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  • 02/01/2024 2:48 PM | Anonymous member (Administrator)

    By David Graf, Moeller Graf

    The word “transparency” gets used a lot in the media, the legislature, anti-HOA forums, and at annual meetings. I’ve seen a number of public meetings recently where a few owners have complained about a “lack of communication” from the board to them. In listening to these owners, I have discovered that they feel that their boards have not been proactive in affirmatively pushing out information to them even though they may not have requested information. They feel left out, unheard, or outside of the association loop. The boards that can get the most information to owners at a low-cost and in an interesting manner will, all other things being equal, have the most satisfied residents.

    But good communication is only one aspect of transparency. It’s an important one, because if the owners feel unheard, there would be a lack of satisfaction and reduced trust on the part of the membership, no matter how good of a job the board is otherwise doing. But transparency goes far beyond email blasts about relevant community events. It starts with how the board does business.

    The corporate model of governance is based upon deliberative action by a group of directors at an open meeting where owners can be present. This is the gold standard for conduct because it is consistent with law, it involves collaboration, and it allows the board members the benefit of hearing different perspectives from the various community members who are in attendance. Regular open meetings of the board are the foundation of good governance.

    Of course, Colorado law does not define what a meeting is and is not. Furthermore, the law is unclear about what notice needs to be provided to the owners about upcoming board meetings, and when that notice might be provided. Lastly, the nonprofit act states that unless prohibited by the bylaws, association boards can take action on virtually any association issue by email outside of a meeting. These three features of Colorado law have been abused by a few boards and have fueled public perception that boards are secretive bodies that take action in private. 

    Here are a few suggestions on how to best increase board’s actions.  First, have regular and well-publicized open meetings. Whether this means that notice will be mailed out to the owners before every board meeting or whether there will be one notice of a regular board meeting scheduled for the entire year will depend on the community and its documents. But giving the owners certainty as to when the board will make decisions is a great first step.

    Next, consider developing protocol for giving owner notice for special board meetings that are not held at the regular date and time. This might be an email blast, sandwich board notification in a conspicuous place within the community, or some other method. This allows the owners to know that if there is a special meeting of the board that will be called, they will have the opportunity to participate.

    If the board is going to have a “working session” to discuss, advertise it as if it were a board meeting. Because it is not technically a meeting, particularly if no decisions are being made, there’s an argument that the board does not have to take public comment. However, unless the would-be attendees have proven themselves not to be civil, then letting the attendees speak is a good way to gain additional information and build community.

     Sometimes there is a concern among board members that they need to get a handle on a complicated issue, such as a budget, in private so that they don’t look unprofessional in front of the owners. There can be some truth to this belief but having “secret meetings” can make the board look unprofessional in a much more damaging way. Furthermore, allowing owners to see the work that goes into revising the budget, disagreements and all, can go a long way to build the credibility of the board. For these reasons, I believe that an open and advertised “working session” is the only way to hold one these days.

    Serving as a volunteer is becoming more challenging with each passing year. Regulatory pressure, increasing prices, negative public perception, and a general lack of civility have all contributed to make otherwise committed volunteer leaders rethink their commitments to their neighborhood. It is stressful but very important work. And it is understandable that volunteer leaders, who are generally very diligent and capable people, do not like to be criticized by people who have incomplete information and who may not be showing up at their best. However, adding a layer of secrecy over the board’s operations only increases the animosity among the owners and the stress on volunteer leaders.

  • 02/01/2024 2:47 PM | Anonymous member (Administrator)

    By Anthony Smith, SJJ Law

    Homeowners Associations (HOAs) hold a vital role in safeguarding the value and integrity of residential communities. Securing appropriate property insurance coverage is crucial for HOAs as they oversee shared spaces and amenities. However, choosing the right property insurance policy can be a complex task. Below are three essential considerations to be aware of when purchasing insurance.

    Consideration #1: Understand and Plan for Your Deductibles

    Deductibles for property insurance policies have evolved over time, becoming more intricate. Most property insurance policies for HOAs feature different deductibles for different types of losses. While some losses still involve a single flat rate deductible, others employ a percentage-based deductible. In states like Colorado, where wind and hail storms are common, percentage-based deductibles place a significant financial burden on HOAs and their members.

    Fortunately, HOAs subject to the Colorado Common Interest Ownership Act (“CCIOA”) can shift the deductible expense downstream to their owners through pro rata assessments. This means owners' HO-6 insurance policies can cover the deductible assessment. However, HOAs not subject to CCIOA must either have an explicit right in their governing documents to assess the deductible back to the owners or rely on special assessments, which can cause delays or barriers to necessary repairs.

    Older HOAs not subject to CCIOA should consider amending their governing documents to grant them the right to assess their property insurance deductible back to the owners.

    Consideration #2: Pay Attention to Exclusions

    Insurance policies may appear similar at first glance but they often vary significantly in terms and conditions. HOAs must be attentive to potential exclusions in their policies. Here are three common exclusions that HOAs should strive to avoid:

    a) Functional Damage, Cosmetic Damage, and Marring Exclusions: These exclusions pertain to damage that doesn't impact the structural integrity of the property but can still detract from its aesthetic appeal. These exclusions hinder an HOA's ability to address issues that may affect the property's overall value and appeal.

    b) Ordinance or Law Exclusions: These exclusions limit coverage for costs associated with complying with building codes or laws that may have changed since the property's original construction. For older communities, this exclusion can be particularly significant as repairs may require updates to meet current building codes, leaving the HOA responsible for the additional costs.

    c) Matching Exclusions: Matching exclusions restrict coverage for the replacement of undamaged portions of a property to achieve visual consistency with the repaired or replaced sections. This limitation makes it challenging for HOAs to restore or replace damaged portions of a property to match the undamaged areas.

