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Colorado Imposes Registration Requirements for Owners’ Associations

The Governor recently signed into law House Bill 10-1278 ("HB 1278"), which creates the "HOA Information and Resource Center" and requires property owners' associations to register annually with the Division of Real Estate.  HB 1278 takes effect January 1, 2011.  Real estate owners and professionals should be aware of HB 1278 because failure to register has some potentially serious consequences.

Although HB 1278 uses the term "HOA," such term applies to all property owners' associations under the Colorado Common Interest Ownership Act (CCIOA), not just residential or homeowners' associations.  There is some ambiguity as to whether HB 1278 requirements apply to property owners' associations that were formed prior to CCIOA's adoption (July 1, 1992). 

Under HB 1278, if an HOA fails to register or is not current in its registration, it will be ineligible to impose or enforce a lien for assessments under CCIOA, which has priority over many other liens from the date of recording of the declaration creating the community.  Likewise, if an HOA fails to register or keep its registration current, it will lose its right to collection costs and attorneys' fees expended in enforcing an owner's assessment obligations.  The Division of Real Estate expects to have registration available on its website by the bill's effective date.

HB 1278 also creates the HOA Information and Resource Center which is to be headed by the "HOA Information Officer" appointed by the Executive Director of the Department of Regulatory Agencies, which appointment is expected to occur in the late fall or early winter of 2010. The HOA Information and Resource Center is to (a) serve as a clearing house for information concerning the basic rights and duties of unit owners, developers, and unit owners' associations under CCIOA, and (b) track and report inquiries and complaints regarding HOAs to the Division of Real Estate.

HB 1278 grants the Director of the Division of Real Estate the power to adopt rules as necessary to implement HB 1278.  Because HB 1278 speaks in fairly general terms, the operations and impacts of the HOA Information and Resource Center and the HOA registration requirements will likely be determined by the scope of the adopted rules.  Given that this is the Division of Real Estate's first real involvement with HOA operations, it will be interesting to see how far the Division will extend its oversight over the formation and operation of HOAs through future regulations.

Otten Johnson's Real Estate practice group has substantial experience in dealing with CCIOA related issues. For more information on this Client Alert or on how CCIOA might impact you, please contact any of the attorneys in the Real Estate practice group (for a listing, click here.)

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