statute is unique and only an examination of your statute can provide this information.
- Doesn’t a certificate of insurance protect us? Obtaining a certificate of insurance from each contractor, indicating the existence of Workers Compensation insurance is a sound measure. However, all it means is that the required coverage is in force on a particular date. It provides no guarantee that coverage will remain in force.
- Is it possible to have an employee and not know it? A person performing services for you may or may not be an employee for Workers Compensation purposes. What appears to be an independent contractor relationship—and which may indeed be one for all other purposes—could be an employment relationship where Workers Compensation is concerned. Aside from any other considerations, courts and Workers Compensation commissions lean toward an employment relationship whenever the person in question is otherwise uninsured.
- If coverage lapses, doesn’t the contractors insurer notify us? Most certificates of insurance impose a “best efforts” or “reasonable efforts” standard on the insured regarding the notification of certificate holders. This does not guarantee timely notification.
- Who can tell us when we need Workers Compensation? Your insurance or legal advisor can help you with your Workers Compensation requirements.
- Isn’t a hold harmless agreement from the contractor effective? Obtaining a properly drafted, enforceable hold-harmless agreement from each contractor can be an effective measure and one we recommend. Under this type of agreement, the contractor guarantees to insulate your association from liability for the injuries and illnesses of its employees. However, an agreement is only as good as the contractor’s solvency. If the contractor is not financially up to its legal obligations, its agreements are worthless.
- Can a contractor drop its insurance and rely on ours? Anyone who is legally required to maintain Workers Compensation insurance, and fails to do so, is subject to the fines and other penalties prescribed by the State statutes. These penalties are intended to be far more burdensome than simple compliance. A prudent and financially sound contractor is unlikely to risk noncompliance. However, financial distress and simple oversite are frequent causes of noncompliance. Even many contractors who are insured attempt to treat some of their employees as independent contractors. This common practice, intended to save on Workers Compensation costs, is virtually impossible for you to detect.
- The only certainty of full compliance with Workers Compensation requirements and the protection of your community’s financial resources is this inexpensive coverage. Without it, some degree of unnecessary risk persists. With it, you avoid a potentially severe loss, a possible assessment needed to pay it and the punitive aspects of noncompliance.
Legal Compliance Issues for HOAs
There is a strict and complex scheme of laws applicable to the operation of homeowners associations (HOAs). This page gives a very preliminary overview of some of the highlights. This is not legal advice. ASAP recommends you retain your own legal counsel to advise you concerning your rights and obligations as a member of an HOA.
In 1963, the Colorado Legislature enacted the Colorado Condominium Ownership Act (CCOA). This set of laws applies to HOAs organized prior to July 1, 1992.
In 1991, the Colorado Legislature enacted the Colorado Common Interest Ownership Act (CCIOA), which governs HOAs organized on and after July 1, 1992. However, by law, many CCIOA provisions also apply to pre-CCIOA communities.
Together, these Acts contain a detailed set of statutes governing HOA operations.
Responsible Governance Policies
For years, HOAs were governed by the basic governing documents, being Articles of Organization, Bylaws and the Declaration (aka Covenants, aka Covenants, Conditions and Restrictions or CC&Rs). Effective January 1,2006, the Colorado Legislature enacted a law requiring CCIOA HOAs to adopt nine “Responsible Governance Policies” (RGPs). Pre-CCIOA communities are only required to adopt the ninth RGP. The nine RGPs must each address:
- Collection of unpaid assessments;
- Handling of conflicts of interest involving board members;
- Conduct of meetings;
- Enforcement of covenants and rules, including notice and hearing procedures and the schedule of fines;
- Inspection and copying of association records by unit owners;
- Investment of reserve funds;
- Procedures for the adoption and amendment of policies, procedures, and rules;
- Procedures for addressing disputes arising between the association and unit owners; and
- When the HOA has a reserve study prepared; whether there is a funding plan for any work recommended and, if so, the projected sources of funding for the work.