    HOAs should negotiate with insurers to eliminate these exclusions, ensuring they have comprehensive coverage that adequately protects their assets, maintains aesthetic appeal, and positively contributes to property values.

    Consideration #3: Be Mindful of Your Duties and Responsibilities

    Finally, HOAs have important duties to fulfill to their insurance companies in the event of a loss. The most significant duties include:

    a) Prompt Notice of Loss: HOAs must promptly notify their insurance companies of any loss or damage to the insured property. Timely notification is critical and generally outlined as a requirement in the insurance policy.

    b) Cooperation with the Insurance Adjuster: HOAs are obligated to cooperate with the insurance carrier's adjuster during the claim investigation. This involves providing access to the damaged property, facilitating inspections, and offering necessary documentation to support the claim.

    c) Proof of Loss: Insurance companies may require HOAs to submit a formal proof of loss document. This document details the loss, including the items damaged, estimated repair or replacement costs, and other pertinent information. Timely submission of a proof of loss is often crucial, as failure to provide one may result in the claim being denied.

    As HOA managers and board members, understanding the nuances of property insurance policies is essential for protecting the interests of residential communities. By keeping three key considerations in mind, HOAs can make informed decisions when purchasing insurance:

    First, comprehending and planning for deductibles is crucial. Whether dealing with percentage-based or flat rate deductibles, HOAs should explore their options to shift the deductible expense downstream to owners, either through CCIOA provisions or by amending governing documents.

    Second, paying attention to exclusions is vital for comprehensive coverage. Negotiating with insurers to eliminate exclusions related to functional damage, cosmetic damage, marring, ordinance or law compliance, and matching can help maintain aesthetic appeal, address repairs, and protect property values.

    Last, understanding and fulfilling duties and responsibilities to insurance companies is essential in the event of a loss. Promptly notifying insurers, cooperating with adjusters, and providing necessary documentation such as proof of loss facilitate efficient claims processes and ensure that HOAs receive the coverage they need.

    By being well-informed and proactive in insurance matters, HOA managers and board members can effectively safeguard the assets, integrity, and overall value of their residential communities. Making thoughtful choices and fostering constructive relationships with insurance providers lead to greater protection and peace of mind for everyone involved.

    Anthony (“Tony”) T. Smith has been representing property owners for most of his career. Tony’s practice focuses on the diverse legal needs of common interest communities. He regularly advises condominium and townhome associations on all aspects of operation, management, governance, and litigation.  

  • 02/01/2024 2:45 PM | Anonymous member (Administrator)

    By Hal Kyles, Orten Cavanagh Holmes & Hunt, LLC

    Based on recent legislative changes, Colorado homeowner associations have had to rethink the way they manage delinquencies. House Bill 22-1137 was signed into law in August of 2022 and imposes greater obligations and burdens on associations in the collection of delinquencies. Like any business, associations must be able to predictably budget for expenses. As assessments are the lifeblood of any HOA, when unit owners fail to pay assessments, the association can be in jeopardy of meeting its obligations. There are, however, steps an association can take to enhance its confidence that money will be available when members do not make timely payments.

    Step One: Adopt an Updated Collection Policy

    Colorado requires most associations to adopt and follow a written policy for the collection of unpaid assessments. The new law requires associations to update their collection policies to comply with the new obligations and restrictions on collecting delinquencies. Any association that has not already done so, should check with their community manager or HOA attorney to verify that it has a collection policy that is compliant with current laws. An association that does not have a current collection policy is prevented from referring a delinquent account to an attorney or collection agency. 

    Step Two: Familiarize and Adhere to Collection Policy

    It isn’t good enough to simply have a collection policy. The purpose of the policy is to provide a suitable and fair process for managing the collection of delinquencies. Failure to follow the prescribed procedures can provide unit owners with a defense in the event legal action is taken against them. For this reason, associations and their managers should be familiar with the policy and adhere to the procedures specified. Additionally, the policy is intended to provide an efficient process to manage collection of delinquencies. This purpose can only be achieved by close adherence to the process outlined in the policy. 

    Step Three: Payment Plans Can Benefit HOA

    The use of payment plans can be an effective means for the recovery of delinquencies. House Bill 22-1137 extended the minimum payment term from six to eighteen months. Experience has shown that the liberal use of payment plans can benefit both the association and delinquent unit owner. The Colorado Common Interest Ownership Act (CCIOA) requires associations to make a good-faith effort to coordinate with a unit owner to set up a payment plan before referring a matter to its attorney or collection agency. Entertaining requests from owners for a payment plan can create goodwill and avoid the need to seek legal action to collect the delinquency. Payment plans are intended to reduce additional collection expenses for both the association and unit owner. For these reasons, HOA boards are encouraged to utilize payment plans. All payment plans should be put in writing and acknowledged by both the unit owner and the association. In the event the owner fails to complete the payment plan, the documentation can later be used as evidence of the owner’s admission of the debt. Therefore, a signed payment plan can be a valuable document for the association’s attorney.

