Colorado § 38-33.3-302 - Powers of unit owners' association.

§ 38-33.3-302. Powers of unit owners' association.

(1) Except as provided in subsections (2) and (3) of this section, and subject to the provisions of the declaration, the association, without specific authorization in the declaration, may:

(a) Adopt and amend bylaws and rules and regulations;

(b) Adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners;

(c) Hire and terminate managing agents and other employees, agents, and independent contractors;

(d) Institute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the common interest community;

(e) Make contracts and incur liabilities;

(f) Regulate the use, maintenance, repair, replacement, and modification of common elements; except that, in regulating the use of common elements by unit owners, the association shall comply with section 38-33.3-302.5, including during the maintenance, repair, replacement, or modification of a common element;

(g) Cause additional improvements to be made as a part of the common elements;

(h) Acquire, hold, encumber, and convey in its own name any right, title, or interest to real or personal property, subject to the following exceptions:

(I) Common elements in a condominium or planned community may be conveyed or subjected to a security interest only pursuant to section 38-33.3-312; and

(II) Part of a cooperative may be conveyed, or all or part of a cooperative may be subjected to a security interest, only pursuant to section 38-33.3-312;

(i) Grant easements, leases, licenses, and concessions through or over the common elements;

(j) Impose and receive any payments, fees, or charges for the use, rental, or operation of the common elements other than limited common elements described in section 38-33.3-202 (1)(b) and (1)(d);

(k) (I) Impose charges for late payment of assessments, recover reasonable attorney fees and other legal costs for collection of assessments and other actions to enforce the power of the association, regardless of whether or not suit was initiated, and, after notice and an opportunity to be heard, levy reasonable fines for violations of the declaration, bylaws, and rules and regulations of the association.

(II) The association may not levy fines against a unit owner for violations of declarations, bylaws, or rules of the association for failure to adequately water landscapes or vegetation for which the unit owner is responsible when water restrictions or guidelines from the local water district or similar entity are in place and the unit owner is watering in compliance with such restrictions or guidelines. The association may require proof from the unit owner that the unit owner is watering the landscape or vegetation in a manner that is consistent with the maximum watering permitted by the restrictions or guidelines then in effect.

(l) Impose reasonable charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments;

(m) Provide for the indemnification of its officers and executive board and maintain directors' and officers' liability insurance;

(n) Assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly so provides;

(o) Exercise any other powers conferred by the declaration or bylaws;

(p) Exercise all other powers that may be exercised in this state by legal entities of the same type as the association; and

(q) Exercise any other powers necessary and proper for the governance and operation of the association.

(2) The declaration may not impose limitations on the power of the association to deal with the declarant that are more restrictive than the limitations imposed on the power of the association to deal with other persons.

(3) (a) Any managing agent, employee, independent contractor, or other person acting on behalf of the association shall be subject to this article to the same extent as the association itself would be.

(b) Decisions concerning the approval or denial of a unit owner's application for architectural or landscaping changes shall be made in accordance with standards and procedures set forth in the declaration or in duly adopted rules and regulations or bylaws of the association, and shall not be made arbitrarily or capriciously.

(4) (a) The association's contract with a managing agent shall be terminable for cause without penalty to the association. Any such contract shall be subject to renegotiation.

(b) Notwithstanding section 38-33.3-117 (1.5)(g), this subsection (4) shall not apply to an association that includes time-share units, as defined in section 38-33-110 (7).

Source: L. 91: Entire article added, p. 1735, § 1, effective July 1, 1992. L. 2005: IP(1) amended and (3) and (4) added, p. 1382, § 12, effective January 1, 2006. L. 2013: (1)(k) amended, (SB 13-183), ch. 187, p. 758, § 4, effective May 10. L. 2022: (1)(f) amended, (HB 22-1040), ch. 93, p. 448, § 1, effective August 10.

ANNOTATION

Law reviews. For article, "The Construction Defect Action Reform Act", see 30 Colo. Law. 121 (Oct. 2001). For article, "Mitigating Potential Condo Conversion and Renovation Construction Defect Liabilities: Part 1", see 48 Colo. Law. 28 (Apr. 2019). For article, "In 'Case' You Missed It — 2020-21: Real Estate Case Law Highlights", see 51 Colo. Law. 44 (Jan. 2022).

Subsection (1)(d) authorizes an association to pursue damage claims on behalf of two or more unit owners regardless of whether individual units or common areas were damaged. Heritage Vill. Owners Ass'n v. Golden Heritage Investors, Ltd., 89 P.3d 513 (Colo. App. 2004).

This section confers standing upon unit owners' associations to pursue damages claims on behalf of two or more unit owners with respect to matters affecting their individual units. Yacht Club II Homeowners Ass'n v. A.C. Excavating, 94 P.3d 1177 (Colo. App. 2003), aff'd, 114 P.3d 862 (Colo. 2005).

A homeowner's association may recover from a successor developer or builder the entire cost of remediating construction defects in common areas where (1) the defects are attributable to the successor developer or builder; (2) two or more of the association's members purchased their homes directly from the successor developer or builder; and (3) those members have rights to use the common areas — even if the successor developer or builder never owned the common areas. Brooktree Vill. Homeowners v. Brooktree, 2020 COA 165, 479 P.3d 86.

Subsection (1)(d) confers standing upon owner's common interest community association to defend litigation in its own name on behalf of itself or two or more unit owners on matters affecting the common interest community. It does not establish the adequacy as a matter of law of the representation by an association of lot owners belonging to the association who were absent from the underlying action. Because conflicting interests exist between the association and the absent owners, representation was not adequate. When assessing prejudice, the court must consider whether the interests of an absent party are adequately represented by those already a party to the litigation. Clubhouse at Fairway Pines v. Fairway Pines Estates, 214 P.3d 451 (Colo. App. 2008).

"Litigation", as used in subsection (1)(d), includes arbitration. Triple Crown v. Vill. Homes of Colo., 2013 COA 150M, 328 P.3d 275.

A binding arbitration provision in a declaration did not violate subsection (2) because it applied to all parties, not only to the declarant. Triple Crown v. Vill. Homes of Colo., 2013 COA 150M, 328 P.3d 275.

A declaration's binding arbitration provision does not implicate subsection (2) where the unit owners, and not the association, had the power to amend the declaration. Moreover, amending a declaration is not one of the enumerated powers granted an association under subsection (1). Vallagio at Inverness v. Metro. Homes, 2015 COA 65, 412 P.3d 709, aff'd, 2017 CO 69, 395 P.3d 788.