HOA Boards - Transparency and Responsibility

By Stephen Daniels
Grand Junction, CO
July 3, 2021

Can you imagine the horror of talking over the phone with your wife while her building collapsed under her? And you never heard from her again? Click here for the story.

Now can you imagine that you were on the Board of the Champlain Towers Homeowner's Association ("HOA") that had the responsibility to prevent the deaths of many of your residents? 

At the time of this article, 24 deaths have been confirmed and over 100 people are still missing. 

I served on the Board of a large Eagle County Colorado HOA for almost four years. Most of the issues we faced were trivial compared to large buildings with structural integrity and maintenance issues. 

Nevertheless, our HOA property owners were similarly passionate about issues within the purview of our declaration and their interests. Accordingly, our Board struggled to resolve disagreements with select property owners ("members") while maintaining support of most members of the HOA. 

Most HOAs do not deal with such dramatic life and death concerns. Often HOAs do have to contend with controversies with outsized objections. 

It is a familiar dilemma: the HOA board has information on some financial, policy or structural issue that needs prompt attention. The Board develops a consensus. Then, several vocal and agitated members of the association do not agree with the Board's consensus and demand reconsideration. Instead of moving ahead, the Board's actions stall out and nothing may happen for months or years. 

Colorado has 2.3 million residents living in common interest communities. Over 60% of Colorado homeowners are part of HOAs. (Source: I Property Management - click on this link.)

When homes are in HOA's there is a recorded title restriction, called a declaration, which contractually assigns legal duties and responsibilities to the association and its Board of Directors. HOAs are quasi-governmental associations because of the Declaration agreed to by property owners when the community and HOA was formed. All purchasers in the area of the HOA become subject to this deed restriction. 

Typical HOA functions are the duty to maintain common areas, to enforce restrictions spelled out in the Declaration, and, to control and approve changes to individual units. HOAs also collect dues and special assessments needed to carry out these responsibilities. Most HOAs are governed by a volunteer Board that may hire professional managers.

In Colorado, the Colorado Common Interest Ownership Act provides a legal structure around the operation of HOAs. A legislative summary discusses what HOA's exist for:

Champlain South Condo After Collapse

"The Colorado Common Interest Ownership Act (CCIOA) was established in 1992 to form a clear, comprehensive, and uniform framework for the creation and operation of common interest communities. Within CCIOA, homeowners’ associations (HOAs) are given the authority to manage the commonly owned property and regulate the use and maintenance of individually owned homes within the community (“units”). However, HOAs are limited in what they can require of a homeowner and what they can prohibit a homeowner from doing or owning." (CLICK ON THIS LINK FOR SUMMARY)

A core issue that most HOA Boards will face is the conflict between the effects of transparency to HOA members and the responsibility to act on behalf of all HOA members. No one should promote limited transparency to members. In fact, most state laws require transparency. Transparency helps the Board to inform the community, maintain consensus and to gain the support of members. 

What our Board often experienced, was that transparency resulted in ill-founded objections from members. HOA members would challenge the Board on pending decisions with a portion of the relevant information to decisions. These objections were amplified by recruitment of other members to object with similar limited knowledge. 

Association members usually are unaware of the complex factors that impact issues before an HOA Board. And members do not have the legal responsibility to make decisions for the best interests of the association and all of its members. 

An HOA Board may have many sources of information that informs their decisions. The obvious types of information includes the declaration and other governing documents, Colorado law, Colorado case law, legal advice, financial implications, past practices, and, engineering reports and recommendations. Most of this type of information is supplemented by technical experts who advise a Board over time. 

The reality is, that most HOA members do not have the time to attend all meetings and consider all of this information. In some cases, the Board has information, that by necessity must be confidential and out of reach to members. 

The legal responsibility falls on the elected Board members to be informed and exercise due care in their decision making. A lawyer can better explain the legal nuances around the intersection of Board decisions and legal responsibility. What most Board members know is that they have a moral and ethical duty to inform themselves and use their best experience and judgment to do what is right for the association. 

Therein lies the dilemma. Should Board members allow the sentiments of association members to unduly influence their responsibility and authority to make decisions? Should the consideration of members input slow down or defer Board actions?

I can say these delays happened to the Board I was on, and, it happens in many Boards. Each Board member is a property owner like all others. Board members may doubt whether their point of view is any better than anyone else's. 

I suggest it is. At least, it is likely to be. 

An elected or appointed Board member has experience or knowledge that most members of the HOA cannot have. Sitting through long Board meetings, studying budgets, listening to legal counsel or other experts, all inform Board decisions. The responsibility to reflect on all of the information has a large bearing on the decision a Board should make. 

None of us are able to evaluate the actions and timeliness of the decisions made for Chaplain Towers in Surfside, FL. The Champlain Towers incident may be an extreme example, and wake-up call, to many HOA Boards to adhere to their responsibility and take action when needed. The reported facts in the Washington Post article (HOA Board Resignation Ahead of Tower Collapse) was that debate continued since 2018 when serious structural concerns were reported to the HOA Board. Dissension among association members resulted in catastrophic delays and resignations of Board members during the process.

In America, we have the chance to learn from experience, even when horrific. All too often, we see catastrophe coming and fail to "duck." I encourage all HOAs to learn from the current Florida news events and reassess the role of transparency and Board responsibility.

With the benefit of hindsight, HOA Board members should put their "responsibility" ahead of the consequences of transparency. Timely and appropriate decisions must be made even when association members have passionate concerns or objections.