    Step Four: "Manage” the Process

    As discussed, adopting and following a written collection policy is a must, but equally important is the need to manage the entire process. Here, the key issues are record-keeping and communication. One of the greatest benefits to utilizing professional management are the accounting records and ledgers that can be generated with the use of industry leading software. Few things can cause a bigger problem than the failure to maintain accurate unit ledgers. This is especially true if the situation ends up in front of a judge. Having a professional community manager is likely to enhance the association’s success in collecting delinquencies. Of course, not all associations require professional management, depending on the association’s size and location. In most cases, however, having a dedicated individual (or individuals) whose primary responsibility is to maintain and enforce policies will greatly enhance the recovery of unpaid assessments.

    The other key aspect to managing the process is effective communication. Associations have a variety of means to communicate with unit owners – mail, email, telephone, and even text, are a few examples. Modern life and technology dictate that associations utilize those modes of communication available. CCIOA requires associations to deliver notice of a delinquency by three different means. In some cases, an association may not possess a unit owner’s phone number, email address or current mailing address. Efforts should be made to obtain and periodically update an owner’s contact information. The county assessor can provide the legal owner’s mailing address. In the event the association receives returned mail, the envelope may provide a forwarding address or other useful information. A few minutes spent conducting a Google search may save time and unnecessary expense if the owner can be located. Indeed, the most frequent complaint I hear from owners is, “the association never talked to me.” Today, associations are required by state law to exercise more than diligent effort to communicate with a delinquent unit owner.

    If it does become necessary to refer an owner’s account to the association’s attorney, it is just as important that the association maintain open and frequent contact with the attorney. Often the association (community manager or board member) is in possession of helpful information that can benefit the attorney in collecting the debt. Occasionally, unit owners will attempt to circumvent the attorney by communicating with the board or manager. The association’s collection policy typically specifies that once a matter is referred to legal counsel all communications from the association will come from the association’s attorney. Policing this part of the process can sometimes become necessary. 

    HOA delinquencies typically go hand in hand with the health of the local economy. When circumstances make collections challenging, successful collections can be enhanced if the association has already taken the appropriate steps – has a current written collection policy that is compliant with state law; identifies the individuals responsible for implementing the policy and managing the process; makes diligent efforts to communicate with the unit owner; periodically verifies that the association has up-to-date contact information; and finally, communicates with the association’s attorney to achieve an optimum resolution.

    Hal Kyles is the managing attorney for collections at Orten Cavanagh Holmes & Hunt, LLC. He has practiced law in Colorado for thirty years, the last fifteen in support of owner associations. He is a former Marine officer and life-long runner. 

  • 02/01/2024 2:41 PM | Anonymous member (Administrator)

    By Elina B. Gilbert, Esq., Altitude Community Law

    The Corporate Transparency Act (“CTA”) was originally enacted by Congress on January 1, 2021 for the purpose of preventing money laundering, tax fraud, and other similar activities, by requiring small corporations in the United States to file reports with the federal government disclosing certain information.   

    The reporting requirements are scheduled to take effect on January 1, 2024, and entities in existence as of this date, will be required to file their first report no later than December 31, 2024.  Entities created after January 1, 2024, will be required to file their first report within 30 days of formation.  

    The CTA requires small corporations and limited liability companies to disclose information about their beneficial owners by filing a report with the Financial Crimes Enforcement Network of the United States Treasury Department.  The CTA further provides that any information collected through the reporting requirements will not be available to the public. Instead, a database will be maintained of beneficial ownership data that will be made available to law enforcement.   

    Because most Colorado associations are set up as nonprofit corporations, they fall under the reporting requirement of the CTA.   “Beneficial owners” are defined as: 

    (1) Any owners who, directly or indirectly, either exercise “substantial control” over the corporation; or 

    (2) Any owners who own or control 25%, or more, of the corporation.

    Pursuant to the CTA, an individual is deemed to exercise “substantial control” over an association if such person:

    (1) Serves as a officer of the association; 

    (2) Has authority over the appointment or removal of any officer or a majority of the board of directors (or similar body); 

    (3) Directs, determines, or has substantial influence over important decisions made by the association, including, but not limited to, decisions regarding: 

    (a) The nature, scope, and attributes of the business of the association, including the sale, lease, mortgage, or other transfer of any principal assets of the association; 

    (b) The reorganization, dissolution, or merger of the association; 

    (c) Major expenditures or investments, issuances of any equity, incurrence of any significant debt, or approval of the operating budget of the association;

    (d)   The entry into or termination, or the fulfillment or non-fulfillment, of significant contracts; or

    (e)  Amendments of any substantial governance documents of the reporting company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures; 

    The CTA further provides examples of “substantial control” as including:

    (1) Board representation; 

    (2) Ownership or control of a majority of the voting power of the association; 

    (3) Rights associated with the association’s finances; or

    (4) Having contract authority on behalf of the association.

    Based on the above, and by virtue of the authority granted to them through Colorado law and governing documents, directors qualify as beneficial owners with substantial control over the company.  Additionally, any owner who owns 25% or more of the units (or voting rights) in the association, would also constitute a beneficial owner subject to reporting requirements.

    Although exceptions exist with respect to “beneficial owner” qualifications, board members will not typically fall under such exceptions. The most significant exceptions include:  

    (1) Individuals acting as nominees, intermediaries, custodians, or agents on behalf of another individual; 

    (2) Individuals acting solely as employees of a corporation or LLC whose control over or benefit from is derived solely from his or her status as an employee; 

    (3)  Large corporations with more than 20 employees having an operating presence at a physical office and more than $5 million in gross receipts or sales; and

    (4)  Tax-exempt 501(c)(3) corporations.  Please note, these types of corporations are set up for religious, charitable, education, or similar purposes and do not typically encompass homeowners’ associations despite the fact that they are nonprofit corporations.

