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Q & A
Q: What is the liability if a homeowner association board makes a purchase over the amount that has been set in the covenants/bylaws? What is the liability of a homeowner association board if they take common area space to use for their owner use?
A: The Board of Directors has a fiduciary duty to the Association. As part of this duty, Directors must perform their obligations in accordance with the authority granted to them by statute and in their governing documents. If the Directors are making purchases and using Common Areas in a manner which exceeds the authority granted to them by your Association’s governing documents, then the Board may be breaching this duty.
In addition, Directors are obligated to be loyal to the Association and its members, which means they must act only for the Association’s benefit and with an eye to its best interests as a whole. When transactions have been challenged, Courts have taken this duty very seriously and often place the burden on the Directors(s) to demonstrate the fairness of any transaction in which the Director is personally involved. The basic legal principle to be observed is that the Director(s) shall not use his or her Association position for individual personal advantage.
Q: May an association adopt a pool rule that requires any child fourteen or under to be accompanied by an adult of eighteen or older?
A: The Fair Housing Act (“FHA”) prohibits housing discrimination on the basis of such factors as race, religion, or familial status. An association rule requiring children to be accompanied by an adult when using the pool has a high likelihood of being seen as discriminating against families with children. Associations may, however, adopt rules related to pool use for safety purposes, but the older the age limit, the less the rule can be justified as a safety-related rule. Consider revising the rule to dispense with adult supervision for those residents under the age of fourteen who can demonstrate swimming proficiency.
Q: When an owner knows that something needs repair in his or her unit and neglects to do it, resulting in damage to association common property, is the association responsible for repairing the damage caused by the owner’s negligence?
A: The association has the duty to repair and maintain its common areas, regardless of why such repair or maintenance is necessary. Since such damage was caused by lack of maintenance (i.e. the owner’s failure to report the problem or repair it his or herself), it is unlikely that an association’s insurance would cover the repair costs. (Insurance usually only covers single-event losses, such as storm damage, not damage caused by failure to maintain.)
However, since the owner’s negligence caused the damage, the association should be able to seek reimbursement from the negligent owner for the costs of repairing the damaged common area. The governing documents of newer associations often specifically allow for reimbursement special assessments under these circumstances. However, older documents usually do not address this issue and associations would be advised to amend them to do so.
Q: Can the rules and regulations of an association conflict with the bylaws or declaration of the association?
A: No. The following is a general hierarchy of authority for operating community associations (from top to bottom): federal law, state and local statutes, association map or plat, declaration, articles of incorporation, bylaws, and rules and regulations. If one authority conflicts with another, the "higher" supersedes the "lower." Rules and regulations are on the bottom of this hierarchy; therefore, they cannot contradict or conflict with the declaration, bylaw, or any higher authority. Rules in conflict with a higher authority are unenforceable, and any attempt to enforce such rules may expose the association to liability. Therefore, make sure your attorney reviews your rules and regulations prior to adoption and/or enforcement.
Q: Can a Colorado homeowners association board of directors prohibit owner attendance at a board of directors meeting?
A: No. Colorado law requires that board of director meetings be open to owners and that owners are given an opportunity to speak at these meetings. However, a board of directors may exclude owners from being present when going into an executive or closed door session, per C.R.S. §38-33.3.-308(3), for the following matters:
(a) Matters pertaining to employees of the Association or the managing agent’s contract or involving the employment, promotion, discipline, or dismissal of an officer, agent, or employee of the Association;
(b) Consultation with legal counsel concerning disputes that are the subject of pending or imminent court proceedings or matters that are privileged or confidential between attorney and client;
(c) Investigative proceedings concerning possible or actual criminal misconduct;
(d) Matters subject to specific constitutional, statutory, or judicially imposed requirements protecting particular proceedings or matters from public disclosure;
(e) Any matter the disclosure of which would constitute an unwarranted invasion of individual privacy; and
(f) Review of or discussion relating to any written or oral communication from legal counsel.
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Community Associations Institute
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The Community Associations Institute (CAI) is a nonprofit organization that provides education and resources to community associations. To find out more about CAI visit www.caionline.org
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