2023 Colorado Revised Statutes › Title 38 - PROPERTY - REAL AND PERSONAL (§§ 38-1-101 — 38-53-110) › REAL PROPERTY (§§ 38-30-101 — 38-46-104) › INTERESTS IN LAND (§§ 38-30-101 — 38-34-106) › Article 33.3 - COLORADO COMMON INTEREST OWNERSHIP ACT (§§ 38-33.3-101 — 38-33.3-402) › Part 2 - CREATION, ALTERATION, AND TERMINATION OF COMMON INTEREST COMMUNITIES (§§ 38-33.3-201 — 38-33.3-223) › Section 38-33.3-209.5 - [Effective Until 8/7/2024] Responsible governance policies - due process for imposition of fines - procedure for collection of delinquent accounts - enforcement through small claims court - definitions

(1)
To promote responsible governance, associations shall:
(a)
Maintain accurate and complete accounting records; and
(b)
Adopt policies, procedures, and rules and regulations concerning:
(I)
Collection of unpaid assessments;
(II)
Handling of conflicts of interest involving board members, which policies, procedures, and rules and regulations must include, at a minimum, the criteria described in subsection (4) of this section;
(III)
Conduct of meetings, which may refer to applicable provisions of the nonprofit code or other recognized rules and principles;
(IV)
Enforcement of covenants and rules, including notice and hearing procedures and the schedule of fines;
(V)
Inspection and copying of association records by unit owners;
(VI)
Investment of reserve funds;
(VII)
Procedures for the adoption and amendment of policies, procedures, and rules;
(VIII)
Procedures for addressing disputes arising between the association and unit owners; and
(IX)
When the association has a reserve study prepared for the portions of the community maintained, repaired, replaced, and improved by the association; whether there is a funding plan for any work recommended by the reserve study and, if so, the projected sources of funding for the work; and whether the reserve study is based on a physical analysis and financial analysis. For the purposes of this subparagraph (IX), an internally conducted reserve study shall be sufficient.
(1.7)
(a)
With regard to a unit owner's delinquency in paying assessments, fines, or fees, an association shall:
(I)
First contact the unit owner to alert the unit owner of the delinquency before taking action in relation to the delinquency pursuant to subsection (1.7)(a)(II) of this section and shall maintain a record of any contacts, including information regarding the type of communication used to contact the unit owner and the date and time that the contact was made. Any contacts that a community association manager or a property management company makes on behalf of an association pursuant to this subsection (1.7)(a) is deemed a contact made by the association and not by a debt collector as defined in section
5-16-103 (9)
. A unit owner may identify another person to serve as a designated contact for the unit owner to be contacted on the unit owner's behalf for purposes of this subsection (1.7)(a)(I). A unit owner may also notify the association if the unit owner prefers that correspondence and notices from the association be made in a language other than English. If a preference is not indicated, the association shall send the correspondence and notices in English. The unit owner and the unit owner's designated contact must receive the same correspondence and notices anytime communications are sent out; except that the unit owner must receive the correspondence and notices in the language for which the unit owner has indicated a preference, if any. An association may determine the manner in which a unit owner may identify a designated contact. In contacting the unit owner or a designated contact, an association shall send the same type of notice of delinquency required to be sent pursuant to subsection (5)(a)(V) of this section, including sending it by certified mail, return receipt requested, and physically post a copy of the notice of delinquency at the unit owner's unit. In addition, the association shall contact the unit owner by one of the following means:
(A)
First-class mail;
(B)
Text message to a cellular number that the association has on file because the unit owner has provided the cellular number to the association; or
(C)
E-mail to an e-mail address that the association has on file because the unit owner has provided the e-mail address to the association.
(II)
Refer a delinquent account to a collection agency or attorney only if a majority of the executive board votes to refer the matter in a recorded vote at a meeting conducted pursuant to section
38-33.3-308 (4)(e)
. A community association management or property management company acting on behalf of the association shall not refer a delinquent account to a collection agency or an attorney unless a majority of the executive board votes to refer the matter in a recorded vote at a meeting conducted pursuant to section
38-33.3-308 (4)(e)
.