    Once reporting requirements become effective, associations will be required to provide the following information in their reports:

    • Legal name of association
    • Trade name (if any)
    • Current address (including both the registered agent and principal office)
    • State where association was formed
    • Taxpayer identification number

    The initial report must also include the following:

    • List of every beneficial owner in the association including full legal names, birth dates, current addresses, and one of the following:  
      • passport number; 
      • driver’s license number; or 
      • state-issued identification document number; and 
      • an image of the document from which the unique identifying number was obtained

    The information reported must also be updated after elections/appointments to remove prior board members and add current directors.

    Finally, failure to comply with the reporting requirements can result in civil penalties of $500 per day, and criminal penalties of up to $10,000, and possible jail time (up to 24 months), so it is very important for associations and board members to be aware of and ready for the reporting requirements.

    Elina Gilbert has practiced community association law for 23 years with Altitude Community Law, PC., with an emphasis on transactional issues such as insurance, document amendments, and real estate matters. Elina is Shareholder in Charge of Practice and has overseen the Altitude Community Education (“ACE”) program for over 14 years, a critical part of the firm’s mission statement and overall brand. Overseeing ACE involves creation, preparation, and presentation of 25+ programs per year, including lunch forums, webinars, and half-day classes that provide managers with CMCA and Real Estate credits. She also heads up the firm’s monthly E-Newsletter, which is nationally circulated. Elina is a frequent speaker on both a local and national level, which includes CAI Law Seminars, attorney courses through the National Business Institute, national webinars through, and state classes and webinars through ACE and local CAI Chapters. Elina was inducted into the College of Community Association Lawyers (“CCAL”) in 2010, which represents an elite group of attorneys determined to be the most qualified experts in the HOA industry. Elina served as co-chair of the CCAL Law Seminar Planning Committee between 2018 and 2021, which developed and created the annual Law Seminar for HOA attorneys around the country, and currently serves on the CCAL Board of Governors and as a member of the CCAL Admissions Committee. When Elina is not practicing law, she enjoys spending time with her family and dogs, doing crosswords and Sudoku puzzles, working out, taking walks, and dreaming of the day the law will allow her to have a pet moose.

  • 12/01/2023 5:16 PM | Anonymous member (Administrator)

    By Patricia A. Book, Ph.D.

    Engaging volunteers is an ongoing challenge in homeowner-led communities.  Working parents with young children have limited volunteer time.  Professionals with heavy travel schedules or businesses with heavy work schedules are challenged to commit the time necessary.  So, if the cost of volunteering with your Homeowners Association (HOA) is time, what might be the rewards and how do you engage homeowners in serving their neighborhood?

    Tapping into homeowners’ expertise, interests, and skills on specific projects has been an effective strategy for getting them engaged and has led to extraordinary benefits for the community.  Whether these be social events like organizing fishing derbies, Halloween parades, or developing a swim team, to more technical needs like pond management, planning or fence replacement, homeowners recognize that they may have the experience to help their own HOA make good decisions about expenditures that directly benefit them as homeowners.

    Our management company and business partners play a key role in supporting our efforts to make service to our neighborhood a positive experience for volunteers as well.  The managers and business partners help educate volunteers about our practices and past experiences, help them locate important historical documents, and assist in securing additional information to support them in their work.   

    We have found that having a Board liaison devoted to building the relationship with the business partners is invaluable to effective communication.  It helps the Board understand the partners’ needs and it also facilitates prompt handling of requests from business partners that need Board action.  


    A success story for Willow Springs Community Association involved sale of land to the City to enable expansion of an arterial roadway.  This expansion is beneficial to homeowners as it improves safety, reduces congestion, and provides improved accommodations for alternate travel modes.  The project required significant negotiation because an irrigation pipe traveled through this area and we had to protect that pipe for our 33 acres of green space and over 500 trees.  To enable the sale, we had to keep the community informed every step of the way over many months of land appraisals, legal reviews and negotiations.  The City contractors pressured us into a very short time frame, threatening eminent domain, but we were able to secure 75% of the homeowners’ approval needed within a two-week time frame—with volunteers going door to door--to enable the sale and protect our irrigation system.  The key to all this was transparency and communication to our 460 homeowners.  Homeowners understood the situation and were responsive when ballots were sent out.   Our management company provided superb support in preparing for and executing the election.  The staff were as excited as the Board by our success.  Now that is a partnership!

    Another success story relates to the chartering of a Pond Committee to mitigate the costly recommendation in our Reserve Study to dredge our irrigation pond.  We were able to tap into considerable community expertise—engineers, water management experts—as well as our vendors to come up with cost effective solutions to selectively hydroexcavate the pond, install stone rip rap to mitigate further erosion, and forego a planned Reserve budget expenditure of some $500,000.  Instead, the Committee developed a pond management plan for future Boards, documenting important technical and legal aspects of this irrigation system, including pumps, wells, water sources, and recommendations to address sedimentation.  Again, communication with homeowners so they were aware of every step of the project ensured their support during various periods of disruption.  The volunteers did an extraordinary job that will benefit the community for decades to come.

    Transparency, communication, managing expectations, and responsible fiscal management create the necessary environment for rewarding volunteer participation.  Volunteers take pride in their community and playing a part in its success, whether through short term projects or events or longer-term Board and committee service.

    Patricia A. Book, Ph.D., CAI-RMC delegate to CLAC, CAI International’s Homeowner Leaders Council and Government and Public Affairs Committee, and Executive Board of Willow Springs Community Association in Fort Collins.

