I serve on my association’s board of directors, and we don’t believe that our association needs the seven written policies and procedures required by SB 100, and besides, our declaration addresses a number of these issues. In addition, our homeowners have told us that they really don’t care whether or not these policies and procedures are adopted.  If we choose not to adopt these policies and procedures, what will happen on January 1, 2006, when this portion of the law takes effect? Since our homeowners are not concerned, what are the possible consequences of this noncompliance?
 
Colorado does not have any enforcement or regulatory office in place to monitor homeowner association compliance with the Colorado Common Interest Ownership Act (CCIOA), including the new policy and procedure requirement added by SB 100.  In addition, there are no civil or criminal penalties for failing to comply with CCIOA, so there is no danger of being taken off in handcuffs or incurring fines for failing to adopt the required policies and procedures.  However, board members do have a legal duty to their associations to comply with any applicable laws, regardless of whether they believe certain provisions to be necessary for their association or whether the homeowners are concerned about compliance.
 
CCIOA also has an enforcement provision that gives associations and homeowners the right to bring to court anyone (owners or associations) violating any section of the law. If a homeowner prevails on such a claim, the court will enter judgment in favor of the homeowner and issue an order directing the association to come into immediate compliance with the law. At first glance, this enforcement mechanism may seem not to have much of a bite.  However, there is a catch that should provide a strong encouragement to associations to comply with CCIOA. Section 38-33.3-123 states the prevailing party in any action to enforce CCIOA is entitled to the reimbursement of the reasonable attorney fees incurred in bringing the action. Thus, the association would end up paying the homeowner’s attorney fees. Boards, therefore, have a strong financial incentive for complying with all of CCIOA’s provisions, new or old, to avoid any potential of having to pay both the association’s attorney fees and those of the prevailing homeowner. 
 
Not only do boards have a duty to apply with applicable laws, it only takes one disgruntled homeowner (and this may be a homeowner who presently claims not to care if the policies and procedures are adopted) to file a lawsuit for noncompliance that may end in having the association pay both parties attorney fees.  An additional reason for associations to adopt the required policies and procedures exists – these policies and procedures will benefit all associations by informing owners as to how their associations operate and any possible consequences of their actions, thereby preventing potential future disputes and lawsuits.