(b)
(I)
An association shall not impose the following on a daily basis against a unit owner:
(A)
Late fees; or
(B)
Fines assessed for violations of the declaration, bylaws, covenants, or other governing documents of the association. An association may only impose fines for violations in accordance with this subsection (1.7)(b).
(II)
(A)
With respect to any violation of the declaration, bylaws, covenants, or other governing documents of an association that the association reasonably determines threatens the public safety or health, the association shall provide the unit owner written notice, in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section, of the violation informing the unit owner that the unit owner has seventy-two hours to cure the violation or the association may fine the unit owner.
(B)
If, after an inspection of the unit, the association determines that the unit owner has not cured the violation within seventy-two hours after receiving the notice, the association may impose fines on the unit owner every other day and may take legal action against the unit owner for the violation; except that, in accordance with subsection (8)(c)(I) of this section, the association shall not pursue foreclosure against the unit owner based on fines owed.
(III)
(A)
If an association reasonably determines that a unit owner committed a violation of the declaration, bylaws, covenants, or other governing documents of the association, other than a violation that threatens the public safety or health, the association shall, through certified mail, return receipt requested, provide the unit owner written notice, in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section, of the violation informing the unit owner that the unit owner has thirty days to cure the violation or the association, after conducting an inspection and determining that the unit owner has not cured the violation, may fine the unit owner; however, the total amount of fines imposed for the violation may not exceed five hundred dollars.
(B)
An association shall grant a unit owner two consecutive thirty-day periods to cure a violation before the association may take legal action against the unit owner for the violation. In accordance with subsection (8)(c)(I) of this section, an association shall not pursue foreclosure against the unit owner based on fines owed.
(IV)
If the unit owner cures the violation within the period to cure afforded the unit owner, the unit owner may notify the association of the cure and, if the unit owner sends with the notice visual evidence that the violation has been cured, the violation is deemed cured on the date that the unit owner sends the notice. If the unit owner's notice does not include visual evidence that the violation has been cured, the association shall inspect the unit as soon as practicable to determine if the violation has been cured.
(V)
If the association does not receive notice from the unit owner that the violation has been cured, the association shall inspect the unit within seven days after the expiration of the thirty-day cure period to determine if the violation has been cured. If, after the inspection and whether or not the association received notice from the unit owner that the violation was cured, the association determines that the violation has not been cured:
(A)
A second thirty-day period to cure commences if only one thirty-day period to cure has elapsed; or
(B)
The association may take legal action pursuant to this section if two thirty-day periods to cure have elapsed.
(VI)
Once the unit owner cures a violation, the association shall notify the unit owner, in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section:
(A)
That the unit owner will not be further fined with regard to the violation; and
(B)
Of any outstanding fine balance that the unit owner still owes the association.
(c)
On a monthly basis and by first-class mail and, if the association has the relevant e-mail address, by e-mail, an association shall send to each unit owner who has any outstanding balance owed the association an itemized list of all assessments, fines, fees, and charges that the unit owner owes to the association. The association shall send the itemized list to the unit owner in English or in any language for which the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section and to any designated contact for the unit owner.
(2)
Notwithstanding any provision of the declaration, bylaws, articles, or rules and regulations to the contrary, the association may not fine any unit owner for an alleged violation unless:
(a)
The association has adopted and follows a written policy governing the imposition of fines;
(b)
(I)
The policy includes a fair and impartial fact-finding process concerning whether the alleged violation actually occurred and whether the unit owner is the one who should be held responsible for the violation. This process may be informal but shall, at a minimum, guarantee the unit owner notice and an opportunity to be heard before an impartial decision maker.
