Proposed HOA “Dispute Resolution & Enforcement” Bill: HB 20-1200

By: Travis B. Keenan

On January 30, 2020, Representatives Brianna Titone (D – Jefferson County) and Michael Weissman (D – Aurora) introduced House Bill 20-1200 (“Bill”). As described in more detail below, this bill would task Colorado’s Department of Regulatory Agencies (“DORA”) with implementing a dispute resolution and enforcement program (“DREP”).  Through this program, DORA would wield significant power to investigate and punish alleged violations of the Colorado Common Interest Ownership Act (“CCIOA”). 

All community associations, executive board members, and community managers would be subject to DORA’s oversight. Notably, the Bill also provides DORA with jurisdiction over any “other person alleged to have committed a violation of the Act or the [DREP].” Potentially, this means that DORA could investigate and penalize just about anyone who is accused of violating CCIOA. 

The Bill would allow anyone to initiate a DREP investigation by filing a complaint with DORA. Upon receipt of a complaint, DORA would be able to subpoena witnesses and evidence to investigate the allegation. The Bill vaguely alludes to the possibility that the parties might come to some kind of agreement during DORA’s investigatory process, but fails to provide any guidance as to what, if any efforts DORA will make to try and broker or facilitate an agreement. The Bill simply states that If DORA determines that the parties are unable to come to an agreement, then DORA would issue a written decision as to whether a violation occurred. If DORA decides there was no violation, it sends the parties a notice of non-violation. 

On the other hand, if DORA determines that a violation occurred, DORA will issue a notice of violation. The notice of violation would set a time for curing the violation and explain the specific actions necessary to cure the violation. The notice would also set a penalty for failure to cure the violation. The penalty could be up to $5,000 per day. In addition, DORA would have authority to: (1) issue cease and desist orders; (2) order associations to refund assessments of fines that were not authorized under CCIOA; (3) file documents to correct a violation; or (4) take any other action necessary to correct a violation. 

In response to a notice of non-violation or a notice of violation, the aggrieved party would have the opportunity to challenge DORA’s determination by requesting a hearing in front of an administrative law judge (“ALJ”).  The request for hearing would have to be filed within 14 days of receiving DORA’s written determination. The ALJ hearing would be an evidentiary hearing. The ALJ would determine whether DORA’s determination is supported by a preponderance of the evidence and issue a written ruling within 63 days of the hearing. Then, parties would have the right to appeal the ALJ’s determination to the district court. 

At this point, it appears that associations, managers, and directors would not have any claim to recover attorney fees or costs incurred to respond to a DORA investigation. However, if the DORA’s determination is appealed to an ALJ or the district court, then CCIOA’s prevailing party attorney fee provision would likely apply. 

The Bill also provides that if DORA penalizes a respondent, the respondent is not allowed to seek reimbursement of that penalty from the complainant or any other unit owner. Moreover, the Bill prohibits associations, managers, and directors from retaliating against an owner who files a complaint with DORA. If DORA finds that retaliation has occurred, it can assess a penalty of up to $10,000. Ironically, the Bill also states that a penalty against an association constitutes a lien against the common elements.  This seems misguided. The common elements are not really worth anything to anyone other than the unit owners. Placing a lien on the common elements may cause problems for individual unit owners who are trying to sell their properties (including a complainant). Moreover, in condominium communities, the individual unit owners own the common elements. Therefore, the lien against the common elements seems to contradict the idea that a respondent cannot turn to the unit owners for reimbursement of a penalty paid to DORA.  

Registration requirements are the final major component of the bill. All associations would be required to register with DORA, which is already true. However, associations would also be subject to a $5,000 late fee for failing to register (or renew their registration) in a timely manner. Furthermore, each association would have to provide additional information including, but not limited to, a telephone number or email address for each director on the board of directors.