The Governor recently signed into law House Bill 10-1278 (“HB 1278”), which creates the “HOA Information and Resource Center” and requires property owners’ associations (not just residential/homeowners associations) to register annually with the Division of Real Estate. HB 1278 takes effect January 1, 2011. Real estate owners and professionals should be aware of HB 1278 because failure to register has some potentially serious consequences including loss of lien power and because it grants the Division of Real Estate oversight and regulatory authority in an area that has not been regulated previously.
HB 1278 creates the HOA Information and Resource Center which is to be headed by the “HOA Information Officer” appointed by the Executive Director of the Department of Regulatory Agencies. The HOA Information and Resource Center is to (a) serve as a clearing house for information concerning the basic rights and duties of unit owners, developers, and unit owners’ associations under the Colorado Common Interest Ownership Act (“CCIOA”), and (b) track and report inquiries and complaints regarding HOAs to the Division of Real Estate.
HB 1278 requires that all HOAs register annually with the Division of Real Estate and to submit general information about the HOA and pay a fee that will serve to fund the HOA Information and Resource Center. The fee must not exceed $50.00 and is subject to adjustment to reflect the actual direct and indirect costs of operating the HOA Information and Resource Center. Certain low revenue HOAs are exempt from the fee requirement.
If an HOA fails to register or is not current in its registration, it will be ineligible to impose or enforce a lien for assessments under CCIOA, which has priority over many other liens from the date of recording of the declaration creating the community. Likewise, if an HOA fails to register or keep it registration current, it will lose its right to collection costs and attorneys’ fees expended in enforcing an owner’s assessment obligations.
With some limited exceptions, before the adoption of HB 1278, the Division of Real Estate did not have any oversight over HOAs and related developments. HB 1278 grants the Director of the Division of Real Estate the power to adopt rules as necessary to implement HB 1278. Because HB 1278 speaks in fairly general terms, the operations and impacts of the HOA Information and Resource Center will likely be determined by the scope of the adopted rules. Given that this is the Division of Real Estate’s first involvement with HOAs in general, it will be interesting to see if it seeks out additional oversight over the operations of HOA or new oversight over the formation of HOAs in the form of regulations or additional legislation.
HB 1278 repeatedly uses the term “HOA” which is misleading. The term “HOA” is defined in HB 1278 to include “unit owners’ association” as defined in CCIOA, which can include residential, commercial and mixed-use condominiums, planned communities and cooperatives, and not just conventional residential planned communities headed by what a layperson might call a “homeowners association.” CCIOA was initially effective July 1, 1992, and there is some ambiguity as to whether the term “HOA” includes and whether HB 1278 requirements apply to unit owners’ associations that were formed prior to that date. We are hopeful that regulations to be adopted by the Division of Real Estate will clarify this point.