The Colorado Common Interest Community Act (“CCIOA”) is a comprehensive law that governs how most homeowners’ associations are created and operated. As many homeowners quickly find out, CCIOA gives HOAs numerous powers that are routinely abused by the board of directors, their management companies, and attorneys.
Even worse, CCIOA provides nearly no government oversight, so it is up to you to defend yourself against illegal and inappropriate behavior. If you are being subject to discriminatory or predatory behavior by your HOA, you are not alone. Clients frequently hire us to deal with these problems.
Because of the lax oversight of HOA boards, the power of HOAs, and the financial incentives for unscrupulous management companies and their attorneys, we believe an aggressive litigation strategy is necessary to defeat HOA when it acts unlawfully.
We Will Fight For You
HOA power is not without limit. We have successfully helped homeowners that have the courage to stand up to their HOA. If you believe that your HOA is acting illegally, unethically, or inappropriately, contact our attorneys. Call 303-688-0944 to begin your free case assessment.
6 Ways You Can Fight Your HOA
No. 1: Removing a Board Member (or the Entire Board)
Do you feel that a board member, or the entire board, has it out for you or your neighbors? Often, a true resolution to your problem will only come once the board member is replaced.
Removing a Board Member without Court Action
Your HOA documents, as well as Colorado Revised Statute 7-128-108, give homeowners the right to remove board directors with or without cause. Here are the steps we go through to remove a board member.
- Review your HOA documents. Your HOA has the right to modify some of the procedural and legal requirements set forth under Colorado law in the HOA documents. We need to review your HOA documents to see what changes were made and whether those changes were legal.
- Call a Special Election. With your help, we gather enough support to call a special election for the purpose of removing one or more board members. It is important to note that the notice has specific requirements that must be set forth, such as the purpose of the meeting. In our experience, the attorney for the HOA will often use a technicality to try to stop the process. Be ready!
- Hold the Vote. Again, we work with you to make sure that we have enough votes, either in person or by proxy, to remove the director.
- Vote for New Board Members. Elect new board members that are more reasonable.
Remove a Board Member with Court Action
If the board member’s actions are especially egregious, removal of the member by court action is possible under Colorado Revised Statute 7-128-109. Here are four important considerations when removing a board member through court action:
- File. File the case in District Court, typically in the county where the principal office is located.
- Parties. Name your HOA as an additional defendant.
- Future. You may motion the court to restrict the board member from becoming a board member in the future.
- Plaintiff. The case must generally be brought by the HOA itself, or by members holding at least 10% of the votes. (We help homeowners with strategies to get the requisite numbers of votes.)
If the board member must be removed by court action, allegations may include claims that the board member engaged in fraudulent or deceptive conduct, that the removal is in the best interests of the HOA, or that the board member grossly abused his or her authority.
Developing the Case
We use a variety of means to develop the case against the board members. Our methods include the use of private investigators, depositions, witness testimony, and the inspection of financial records of the HOA.
An Effective Solution to Illegal HOA Actions
Once new board members are installed, the old board members do not have any power to harass you. In addition, the new board can fire the management company and its attorneys.
The removal of board members is highly contentious. Expect the HOA attorney to vigorously defend the current board and use every legal technicality they have to stop you.
Be aware that the removal of board members can be very time-consuming and expensive. Often a group of homeowners will come together to pay for legal fees to defer costs. Schedule an assessment by calling (303) 688-0944 or schedule online to understand the legal fees and time commitment to attempt a board removal.
No. 2: Demand an Inspection of Records
As a homeowner, you have the right to inspect certain documents. What’s more, if court action is pursued, you may expand the scope of inspecting to include relevant to your claim against the HOA.
If your HOA is not giving you access to inspect the HOA records, our attorney can demand the records for you. If required, we will request that the court to compel the HOA to turn over the records.
The HOA must give you access to the following records:
- HOA Records. Records that are defined in the HOA’s declaration or bylaws;
- End of Year Records. Records the association is required to disclose within 90 days after the end of year as required by CCIOA;
- Expenses. Detailed records of receipts and expenditures affecting the operation of the HOA;
- Construction Defects. Records of claims for construction defects and amounts received for settlement of those claims;
- Minutes. Minutes of all meetings of its owners and board and actions taken by the board;
- Communications Among Board Members. Written communications among, and votes cast by, board members that are related to actions taken by the board;
- Homeowner Addresses. A list of the names of all owners and the physical mailing addresses at which the HOA communicates with them, showing the number of votes each owner is entitled to vote;
- Governing Documents. The HOA’s current declaration, covenants, bylaws, articles of incorporation, rules and regulations, and policies;
- Financial Statements. Financial statements for the past 3 years and tax returns of the association for the past 7 years;
- Contact Information for Officers. A list of the names, email addresses and physical mailing addresses of the current board members and officers;
- Annual Report. The most recent annual report (if any) delivered to the Secretary of State;
- Assessment Information. Financial records sufficiently detailed to enable the association to provide an owner with a written statement stating the amount of unpaid assessments currently levied against the owner’s unit;
- Reserve Study. The HOA’s most current reserve study (if any);
- Contracts. Current written contracts to which the association is a party and contracts for work performed within the past 2 years;
- Approval & Denials. Records of board or committee actions to approve or deny any requests for design or architectural approval from owners;
- Votes. Ballots, proxies, and other records related to voting by owners for 1 year after the election, action or vote;
- Resolutions. Resolutions adopted by the board relating to the characteristics, qualifications, limitations, and obligations of members;
- Communications. All written communications within the past 3 years sent to all owners.
