February 21, 2014 Updated: February 21, 2014 at 5:47 am
Colorado lawmakers should provide alternatives for residents to settle disputes with dysfunctional homeowners associations, the state HOA boss recommends.
Establishing a binding arbitration program and a referral system for mediation were among a half-dozen recommendations that Gary Kujawski, the HOA information officer, recently made to the Colorado General Assembly.
Kujawski was directed by lawmakers to research HOA regulation in other states. He looked at Florida, Nevada and Virginia, which have implemented regulatory agencies for HOAs.
Both a binding arbitration program and mediation to settle HOA disputes, Kujawski said, would provide less expensive and quicker alternatives to the court system.
"Encouraging dialogue and reducing animosity within a community should be a top priority," Kujawski said in his report. "It has the potential to not only resolve any given dispute but also increases the chance that future disputes will be handled amicably within the HOA, thus potentially avoiding escalation of additional disputes to the center."
He recommends a fee, to be assessed per HOA unit, to pay for a binding arbitration program.
Kujawski said state oversight is necessary because it's often too late when homeowners discover they have bought into a neighborhood with a problematic HOA board that engages in selective enforcement of covenants, or meets illegally in secret or rigs elections or increases dues without proper authority or any of the myriad complaints related to HOA governance.
"Few prospective buyers would knowingly choose to purchase a home in a dysfunctional HOA," he wrote. "The multitude of complaints received by the center attests to the difficulty many homeowners face when an HOA is out of compliance.
"Unfortunately, homeowners discover the majority of problems only after completing the purchase, as the inner dynamics within an HOA are not readily apparent from outside."
So far, no bills to implement Kujawski's recommendations are among a handful of HOA-related bills under consideration in the Legislature.
House Bill 1254 would require full disclosure by management companies of all fees.
In another report delivered this month by Kujawski, he summed up the work of the HOA Information and Resource Center in registering HOAs, collecting data and complaints and dispensing information.
(I use the HOA abbreviation to describe all covenant-controlled communities whether they are single family neighborhoods, condo and townhome associations, voluntary improvement associations, or property owners associations. Covenants are rules governing such things as house design, landscaping, paint colors, roofing materials and parking that homeowners voluntarily agree to follow when they buy their homes.)
In Kujawski's 16-page report, he said the HOA center received 4,767 inquiries in 2013 and processed 1,248 complaints from 327 individuals.
He said 40 percent of all complaints involved community association managers, which seems to reinforce the Legislature's decision last year to require education, testing and state licensing for managers effective July 1, 2015.
Poor communication seemed to be a common complaint among HOA residents. But the issues raised ran the gamut from issues with dues, special assessments and budgeting to enforcement of covenants and other rules, levying of fines, harassment, poor maintenance and board election issues.
"Many homeowners stated that they were not being kept informed about their HOA," Kujawski said in his report.
"This includes not receiving notices of board meetings, which effectively precluded their participation."
Some complaints involved allegations of discrimination, which Kujawski referred to the Division of Civil Rights for investigation. Others related to health and safety issues such as rodent and mold infestations. Still others involved election fraud and HOA boards meeting in private in violation of state law.
Since launching operations in 2011, the HOA office has registered 8,857 HOAs covering 880,326 units, or homes.
Of the total, 773 registered HOAs were from the south-central area that includes Colorado Springs and the Pikes Peak region.
In that time, the center has logged more than 10,444 inquiries and processed 2,264 complaints.
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