(II)
As used in this paragraph (b), "impartial decision maker" means a person or group of persons who have the authority to make a decision regarding the enforcement of the association's covenants, conditions, and restrictions, including its architectural requirements, and the other rules and regulations of the association and do not have any direct personal or financial interest in the outcome. A decision maker shall not be deemed to have a direct personal or financial interest in the outcome if the decision maker will not, as a result of the outcome, receive any greater benefit or detriment than will the general membership of the association.
(c)
The policy:
(I)
Requires notice regarding the nature of the alleged violation, the action or actions required to cure the alleged violation, and the timeline for the fair and impartial fact-finding process required under subsection (2)(b) of this section. The association may send the unit owner the notice required under this subsection (2)(c)(I) in accordance with subsection (1.7)(a) of this section.
(II)
Specifies the interval upon which fines may be levied in accordance with subsection (1.7)(b) of this section for violations that are continuing in nature.
(3)
If, as a result of the fact-finding process described in subsection (2) of this section, it is determined that the unit owner should not be held responsible for the alleged violation, the association shall not allocate to the unit owner's account with the association any of the association's costs or attorney fees incurred in asserting or hearing the claim. Notwithstanding any provision in the declaration, bylaws, or rules and regulations of the association to the contrary, a unit owner shall not be deemed to have consented to pay such costs or fees.
(4)
(a)
The policies, procedures, and rules and regulations adopted by an association under subparagraph (II) of paragraph (b) of subsection (1) of this section must, at a minimum:
(I)
Define or describe the circumstances under which a conflict of interest exists;
(II)
Set forth procedures to follow when a conflict of interest exists, including how, and to whom, the conflict of interest must be disclosed and whether a board member must recuse himself or herself from discussing or voting on the issue; and
(III)
Provide for the periodic review of the association's conflict of interest policies, procedures, and rules and regulations.
(b)
The policies, procedures, or rules and regulations adopted under this subsection (4) must be in accordance with section
38-33.3-310.5
.
(5)
(a)
Notwithstanding any provision of the declaration, bylaws, articles, or rules and regulations to the contrary or the absence of a relevant provision in the declaration, bylaws, articles, or rules or regulations, the association or a holder or assignee of the association's debt, whether the holder or assignee of the association's debt is an entity or a natural person, may not use a collection agency or take legal action to collect unpaid assessments unless the association or a holder or assignee of the association's debt has adopted and follows a written policy governing the collection of unpaid assessments and unless the association complies with subsection (7) of this section. The policy must, at a minimum, specify:
(I)
The date on which assessments must be paid to the entity and when an assessment is considered past due and delinquent;
(II)
Any late fees and interest the entity is entitled to impose on a delinquent unit owner's account;
(III)
Any returned-check charges the entity is entitled to impose;
(IV)
The circumstances under which a unit owner is entitled to enter into a payment plan with the entity pursuant to section
38-33.3-316.3
and the minimum terms of the payment plan mandated by that section;
(V)
That, before the entity turns over a delinquent account of a unit owner to a collection agency or refers it to an attorney for legal action, the entity must send the unit owner a notice of delinquency, by certified mail, return receipt requested, specifying:
(A)
The total amount due, with an accounting of how the total was determined;
(B)
Whether the opportunity to enter into a payment plan exists pursuant to section
38-33.3-316.3
and instructions for contacting the entity to enter into such a payment plan;
(C)
The name and contact information for the individual the unit owner may contact to request a copy of the unit owner's ledger in order to verify the amount of the debt; and
(D)
That action is required to cure the delinquency and that failure to do so within thirty days may result in the unit owner's delinquent account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the unit owner's property, or other remedies available under Colorado law;
(VI)
The method by which payments may be applied on the delinquent account of a unit owner; and
(VII)
The legal remedies available to the entity to collect on a unit owner's delinquent account pursuant to the governing documents of the entity and Colorado law.
(b)
As used in this subsection (5), "entity" means an association or a holder or assignee of the association's debt, whether the holder or assignee of the association's debt is an entity or a natural person.