  • 12/01/2023 5:11 PM | Anonymous member (Administrator)

    By Nate Skrdla, Rob Kabza, ASR Companies 

    It’s probably safe to say that maintenance and construction costs are going to go up, perhaps way up, in 2024.   Why?  Ongoing economic uncertainty in the market, higher interest rates, continued labor shortages, rising costs of materials, and (oh lucky us…) a highly charged political season.

    We know it’s coming…the question is, what can we do about it?    While there’s not much we can do about the conditions on the ground, there are some steps we recommend every property manager or HOA board member take to help mitigate the chaos and uncertainty (and hopefully keep your costs as low as possible). 

    Here are five important steps you can take to mitigate and manage planned project cost increases in the coming year:

    1. Pre-Plan, Pre-Plan, Pre-Plan.  The more work you do upfront before engaging with a construction company the better.  If your project involves structural elements (or if you’re unsure), the first step is to get an engineering analysis and recommendations prior to talking with contractors.  The more detail you can provide the contractors, the better.  Early planning with your residents is important as well.  They need to know what to expect so they can arrange their lives accordingly. 

    1. Focus on the Desired Outcomes and Encourage Construction Companies to Offer Creative Solutions.  What do you want from this project?  How do you want your life and your tenant’s life to improve?  What do you want your tenants to experience before, during, and after construction?  What are the needs of your community when it comes to access, safety, feedback, etc.  What are your budget constraints?  What is your list of MUST HAVES and LIKE TO HAVES?  Share all of this with the construction companies you ask to bid on a project.  Ask for multiple solution options to solve the problem and deliver the best value. 

    1. Insist on Seeing the Details, and Make Sure You’re Comparing Apples to Apples.  When comparing bids, make sure you’re getting the same level of detail from each party you’re considering.  Make sure to discuss staging areas, security, safety, and trash removal as part of this process.  Consider using an outside, objective expert to help you assess competing bids.

    1. Work With all Stakeholders on Various Ways to Ensure Value.  Before your project starts, look for ways you could partner with the construction company to save time or money.  Can you make space available for them to safely store tools or materials on site?  Can you allow access to a greater area or allow multiple phases of the project?  Can you be flexible with hours, or access, etc.? 

    1. Be Aware of Potential Bottlenecks and Make Sure Your Construction Company is Transparent and Communicates Throughout These Steps.  The industry changed during the pandemic, and many of those changes continue today, including:
    • Permitting slowed from days to weeks, even months.
    • Lending institutions slowed loan processes.
    • Supply chain resources and supplies became unreliable. 
    • Decision makers are more hesitant to make timely decisions due to general uncertainty.
    • Many additional issues beyond the specific projects.

    Some of these things can be sped up while others are out of everyone’s control.  The key is to insist on regular communication between you and your construction company, as well as ongoing communication with all stakeholders involved.

    About Rob Kabza, President of ASR Companies Rob has over 26 years of construction management experience in Colorado, with a primary focus on project management, construction operations and reconstruction projects. He oversees production and quality management, and provides leadership for all projects from the preparatory planning phase through the construction completion. Rob received his B.S. in Construction Management from Colorado State University.‍

    About Nate Skrdla, Director of Construction at ASR Companies Nate has over 20 years of Construction Management in Project Planning, Project Management and Purchasing experience. His focus is on Trade Partner, Vendor and Supplier relations. He supports the production team in meeting project goals, timelines, and budgets. Nate received his B.S in Construction Management from the University of Nebraska at Kearney.

  • 12/01/2023 5:03 PM | Anonymous member (Administrator)

    By Brad Henderson, Network Insurance Services

    Several years ago, my wife suggested, "You should run for a position on our HOA's Board of Directors. You attend so many board meetings; you would be great at it!" Today, more than ever, I appreciate those who volunteer to serve their community as a board member. This often thankless position can demand so much time that it feels like a part-time job. I considered my wife's suggestion to run for a board position much longer than I would today. It seems that increasingly over the last couple of years, boards have been faced with a barrage of difficult decisions with far-reaching consequences for their community members.

    Early in my insurance career, inviting the insurance broker to present a renewal proposal was often a formality and limited to 15 minutes because "we have a lot on the agenda." As the United States experienced a soft real estate property insurance market with healthy competition, low premiums, and robust coverage availability, discussions regarding maintenance, landscaping, and legal matters often took precedence over the insurance renewal. 

    The days of quick insurance renewal meetings have, for most communities, come and gone. The once-soft market evolved almost overnight into the hardest insurance market in a generation, putting immense pressure on communities and their financial and insurance positions. What happened?

    According to the NOAA, since 1980, the United States has sustained 371 separate weather and climate disasters where the overall costs and damages exceeded $1 billion, averaging about 9 billion-dollar events each year over the last 43 years. The US experienced a record-breaking 22 weather and climate events in 2020 that exceeded $1 billion. With a few months remaining in 2023, this previous record has been surpassed with 23 weather events exceeding the billion-dollar disaster threshold in the United States, exceeding a combined cost of $57 billion.

    Disasters of this magnitude are having dramatic repercussions in the insurance market. In 2020, the US Property & Casualty industry experienced a net underwriting loss of $3.8 billion. In 2022, that loss ballooned to $26.9 billion. The US Property & Casualty recorded a $24.5 billion net underwriting loss in the first half of 2023. The number of costly disasters has increased over time, and the resulting underwriting losses have caused dramatic changes in the insurance market.

    Underwriting capacity is the maximum amount of liability an insurance company is willing to insure or risk they are willing to assume. The market is experiencing a capacity shortage; carriers are reducing the amount of property coverage they are willing to insure. For example, a carrier that would previously insure a Colorado association with a reconstruction value of $120,000,000 or more has recently reduced their maximum per-account capacity to just $30,000,000.

