The 2002 Legislative Session concluded on May 8th with an amendment to the Colorado Common Interest Ownership Act (CCIOA) passed by the Legislature and referred to the Governor. While this one bill is now before the Governor, rumors continue to circulate about another amendment to CCIOA based on an April Fools article in our April 1^st newsletter.  Based on that spoof, some have thought that covenant violations might become a felony.  That is not the case. Yet, as of the writing of this article, amendments to CCIOA, through House Bill 02-1191, are before the Governor for his action. The Governor is expected to sign the bill. The bill is then expected to be effective late summer or early fall of 2002. This article discusses the provisions in House Bill 02-1191.
 
2002 Amendments to CCIOA
 
House Bill 02-1191 will amend CCIOA:
 
By clarifying existing provisions of CCIOA allowing for court approval of declaration  amendments and conveyances of common elements;
By allowing post-CCIOA communities (those created on or after July 1, 1992, that are not exempt from CCIOA) greater budget flexibility;
By clarifying transition of control of developer controlled associations in post-CCIOA communities;
By adding subjects allowed to be discussed by boards of owner associations in executive sessions (pertaining to the managing agents contract or to review legal advice).
 
House Bill 02-1191 may be viewed at the state’s website at www.state.co.us.

Clarifications to Court Approval of Declaration Amendments
 
When signed by the Governor, House Bill 02-1191 will resolve apparent ambiguities in the special statutory petition process first authorized in 1999.  Section 1 of the bill will specify that the statutory process authorized in 1999 (in section 33-33.3-217(7) of CCIOA) is to be applied as set forth in section 217(7) of CCIOA. 
 
Section 217(7) of CCIOA allows an owner association to petition a district court to sanction amendments to a declaration if certain minimum approvals from owners are first obtained and other due process conditions and requirements are met. If the district court grants the petition, the court enters in an Order approving the proposed amendment and requiring the Association to record the amendment. The amendment becomes effective once recorded.
 
House Bill 02-1191 will also add to Section 120 of CCIOA. This section of CCIOA lists the methods of amending declarations in pre-CCIOA communities (those that were existing on June 30, 1991). Section 2 of the bill adds an additional means of amending declarations in pre-CCIOA communities through the special statutory court petition process approved in 1999.
 
Clarification of Conveyances of Common Elements
 
House Bill 02-1191, when approved by the Governor, will also resolve Association authority to convey common elements in a condominium community. Section 3 of the bill will specify that in a condominium community, the common elements can be conveyed as allowed for in Section 312 of CCIOA. Prior amendments to CCIOA allow an owner association to convey common elements in a post-CCIOA community, with the approval of 67% of the votes of the units owners (excluding the declarant). The change made by House Bill 02-1191, makes section 207 of CCIOA consistent  with that authority.  
 
Budget Flexibility for Post-CCIOA Communities
 
House Bill 02-1191 will also add budget flexibility to post-CCIOA communities. Section 4 of the bill will provide more time for board preparation of proposed budgets. Current law requires a summary of a proposed budget in a post-CCIOA community to be mailed or delivered to each owner within 30 days of the board’s adoption of that budget. This time frame is enlarged to 90 days.
 
The bill will also allow more time flexibility in the setting of the member meeting for action on the budget. Current law requires this meeting to be set not less than 14 days nor more than 60 days after the budget summary is mailed or delivered to owners. The time frame for setting this meeting will become a "reasonable time" after the mailing of the budget summary.
 
Additionally, budgeting authority by class of owners is confirmed for post-CCIOA communities. Budgeting by class is sometimes authorized in the declaration for certain post-CCIOA communities (i.e. mixed use buildings, containing both commercial and residential units).
 
Finally, the action required at the budget meeting of the members is clarified. The action required under current law is the failure of a majority of all owners (or larger percentage, if a larger percentage is set in the declaration) to reject a proposed budget. Provisions in current law also spoke of a proposed budget being ratified if not rejected. Use of the term "ratified" implied affirmative action was needed from the members. This has been clarified, to make clearer that the members need not act affirmatively at a budget meeting, unless the required percentage of members desire to exercise their right to veto a proposed budget.
 
Transition of Control in Post-CCIOA Communities
 
House Bill 02-1191, when approved by the Governor, will also resolve a possible ambiguity in the required transition of control of an owner association from the declarant appointed board to an owner elected board. See section 4 of the bill. Current law sets forth three “triggers” that could activate the requirement for a majority of the board being elected by owners (exclusive of the declarant). The three triggers remain the same. They are: 1) 60 days after the declarant has conveyed 75% of the units the declarant has the rights to create; 2) the passage of 2 years without a conveyance by the declarant; or 3) the passage of 2 years without the declarant exercising its reserved right to create additional units. The clarification made is one word in the statute preceding this list of three triggers "either” (seeming to refer to two possibilities) to be replaced with “the earlier of.”
 
Additional subjects for Executive Sessions of the Board of an Owner Association
 
Lastly, House Bill 02-1191 will add two subjects that boards of owner associations can discuss in executive sessions–the managing agents contract and legal advice. The "managing agent contract" was added to allow the board to review the proposed contract with a new managing agent, as well as subjects included in that contract, in executive session. The rationale is that a managing agent, typically engaged as an independent contractor, has a special relationship with the board of the owner association and so, should be given this possibility of review in executive session.
 
The addition of legal advice as a subject that can be discussed in executive session was made, as attorneys do not frequently attend board meetings, yet that should not preclude the possibility of an executive session to review letters or oral communications from an attorney.
 
As to executives sessions, note that CCIOA requires that the general matter to be discussed in executive session be announced prior to the board (or committee) going into executive session.
 
Prior Amendments to CCIOA
 
Since its original effective date of  July 1, 1992, the Colorado Common Interest Ownership Act (CCIOA) has been amended 16 times, almost every year since 1991. House Bill 02-1191 will be the 17^th amendment to CCIOA.  These amendments project future revisions to this statute. If you have questions about the amendments of House Bill 02-1191 or if you know of or become aware of provisions in CCIOA that you think should be changed or added, please contact our office. You can direct email to jorten@ortenhindman.com.