(6)
A notice of delinquency that an association sends to a unit owner for unpaid assessments, fines, fees, or charges must:
(a)
Be written in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section;
(b)
Specify whether the delinquency concerns unpaid assessments; unpaid fines, fees, or charges; or both unpaid assessments and unpaid fines, fees, or charges, and, if the notice of delinquency concerns unpaid assessments, the notice of delinquency must notify the unit owner that unpaid assessments may lead to foreclosure; and
(c)
Include:
(I)
A description of the steps the association must take before the association may take legal action against the unit owner, including a description of the association's cure process established in accordance with subsection (1.7)(b) of this section; and
(II)
A description of what legal action the association may take against the unit owner, including a description of the types of matters that the association or unit owner may take to small claims court, including injunctive matters for which the association seeks an order requiring the unit owner to comply with the declaration, bylaws, covenants, or other governing documents of the association.
(7)
(a)
An association shall not commence a legal action to initiate a foreclosure proceeding based on a unit owner's delinquency in paying assessments unless:
(I)
The association has complied with each of the requirements in this section and in section
38-33.3-316.3
related to a unit owner's delinquency in paying assessments;
(II)
The association has provided the unit owner with a written offer to enter into a repayment plan pursuant to section
38-33.3-316.3 (2)
that authorizes the unit owner to repay the debt in monthly installments over eighteen months. Under the repayment plan, the unit owner may choose the amount to be paid each month, so long as each payment must be in an amount of at least twenty-five dollars until the balance of the amount owed is less than twenty-five dollars; and
(III)
Within thirty days after the association has provided the owner with a written offer to enter into a repayment plan, the unit owner has either:
(A)
Declined the repayment plan; or
(B)
After accepting the repayment plan, failed to pay at least three of the monthly installments within fifteen days after the monthly installments were due.
(b)
A unit owner who has entered into a repayment plan pursuant to subsection (7)(a) of this section may elect to pay the remaining balance owed under the repayment plan at any time during the duration of the repayment plan.
(8)
An association shall not:
(a)
Charge a rate of interest on unpaid assessments, fines, or fees in an amount greater than eight percent per year;
(b)
Assess a fee or other charge to recover costs incurred for providing the unit owner a statement of the total amount that the unit owner owes; or
(c)
Foreclose on an assessment lien if the debt securing the lien consists only of one or both of the following:
(I)
Fines that the association has assessed against the unit owner; or
(II)
Collection costs or attorney fees that the association has incurred and that are only associated with assessed fines.
(9)
A party seeking to enforce rights and responsibilities arising under the declaration, bylaws, covenants, or other governing documents of an association in relation to disputes arising from assessments, fines, or fees owed to the association and for which the amount at issue does not exceed seven thousand five hundred dollars, exclusive of interest and costs, may file a claim in small claims court pursuant to section
13-6-403 (1)(b)(I)
.
(10)
As used in this section, "notice of delinquency" means a written notice that an association sends to a unit owner to notify the unit owner of any unpaid assessments, fines, fees, or charges that the unit owner owes the association.
Amended by 2022 Ch. 367, § 1, eff. 8/10/2022.
Amended by 2013 Ch. 351, § 1, eff. 1/1/2014.
L. 2005: Entire section added, p. 1377, § 7, effective 1/1/2006. L. 2006: (1)(a), (1)(b)(VI), and (1)(b)(VII) amended and (1)(b)(VIII) added, p. 1219, § 7, effective May 26. L. 2008: (2) and (3) added, p. 556, § 2, effective July 1. L. 2009: (1)(b)(IX) added, (HB 09 -1359), ch. 257, p. 1164, § 1, effective August 5. L. 2011: (1)(b)(II) amended and (4) added, (HB 11 - 11 24), ch. 105, p. 328, § 2, effective April 13. L. 2013: (5) added, (HB 13-1276), ch. 351, p. 2035, § 1, effective 1/1/2014.
2022 Ch. 367, was passed without a safety clause. See Colo. Const. art. V, § 1(3).
This section is set out more than once due to postponed, multiple, or conflicting amendments.