More recently the Colorado Legislature updated RGP #1, procedures for collection of assessments, requiring the HOA (1) offer the delinquent owner a payment plan of at least six months duration, (2) not proceed with foreclosure to collect without first noticing the owner to a Board hearing, and (3) not proceed with foreclosure unless the owner is at least six months delinquent on dues. Dues collection is a difficult endeavor. In the event a lender forecloses on an owner, the HOA is only entitled to recover six months worth of old dues from the lender. As such, HOAs must be vigilant on collections.
The Colorado Legislature also recently updated RGP #5, rules applicable to inspection and copying of association records by unit owners. The change was that, effective January 1, 2013, owners need not state their purpose for requesting records. Other highlights of the rules applicable to records are that HOAs are not to disclose an owner’s E-mail address to other owners without the permission of the owner. HOAs are required to provide mailing addresses.
RGP #9 addresses capital reserve studies. In Colorado, it is not mandatory that an HOA maintain reserves, but, it is highly advisable that HOAs have a current written plan/study for reserve needs, and that there are also meaningful collections such that a large future special assessments will not be required.
Board of Directors
HOAs are governed by their Board of Directors. As such, Board operations are at the heart of proper HOA governance.
An often violated rule is that owners must be notified concerning all Board meetings. The CCIOA provision, also made applicable to pre-CCIOA communities, states that agendas must be posted on the HOA Website (if it exists) at least 24 hours prior to the Board meeting. Good practice is E-mail notice to owners at least 5 days prior to the meeting.
A little known rule is that unless the Bylaws authorize Directors to proxy third parties to speak for them, such is disallowed. Good governance typically requires that a Director proxy only another Director.
Operational Decisions and Owner Surveys
A common owner request is that the Board put operational decisions out for an owner vote. While the Board can and should canvass the owners for input, it would in fact be an abdication of duty for the Board to simply put the matter out to a vote of the ownership. Owners elect Directors specifically to govern the HOA. The Directors are charged with becoming fully informed concerning HOA matters, and making the best decisions for HOA. The owners are not charged with becoming so informed. As such, again, for a Board to simply put operational matters out to a vote of the ownership – owners who are not charged with becoming fully informed as to the pros and cons of actions – would in fact violate the Board’s duty to the owners. The better practice is for the Board to canvass/survey the owners for input, as well as to convene Board meetings to discuss matters in open forum.
Director terms should be set and approved by the Owners. The ideal scheme seems to be three-year terms, with terms staggered such that terms overlap. This allows new Directors to serve with Directors who have had some experience on the Board. CCIOA requires at least one third of the Board be elected annually. As such, for a three-member Board, it can be simply arranged for one seat to be elected each year. For a five-member Board, terms can still be three years, but, the Bylaws need to establish a mechanism whereby, annually, at least two of the five Director seats are be placed up for election.
Board meetings are public to all owners. And, owners must be afforded the opportunity to speak on topics discussed. However, the Board does have the authority to conduct closed-door meetings and exclude owners, for six categories of issues
- Matters pertaining to employees of the association or the managing agent’s contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the association.
- Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client.
- Investigative proceedings concerning possible or actual criminal misconduct.
- Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure. This would include for example discussion of matters under some type of court-ordered protective order.
- Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy.
- Review of or discussion relating to any written or oral communication from legal counsel.
Websites and Blog
Director terms should be set and approved by the Owners. The ideal scheme seems to be three-year terms, with terms staggered such that terms overlap. This allows new Directors to serve with Directors who have had some experience on the Board. CCIOA requires at least one third of the Board be elected annually. As such, for a
HOAs should, if they can afford it, maintain a simple Website containing the following items:
- Public Section
- Responsible Governance Policies
- Architectural Design Guidelines, if they exist
- Password-Protected Section
- Notice of any pending Board meetings, complete with agenda (again, legally required to be posted at least 24 hours prior to meeting)
- Board and owners meeting minutes
- Current budget
- Information on capital reserves on hand
- Reserve study, if it exists
- HOA insurance certificates
Good practice is to password-protect the above items, since the matters should not be on the Web for general public review.