    Rising reinsurance costs have contributed to this dramatic reduction in available capacity. Reinsurance, simply put, is insurance for insurance carriers. Reinsurance transfers some of the risk and financial exposure associated with issuing insurance coverage. Reinsurance plays a valuable role in the overall insurance landscape, giving insurance companies the opportunity to take on additional business and effectively allocate their risk. Reinsurance costs have increased and capacity reduced dramatically, and, in some cases, reinsurance has become unobtainable. The impacts of this are being felt downstream by insurance carriers and their policyholders.

    These market conditions have caused many of the most competitive standard market carriers to pull out of the HOA insurance space completely. Communities across the state have experienced non-renewals over the last 24 months. This has caused confusion and frustration for many communities who may have never turned in a claim.

    The few standard market carriers left have become increasingly selective about the communities they will insure. Communities with buildings built prior to 1990, with large property schedules, high reconstruction values, located in high wildfire areas, and those with poor claims history are being pushed into the excess and surplus lines marketplace. These 'carriers of last resort' typically provide less coverage for a higher price. Premium increases of 500% or more have become common, forcing board members to make challenging decisions for their communities. Residents often seem to disregard the fact that the volunteer board serving the community are members of the community themselves. The request for security services at meetings by board members has increased nearly as much as insurance premiums. If my wife attended one of these tense community meetings, I suspect she may take back her suggestion for me to join our HOA's board.

    Insurance premiums will come down -  the insurance market is cyclical and hard markets always soften. The big question is when this will happen? We will need to see a decrease in the cost and/or frequency of catastrophes, or insurers’ ability to collect premiums and offer coverage that can sustain such significant loss activity. 

    The US property and casualty industry has not yet reached the inflection point between premium increases and claim costs. House Bill 23-1288, establishing the Fair Access to Insurance Requirements (FAIR) Plan, was passed by the Colorado legislature and then signed into law by the Governor in May 2023. Over 30 states currently offer some form of a FAIR plan. This program is designed to provide property insurance coverage when coverage is unavailable from standard insurance companies. While this is aimed at alleviating some of the challenges in the current market, access to FAIR Plan policies in Colorado is not expected until early 2025. 

    Communities should prepare for another year or two of potentially increasing premiums until the market begins to soften. Allocating funds in the budget earmarked for potential premium increases can help offset sudden spikes in insurance costs. Increasing assessments now in anticipation can prevent a special assessment later. Higher deductibles can result in lower premiums but should be combined with rigorous risk management practices to minimize potential losses. Protecting the master policy’s claims loss ratio is a good investment. Effective and regular communication with residents about insurance-related changes and the importance of properly structuring personal lines policies ensures that both the HOA and unit owners are prepared for any new cost-saving strategies the community implements.

    Successfully navigating this volatile insurance landscape requires a partnership with an insurance broker with an established reputation and trustworthiness with underwriting partners across the globe. Securing coverage for a community in a soft market can typically be done by marketing coverage to 3-5 standard market carriers. In the current insurance market, a reputable insurance broker may approach up to 40 carriers worldwide to build a comprehensive policy portfolio that adequately addresses the coverage needs of the community. Plan for quotes to be received closer to the renewal date than your board would like, as many carriers won’t release a quote until sometimes within just a week of renewal. Your broker will be able to give you a pretty close estimate of the premium within 30 days of renewal. 

    Will rates ever come back down to where they were in 2019? Unlikely, at least in the near future. Will rates come down from where they are today? Absolutely. Enthusiastically, "Yes!" Weathering this hard insurance market with an insurance partner well-versed in the complexities of the HOA marketplace is key to identifying and implementing strategies to position your community for success, both now and when the market begins to cool.

  • 12/01/2023 5:00 PM | Anonymous member (Administrator)

    By Aaron Goodlock, Orten Cavanagh Holmes & Hunt, LLC

    CAI’s Legislative Action Committee (CLAC) is anticipating another active legislative session in 2024. Both the governor’s office and members of the general assembly have signaled that common interest communities continue to be a significant area of focus for the Colorado legislature. 

    Legislative reform presents both challenges and opportunities for community associations. Among CLAC’s objectives is to engage proactively with stakeholders and legislators in order to embrace opportunities and limit challenges. 

    Legislation Expected to be Introduced in 2024

    As of October 2023, the Colorado HOA Homeowners’ Rights Task Force members have been appointed and task force meetings are underway, with the first public meeting scheduled for October 24, 2023. Additional task force meetings will be held through the end of 2023 and early 2024.

    The HOA Homeowners’ Rights Task Force final report is scheduled to be published no later than April 15, 2024 – in the midst of the 2024 legislative session. Among the primary issues expected to be addressed in the report are legislative recommendations pertaining to:

    • Common interest community fining authority and practices
    • Community association foreclosure practices
    • Communication practices between community associations and homeowners
    • Availability and disclosure of association records 

    CAI members are encouraged to participate in the HOA Homeowners’ Rights Task Force survey and share comments or ideas by attending the task force meetings or submitting information online through the HOA Homeowners’ Rights Task Force website: 

    Although it would seem premature to introduce legislation prior to the release of the task force’s final report, legislation affecting common interest communities is expected to be introduced throughout the 2024 legislative session. The following topics have been identified as potentially subject to new/additional legislation based on recent nationwide trends, public policy statements from local and statewide trade organizations, previous legislation introduced in Colorado, and recognized state-specific concerns:

