First Regular Session

Sixty-first General Assembly

LLS NO. 97­0471.01 JY SENATE BILL 97­156

STATE OF COLORADO

BY SENATOR Phillips

BUSINESS AFFAIRS & LABOR

A BILL FOR AN ACT

CONCERNING THE "COLORADO COMMON INTEREST OWNERSHIP ACT".

Bill Summary

(Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)

In addition to every contract or duty governed by the "Colorado Common Interest Ownership Act", specifies that any declaration, bylaws, rules and regulations, or articles of incorporation of a unit owners' association imposes an obligation of good faith in its performance or enforcement. Allows an association to enter into an intermediate covenant variance, without waiver of future enforcement rights against a subsequent purchaser, under certain circumstances. Eliminates the ability of a person to collect costs and attorney fees for noncompliance with the provisions of the act without commencing a lawsuit. Rather than requiring the court to award certain costs and attorney fees to the prevailing party, requires the court to determine the appropriate liability, if any, for costs and fees. Prior to exercising certain powers, requires the association to have specific authorization pursuant to a declaration or approval of the voting association members. Specifies that all executive board members and officers, whether appointed by the declarant, owe a fiduciary duty to the association.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1.  38­33.3­103 (3) and (16), Colorado Revised Statutes, 1982 Repl. Vol., as amended, are amended to read:

38­33.3­103.  Definitions.  As used in the declaration and bylaws of an association, unless specifically provided otherwise or unless the context otherwise requires, and in this article:

(3)  "Association" or "unit owners' association" means a unit owners' association organized under section 38­33.3­301 AND THE MEMBERSHIP THEREOF.

(16)  "Executive board" means the body, regardless of name, IF SO designated in the declaration to act on behalf of the association AND WHOSE MEMBERS OWE A FIDUCIARY DUTY TO THE ASSOCIATION.

SECTION 2.  38­33.3­113, Colorado Revised Statutes, 1982 Repl. Vol., as amended, is amended to read:

38­33.3­113.  Obligation of good faith.  Every contract or duty governed by this article AND ANY DECLARATION, BYLAWS, RULES AND REGULATIONS, OR ARTICLES OF INCORPORATION OF AN ASSOCIATION imposes an obligation of good faith in its performance or enforcement. WHERE THE ASSOCIATION IN GOOD FAITH CHOOSES NOT TO PERFORM UNDER OR ENFORCE THE PROVISIONS OF ANY DECLARATIONS, BYLAWS, RULES AND REGULATIONS, OR ARTICLES OF INCORPORATION, THE ASSOCIATION SHALL HAVE THE AUTHORITY TO ENTER INTO AN INTERMEDIATE COVENANT VARIANCE, WITHOUT THE WAIVER OF FUTURE ENFORCEMENT RIGHTS AGAINST A SUBSEQUENT PURCHASER, UPON NOTICE OF THE ASSOCIATION'S DECLARATIONS, BYLAWS, RULES AND REGULATIONS, OR ARTICLES OF INCORPORATION TO THE SUBSEQUENT PURCHASER PRIOR TO CLOSING ON A CONTRACT FOR THE PURCHASE AND SALE OF ANY UNIT.

SECTION 3.  38­33.3­123 (1), Colorado Revised Statutes, 1982 Repl. Vol., as amended, is amended to read:

38­33.3­123.  Enforcement ­ limitation. (1)  If any person subject to the provisions of this article fails to comply with any of its provisions or any provision of the declaration, bylaws, articles, or rules and regulations, any person or class of persons adversely affected by the failure to comply may require reimbursement for collection costs and reasonable attorney fees and costs incurred as a result of such failure to comply. without the necessity of commencing a legal proceeding. For each claim, including but not limited to counterclaims, cross­claims, and third­party claims, in any legal proceeding to enforce the provisions of this article or of the declaration, bylaws, articles, or rules and regulations, the court shall award to the party prevailing on such claim the prevailing party's reasonable collection costs and attorney fees and costs incurred in asserting or defending the claim DETERMINE THE LIABILITY, IF ANY, OF THE PARTIES IN THE LEGAL PROCEEDING FOR COSTS AND ATTORNEY FEES.

SECTION 4.  The introductory portion to 38­33.3­302 (1), Colorado Revised Statutes, 1982 Repl. Vol., as amended, is amended, and the said 38­33.3­302 is further amended BY THE ADDITION OF A NEW SUBSECTION, to read:

38­33.3­302.  Powers of unit owners' association. (1)  Except as provided in subsection (2) SUBSECTIONS (1.5) AND (2) of this section and subject to the provisions of the declaration, the association, without specific authorization in the declaration, may:

(1.5) (a)  EXCEPT AS PROVIDED IN PARAGRAPH (b) OF THIS SUBSECTION (1.5) AND PRIOR TO EXERCISING ANY OF THE POWERS SPECIFIED IN SUBSECTION (1) OF THIS SECTION, IF THE ASSOCIATION HAS ANY MEMBERS WHO ARE ENTITLED TO VOTE, A MAJORITY OF THE VOTING MEMBERS SHALL APPROVE THE EXERCISE OF SUCH POWERS.

(b)  THE POWERS OF THE ASSOCIATION SPECIFIED IN PARAGRAPHS (a), (b), (d), (g), (k), (l), (o), AND (p) OF SUBSECTION (1) OF THIS SECTION SHALL BE EXERCISED ONLY PURSUANT TO SPECIFIC AUTHORIZATION IN THE DECLARATION GRANTING SUCH POWERS OR UPON APPROVAL BY A TWO­THIRDS MAJORITY OF THE VOTING MEMBERS OF THE ASSOCIATION.

SECTION 5.  38­33.3­303 (1) and (2), Colorado Revised Statutes, 1982 Repl. Vol., as amended, are amended to read:

38­33.3­303.  Executive board members and officers. (1)  Except as provided in the declaration, the bylaws, or subsection (3) of this section, SECTION 38­33.3­302 (1.5), or any other provisions of this article, the executive board may act in all instances on behalf of the association.

(2) (a)  If appointed by the declarant, In the performance of their duties, the officers and members of the executive board are required to exercise the care required of fiduciaries of the unit owners.

(b)  If not appointed by the declarant, No member of the executive board and no officer shall be liable for actions taken or omissions made in the performance of such member's duties except for wanton and willful acts or omissions.

SECTION 6.  Effective date ­ applicability.  This act shall take effect upon passage, and section 3 shall apply to causes of action filed on or after said date.

SECTION 7.  Safety clause.  The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.