Owners selling their units need quick access to HOA documents. The standard Colorado form real estate contract requires the seller provide most of the above documents to buyers under contract.
Some HOAs also set up owner blogs, to facilitate owner communication.
Mail Ballot Voting
Many HOA matters can be resolved by mail ballot voting. However, the better practice is to issue mail ballots, with a return date coinciding with an owners meeting, and making it clear that owners can either vote by mail, or vote in person at the meeting.
The Board should ensure the HOA maintains maintain proper liability insurance for common elements. Such insurance will protect the HOA from liability in the event someone is injured on HOA property. Good practice is to also purchase Directors & Officers (D&O) insurance, which will cover the Board Members/Directors individually in the event of legal claims against them.
Another complex and common area of HOA work is when owners seek to modify their units, such as expand the unit, combine the unit with an adjacent one, and/or modify or enclose a unit limited common element.
Because service on an HOA Board is generally a volunteer effort, the majority of HOAs employ professional management to handle matters such as dues invoicing, arranging meetings, preparing draft budgets, initial enforcement procedures and coordinating owner requests such as Unit modifications. Effective July 1, 2015, HOA managers must be licensed through the Colorado Division of Real Estate.
Again, this page gives a very preliminary overview of some of the highlights. This is not legal advice. ASAP recommends you retain your own legal counsel to advise you concerning your rights and obligations as a member of an HOA.
This article was written by Telluride, Colorado attorney Joseph A. Solomon, Esq.
Legal Compliance Issues for HOAs
Let ASAP help you stay in compliance.
- Colorado Regulations require all HOA’s to provide specific information in writing or on a website, including:
- contact information for the HOA and its management company or agent.
- financial information, including an operating budget, a list of all insurance policies and a list of all applicable assessments.
- minutes of all meetings during the year.
- copies of all governing documents including bylaws and declarations.
- the result of its most recent annual financial audit or review, which must be completed at least every two years.
ASAP’s HOA Account Managers are licensed in Colorado under the CMCA and have completed necessary training and examinations relating to the Colorado Manager Licensure (HB 13-1277).
In addition to our staff resources, ASAP provides technology solutions to help HOAs stay in compliance. For example, with ASAP’s customized website members can view association information online, anytime.
Colorado Common Interest Ownership Act (CCIOA) – 2011 Unannotated , HB 09-1359
HOA Recordkeeping-requirements effective 1/1/2013 – HB 1237 HOA records which must be maintained and produced; HOA records which may be withheld from production; HOA records which must be withheld from production; Procedures for requesting HOA records; Charges for assembling, copying, and producing records; and the use of membership lists. In addition to complying with new HOA records law, it’s important to update your Policies to comply with new requirements (consult your legal team to update your Policies).
HOA Manager Licensing-requirements effective 7/1/2014 – HB1277 It is unlawful for any person to engage in, or to hold out himself, herself, or itself as qualified to engage in, the business of community association management without first having obtained a license from the state.
Community Association Institute – CAI is a national organization that provides information and education for community associations and the professionals that support them. CAI Rocky Mountain Chapter
HOA Legislative Changes
House Bill 14-1254 passed and was signed into law by the governor on 4/18/2014 concerning requirements to disclose fees charged to a unit owners’ association by a community association manager.
Fees and charges for contracted services and home sales are required to be disclosed to the Executive Board of the HOA by every manager, agent, or person who represents or negotiates on behalf of a manager during contract negotiations and on an annual basis.
The Director may (and if a written complaint is received, shall) investigate any activities of any community association manager. After holding a hearing in accordance with the State Administrative Procedure Act, the Director may impose an administrative fine not to exceed $2,500.00 for each separate offense in failing to make a full and true disclosure of fees, charges, and remuneration.
To view House Bill 14-1254, click here.