Chapter 6 - § 6.1 • INTRODUCTION

• Jurisdiction: Colorado

§ 6.1 • INTRODUCTION

§ 6.1.1—Generally

A common interest community "association," or "unit owners' association," is an entity organized under the CCOIA.¹ Its membership consists exclusively of all the unit owners.² It must be organized as a nonprofit, not-for-profit, or for-profit corporation or as a limited liability company no later than the date the first unit is conveyed to a purchaser,³ although it is usually organized before then. While associations take on a variety of responsibilities, their basic one is for maintenance, repair, and replacement of the common elements.⁴ In that and other duties, an executive or governing board is authorized to act on behalf of the association.⁵ The board's composition, selection, and removal, as well as its business and governmental responsibilities are discussed elsewhere.⁶ This chapter is concerned with creation of the association, its organizational structure, incorporation, bylaws, membership, and standing to bring legal actions.

The Colorado General Assembly has recognized the importance of associations with three legislative declarations stating that:

the continuation of the economic prosperity of Colorado is dependent upon the strengthening of homeowner associations in common interest communities financially through the setting of budget guidelines, the creation of statutory assessment liens, the granting of six months' lien priority, the facilitation of borrowing, and more certain powers in the association to sue on behalf of the owners and through enhancing the financial stability of associations by increasing the association's powers to collect delinquent assessments, late charges, fines, and enforcement costs;⁷

. . . it is the policy of this state to promote effective and efficient property management through defined operational requirements that preserve flexibility for such homeowner associations;⁸
. . . it is the policy of this state to promote the availability of funds for financing the development of such homeowner associations by enabling lenders to extend the financial services to a greater market on a safer, more predictable basis because of standardized practices and prudent insurance and risk management obligations.⁹

§ 6.1.2—Responsible Governance Policies

As noted above, it is the policy of the state of Colorado to strengthen associations in common interest communities financially¹⁰ and to promote effective and efficient property management in them.¹¹ In furtherance of those policies and to promote "responsible governance," associations must maintain accurate and complete accounting records,¹² and they must adopt policies, procedures, and rules and regulations concerning:

• Collection of unpaid assessments.
• Handling of conflicts of interest involving board members.¹³
• Conduct of meetings, which may refer to applicable provisions of the nonprofit code or other recognized rules and principles.
• Enforcement of covenants and rules, including notice and hearing procedures and a schedule of fines.¹⁴
• Inspection and copying of association records by unit owners.
• Investment of reserve funds.¹⁵
• Procedures for adoption and amendment of policies, procedures, and rules.
• Procedures for addressing disputes arising between the association and unit owners.¹⁶

§ 6.1.3—Disclosures

The CCIOA requires associations to disclose certain information about themselves within 90 days after assuming control from the declarant.¹⁷ An association must make the following information available to unit owners on reasonable notice: (1) its name; (2) the name of its designated agent or management company, if any, including the license number of the agent or company if the agent or company is subject to state licensure; (3) its physical address and telephone number, as well as the physical address and telephone number for its designated agent or management company, if any; (4) the name of the common interest community; (5) the initial date of recording of the declaration; and (6) the reception number or book and page for the main document that constitutes the declaration.¹⁸ Additionally, if the association's address, designated agent, or management company changes, it must make the...