Since 2011, an office within the Colorado Division of Real Estate has collected complaints, thousands of them, about homeowners associations.
But the HOA Information and Resource Center has lacked the authority to act, even when there was a clear violation of the Colorado Common Interest Ownership Act or CCIOA, the state rules governing community associations.
That could change. A new regulatory review recommends the HOA center not only be extended, but also be given the power to investigate and resolve disputes, which are often emotionally charged and can become financially draining.
“Since many complaints against HOAs exist and consumers are perhaps being harmed, a more equitable avenue to effectively address complaints would be to authorize the Center to investigate complaints,” a sunset review from the Department of Regulatory Agencies that came out last week recommends.
There are 7,881 active HOAs throughout the state. Every year, on average, the state HOA center, run with two people, receives 1,543 complaints and processes 5,161 requests for information.
Last year, the largest areas of complaints centered on sins of omission — not maintaining and repairing common areas, not following the governing documents, not enforcing the rules and covenants and not communicating with residents.
But hundreds of complaints are linked to more egregious violations, such as harassment, failing to produce documents when requested, fraud in board elections and excessive fines.
Right now, someone trying to force an HOA manager or HOA board to comply with state rules often has to litigate, and that battle is lopsided from the get-go, said Stan Hrincevich, president of the Colorado HOA Forum.
“We have a system where people pass laws and wave the flag of victory. Not once are these things enforceable,” he said.
Hrincevich and the forum have long supported out-of-court dispute resolution, similar to what the state has implemented for disputes within mobile home communities.
“It is cost-beneficial because of legal savings,” said Hrincevich. He expects that a majority of cases could be resolved quickly without a lengthy investigation.
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For example, if an HOA won’t provide financial documents required under state rules, a simple query from the HOA center could resolve that. If the HOA confirms it isn’t providing documents, then it can be ordered to do so.
Hrincevich envisions requiring a $50 filing fee to weed out frivolous complaints. That combined with an increase in the $25 a year fee HOAs pay to renew their registrations with the state should be enough to cover the added costs.
Dispute resolution would allow those who disagree with the HOA office’s ruling to appeal to an administrative law judge. And it still leaves the door open to litigation in more complex cases, he said.
Having a low-cost system with enforcement should ensure better compliance by HOAs, he said, adding he expects the Community Associations Institute, the trade group for HOA managers in the region, to fight any changes.
Calls to the group’s executive director to discuss the sunset review recommendations were not returned.
