As the saying goes, “you cannot please 100% of the people 100% of the time”. This cannot be truer when it comes to common interest community living. In a perfect world, homeowners would elect the board and allow it to govern in accordance with the law and the community’s governing documents.
In the real world, however, there is oftentimes confusion on the authority of a board to govern and what that actually means. Sometimes boards make decisions that owners oppose, or flat-out contest because owners either don’t agree with the decision, or do not believe the board had authority to make the decision without their input and/or approval. Regardless of the reasons, these types of disagreements are often the start of a vicious cycle that spirals out of control and leads to toxic environments of finger-pointing, back-stabbing, and general political unrest in a community.
Pursuant to certain Colorado statutes, including the Colorado Revised Nonprofit Corporation Act and CCIOA, HOA boards are endowed with many powers and authorities that exist even if they are not specifically referenced in the associations’ governing documents. On the other hand, these same statutes also set forth powers and authorities delegated to the homeowners.
In addition to the statutory provisions empowering both boards and owners, each community has its own set of governing documents that may create additional powers for either the associations or their owners.
Most often, boards are empowered to take the following actions:
- Enter into contracts on behalf of the association with various vendors—this includes service contracts, construction contracts, professional contracts (such as accounting, insurance, and legal services), and other contracts pertaining to services or work to be performed for the association;
- Control and govern maintenance of common areas—this includes the unilateral right to decide on how the common areas will be maintained, when they will be maintained, and by whom;
- Initiate legal action on behalf of the association;
- Control and govern maintenance of residence exteriors (mostly in condominiums and townhomes)—this also typically includes the unilateral right to decide on how the residential exteriors will be maintained, when they will be maintained, and by whom;
- Enter into management agreements with management companies of their choice;
- Acquire insurance for the benefit of the community, including property and liability policies, as well as directors’ and officers’ liability policies;
- Elect officers—typically includes the president, vice-president, secretary, and treasurer;
- Enforce covenants and rules, including imposition of fines and initiation of legal action in accordance with its covenant enforcement policy;
- Adopt budgets (that later get presented to owners for ratification);
- Collect delinquent assessments and impose late fees in accordance with the association’s collection policy;
- Adopt rules and regulations governing use of common areas and sometimes units (as long as they do not contradict any provisions in the governing documents);
- Grant easements and licenses over common area; and
- Create and disband committees and appoint committee members;
When it comes to powers of the owners, such powers typically include the following:
- Election of directors;
- Removal of directors;
- Approval of amendments to governing documents—specifics typically found in governing documents;
- Approval/ratification of special assessments—specifics found in governing documents;
- Approval/ratification of budgets—specifics found in governing documents; and
- Approval of the sale/transfer of common areas—specifics found in governing documents;