    • Insurance 
    • Reserve studies and funding
    • Colorado House Bill 22-1137 reform
    • Housing affordability and local/statewide land use regulation (e.g., ADUs)
    • Community association collection practices and remedies
    • Wildfire mitigation, conservation, and sustainability
    • Regulation of home-based businesses

    Key strategies and initiatives of CAI for the 2024 legislative session include:

    • engaging in constructive dialogue and discussion with the HOA Homeowners’ Rights Task Force 
    • building and developing political support
    • identifying legislators to sponsor meaningful change for community associations, with a vested interest in building and maintaining resilient and sustainable communities throughout Colorado
    • developing pragmatic legislative solutions to address challenges arising from previous legislation (e.g., HB 22-1137 clean up)
    • preventing further legislation that substantially adversely impacts Colorado common interest communities, homeowners, and residents
    • promoting legislation that supports overall welfare of community associations
    • advocating for changes and updates to CCIOA that reflect modern best practices, embrace technology, and support harmonious, thoughtful, and recognized public policies

    What Else to Expect and Prepare for in 2024

    The Colorado Fair Access to Insurance Requirements (FAIR) Plan

    The Colorado Division of Insurance will appoint the board of directors to oversee and implement the Colorado FAIR plan, established by Colorado House Bill 23-1288 and signed into law by the governor on May 12, 2023.  The FAIR Plan board of directors is to be appointed by January 1, 2024. 

    The FAIR Plan will provide residential and commercial property insurance to eligible individuals and entities in Colorado (including community associations) when coverage is unavailable through traditional means.

    Once appointed, the FAIR Plan board of directors is required to develop a “plan of operation” to be submitted to the Colorado Division of Insurance on or before July 1, 2024. The plan of operation will identify, among other things, the lines of coverage, coverage limits, policy forms, and covered perils to be made available and offered through the Colorado FAIR plan.

    Continued discussion and analysis of future changes to CCIOA based on the HOA Homeowners’ Rights Task Force Final Report

    Community associations should expect ongoing discussion among legislators and interest groups about issues identified in the HOA Homeowners’ Rights Task Force Final Report, after it is published in April, 2024. In addition to the primary topics outlined above, the final report is expected to address and include recommendations regarding possible (future) changes to CCIOA to incorporate and implement aspects of the 2021 Uniform Common Interest Ownership Act. 

    To ensure that constituents’ voices are heard, CAI members are encouraged to attend and participate in the HOA Homeowners’ Rights Task Force proceedings and contact your local legislators prior to and during the upcoming legislative session.

    Aaron J. Goodlock is a partner at Orten Cavanagh Holmes & Hunt, LLC.  He provides general counsel and transactional services to community associations throughout Colorado and serves on the Colorado Legislative Action Committee for CAI. 

  • 12/01/2023 4:59 PM | Anonymous member (Administrator)

    By Ed Jarrett

    It has been a year since the tragedy involving Micheal Shinners and many others at 1280 Peachtree located in Atlanta, Georgia.  What as an industry have we learned and what are we doing to prevent these events?  Unfortunately, since January 1st, the U.S. has experienced at least 484 mass shootings so far this year, according to the Gun Violence Archive. This averages out to almost two mass shootings a day. Mass shootings are defined as an incident in which four or more victims are shot or killed, according to the archive.  The vast majority of these shootings occurred at a place of business.  Candidly, these events are happening at such a rate that society is becoming desensitized to them. Indeed, many mass shootings are often no longer reported on by media outlets.

    Our industry, despite being somewhat of a volatile environment, (especially for onsite staff and managers), has been immune to this phenomenon until now. Over the past five years, several instances of workplace violence that resulted in the loss of life have occurred.  Onsite staff perform their professional duties in an environment where they encounter disgruntled homeowners and residents, despite their best efforts. I think all of us in the industry have a story of a disgruntled resident or owner that made us uncomfortable or worse. Many of us have protective orders issued by local courts to help prevent these interactions from escalating. Unfortunately, many of these events are mental health-related, which can be extremely difficult to navigate.


    Simply put, the term “Active Shooter” is here to stay, and incidents will increase due to the uncertainty of the times. Given the nature of our industry, we should incorporate active shooter training into our standard life safety protocols. Beyond that, employment contracts and management agreements should address this topic expressly,  including which entity is responsible for training. These events can be prevented with appropriate training and a proactive response as illustrated below.

    Per the FBI, “Study of Pre-Attack Behaviors of Active Shooters in the U.S.”

    • Approximately one-third of active shooters in this sample victimized only random members of the public, MOST active shooters arrived at a targeted site with a specific person or persons in mind.
    • 73% of all active shooters had a known connection with the attack site.
    • When threats of confrontations occurred, 95% were in person.
    • 55% of active shooters who had a specific target made threats or had a confrontation with the intended target.
    • 62% of all active shooters had documented mental health issues.

    The above information as provided by the FBI paints a clear picture that most of these events can be prevented.  Beyond that, the above for industry professionals is an all too familiar set of facts.  I would suspect that most property management professionals have encountered these behaviors in varying degrees, some more than others.  The event involving Micheal Shinners as well as the event in Toronto, Canada certainly contained the above warning signs.  

    These indicators paint a clear picture and corresponding outcome; act accordingly and do not hesitate to reach out to law enforcement.  Do not allow societal pressures to influence your decision to report incidents.


    Are we prepared as industry professionals to deal with such an event at a property?