No. 3: Revoke the HOA Management Company’s Registration
To fight the HOA management company, you often must attack them where it hurts: their pocketbook. Did you know that Colorado law requires that HOA management companies register with the Colorado Department of Regulatory Agencies, which went into effect on July 1, 2015. Therefore, the very existence of the management company requires that they maintain their registration. If the management company loses their registration, or other HOAs find out about their inappropriate behavior, they risk losing business.
Here’s what we do if we believe that legal action against the HOA management company is warranted.
- We review the regulatory registrations to ensure that the HOA management company is licensed.
- We investigate whether the principals are properly licensed. For example, if the principals that are required to be registered have certain criminal convictions, the license may be revoked.
- We assist homeowners in filing complaints with the Colorado Department of Regulator Agencies, Division of Real Estate, against the management company (if appropriate).
- We take civil action against the HOA management company if necessary.
No. 4: Determine if the Board Met its Fiduciary Duties
All members of the board of directors have fiduciary obligations to you, a member of the HOA. >When our clients have a good faith belief that a director is acting improperly, we hire professionals such as private investigators and forensic accountants to investigate the possible claims. Our goal is to uncover enough evidence to build a case against the director.
As attorneys, we have access to various discovery methods such as document subpoenas, record inspections, background checks, and depositions. If you suspect that a director is acting unethically, contact us as soon as possible to speak with our attorneys. It is important to avoid the destruction of evidence, as this information will be needed to prove your case. Call us at (303) 688-0944.
Each board member has the following duties:
- The Duty to Act Prudently. The board member must act in a reasonably prudent manner. If they do not, their actions are considered negligence.
- The Duty to Act Diligently. The board member must act in a reasonably diligent manner. For example, if they do not conduct the necessary research and analysis before making business decisions, such as entering into contracts, their actions can be a breach of their duty to act diligently.
- The Duty of Care. The board must act with a reasonable standard of care if their actions could harm the community members.
- The Duty of Loyalty. A board member’s loyalty must be to the association and its owners.
- The Duty of Confidentiality. Much of your information is confidential. The board of directors cannot improperly disclose your personal information. So, board members cannot disclose your information to friends or neighbors.
- The Duty to Act within the Scope of Authority. The HOA board can only act within the scope of authority granted under either statute or the governing documents of the HOA.
An HOA director’s liability may be reduced if the homeowners waive the right to recover against the directors in the bylaws. Nevertheless, certain claims against the director will never be eliminated.
Under Colorado Revised Statute 7-128-402, the director cannot eliminate potential liability to these claims:
- Unlawful Distributions
- Unlawful Loans to the Director
- Breach of the Director’s Duty of Loyalty
- Acts or Omissions not in Good Faith
- Intentional Misconduct
- A Knowing Violation of Law
No. 5: Defenses to Attacks from HOAs
As a homeowner, you have a variety of defenses that can be raised against enforcement actions by your HOA.
Failure to Follow the Rules
Your HOA must have a written policy governing the imposition of fines. By carefully reviewing the HOA documents and the actions of the Board and related parties, our lawyers often find that the HOA does not have, or did not follow, the HOA’s policies regarding fines and assessments.
Among the policies required under Colorado law include a “policy providing a fair and impartial fact finder as to whether the alleged violation actually occurred,” and which homeowner should be held liable. In fact, the HOA must “guarantee the…owner notice and an opportunity to be heard before an impartial decision-maker.” Colo. Rev. Stat. Ann. § 38-33.3-209.5 (West)
Most homeowners and many attorneys are unaware of this defense, and too often give in to the HOA’s demands.
Abandonment or Selective Enforcement
Do you feel that you are being singled out? Perhaps you see other homeowners with the same “violation” that you are being accused of by the HOA.
Our attorneys are experienced with using selective enforcement as a defense, as well as the closely related abandonment defenses against HOAs.
For an abandonment defense to be successful, you must show that a reasonable person observing the neighborhood, with knowledge of the covenants of your HOA, would conclude that the HOA has abandoned the enforcement of the covenant. Therefore, to prevail with a selective enforcement or abandonment defense, you must show other similar violations of a substantial nature.
Likewise, your HOA cannot act in an arbitrary or capricious manner. This means that your HOA must have procedures, and execute those procedures, in a uniform and consistent manner. A defense of selective enforcement is available if you can show that the HOA did not act consistently and treated you differently than other homeowners in a similar situation. For example, if your neighbors installed a shed, but when you go to install a shed your HOA fines you, a defense of selective enforcement or abandonment may be available to you.
No. 6: Fight Back
Sometimes we advise our clients to seek a declaratory judgment. A declaratory judgment is a judgment from a court that determines the rights of parties without ordering anything to be done or awarding damages. If the HOA has ordered you to make a change or remove something from your property, often a declaratory judgment is the best court of action.
In other circumstances, counterclaims against the HOA or a board member individually may be warranted. Because court procedure includes a doctrine called “compulsory counterclaims” it means that you must bring your claims in a timely manner or they will be lost forever. Don’t lose your claims.
Damages & Counterclaims
The law provides a variety of remedies if your HOA is found to be violating the law.
Here are a few of the remedies that may be available to you:
- Monetary damages for your direct and indirect expenses.
- Attorneys fees.
- Punitive damages.
- Injunctions and restraining orders to stop the illegal actions.
Let’s Fight Your HOA
If you believe that your HOA is acting illegally, unethically, or inappropriately, contact our attorneys. We provide an assessment. During that time we will discuss your options, so you can decide on a course of action. Call 303-688-0944 to begin your free case assessment.
Robinson & Henry attorneys, led by homeowners association (HOA) lawyers Don Eby and Steve Whitmore, frequently represent homeowners before HOA boards, and in state and federal court. In this article, they outline common defense and counterclaims we assert against unlawful acts by HOAs, and their attorneys and management companies.