    Similar to evacuation plans, active shooter training must be incorporated into the safety planning for onsite managers and staff. We should reinforce this training without creating alarm. It must become routine.  We create liability for our clients and staff by failing to implement training!  In conversations with other professional organizations, workplace violence and active shooter training appear to be widely discussed. Schools, places of worship, and municipal buildings are constantly improving their preparedness and training of staff. Given the size of many of the high rises in most metropolitan environments as well as those large-scale planned developments with sizeable amenity centers and schools, we as an industry should embrace this unfortunate reality.  We cannot be a late adopter of workplace training given the consequences.  

    Training is available at little to NO cost to you, your staff or property.  If you are interested, start with your local law enforcement agencies; many offer training and, in some instances, live simulations.  If you are looking for industry best practices, contact Alice Training ( Alice Training has evolved as the industry leader in training.  They have trained over 18 million individuals over the last twenty years and boast an impressive corporate list of customers ranging from Fortune 500 companies to local schools and places of worship.  Alice can help you understand the options, ensuring you keep the individuals in your organization safe with a trauma-informed approach to safety training that works for you.

    Get training for your staff, yourself and your community. Be an advocate for an increased awareness of this seldom discussed issue! 

    In 2017 I managed a luxury high-rise in the Atlanta market that found itself going through many of the scenarios I’ve mentioned in this article, and we were asking these questions and many more. Unfortunately, a man armed with a high-capacity handgun and additional ammunition entered the building with the intent of harming select individuals. Thankfully the staff at the time was able to stop the threat.  As the General Manager, I revisited every decision that led to the events of that day. It was a very difficult time as gunshots were fired, and people were harmed. The Board and I were faced with questions we were ill-prepared to address. The one thing we did learn was the need for training and safety protocols that we simply had not considered prior.

    #alicetraining, #darkangelmedical,#activeshooter,#stopworkplaceviolence

  • 12/01/2023 4:56 PM | Anonymous member (Administrator)

    By David Graf, Moeller Graf

    Community association leaders—boards and professional managers-- were never given the memo that their job descriptions changed. Historically, much of the time invested in managing a community was directed towards fiscal management, fund handling, planning for and replacing infrastructure, and performing ongoing maintenance.

    Leading up to the pandemic and beyond, political divisiveness, social justice movements, renewed focus on the rights of the individual, and other human factors have shaped community association leadership towards a more human-centric role: governance policies, open meeting design, frequent and much more proactive information delivery, and handling interpersonal conflict. 

    Many difficult owners with whom community association leaders interact with are in a category that I refer to as “Situationally Difficult,” meaning a person who has a situation that needs to be addressed before they will go back to being an otherwise-productive member of the community. This is not a value judgment on the merits of their situation but is, instead, a recognition that there is a situation in the first place, as opposed to just a difficult human. This allows us to focus our efforts on addressing the situation instead of labeling, castigating, or isolating the individual.

    A very vocal and increasing percentage of the difficult owners with whom community association leaders interact with are in a category that I refer to as “Currently Unrepairable,” which means that their issue goes beyond our ability to deliver a result that would end the conflict. Most of the Currently Unrepairable owners that I deal with thrive on the conflict; seeking solutions that would eliminate the conflict is like searching all over your house for your car keys when they were in your pants pocket to begin with. Some of these difficult owners will someday realize that the solution to their problem lies with them and will not be found through any number of contentious battles with their neighbors, the association, or its leadership.

    The challenge for community association leaders and professional managers is to recognize the difference between these two types of difficult owners and to minimize the number of difficult owners that we erroneously categorize as “Currently Unrepairable.” The reason that this is a challenge is because in the face of hostility, it is almost impossible to tell one from the other. As our job descriptions have evolved to solving difficult people problems, it is a missed opportunity to give up on finding a solution under the mistaken belief that it won’t matter.

    Here are a few ideas to consider both before and after the moment of conflict:

    1. Conduct all association business in an open session where owners are present. This minimizes conspiracy theories and builds a sense of trust.
    2. Continue to collect email addresses of owners and proactively push out information even if you believe that owners don’t care. 
    3. Recognize that limited owner participation (negatively referred to as apathy) is not a sound justification to stop being proactive in the communication. 
    4. Understand that owners’ concerns are very personal to them. Community association leaders understandably focus on the facts of an issue whereas owners often do not have that same context and are primarily focused on what they want and how it affects them. 
    5. Let go of judgment that owners could have and should have been more prepared in doing their research before arriving to the dispute. 
    6. Remember the “steward leadership” mentality which is that while we do want to make every effort to resolve the dispute, we must be responsible stewards of the governing documents for all of the other owners who rely on them. 
    7. Recognize that the temperature of the community is not accurately taken by a few very vocal and unhappy people showing up at a meeting. 
    8. Be aware that verbally acknowledging the importance of the issue to the owner, even if you completely oppose the situation, is healing. Often this is the difference between keeping someone Situationally Difficult from becoming Unrepairable.
    9. Take appropriate legal action when the situation is untenable. 
    10. Understand that there is a very small but real possibility that a verbal dispute can become violent. There is no association business worth someone’s life. 

    Community association leaders make a large and lasting impact on the lives of the people who live in communities. It can be difficult to see this value during community strife, but that does not mean that it does not exist. What you do matters. Thank you for continuing to do it.

    David Graf, Moeller & Graf, has practiced community association law exclusively since 2001. David has been admitted to the College of Community Association Lawyers (“CCAL”). In 2018 and 2020, David was elected by his CCAL peers to the CCAL Board of Governors and is the current President of CCAL. In 2015, David was named CAI’s National Educator of the Year.

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