HOA not in compliance with Colorado law

Started by RyanS5 • 10 replies • 1259 views

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RyanS5 (Colorado)
Posts: 1

Posted:

I have a contract to buy a townhouse in a six unit complex in Denver. My due diligence has revealed that the HOA operates in a very loose manner. Basically one of the owners , working with a management company, handles everything (Collection of dues, interfacing with the management company, making sure exterior maintenance is done, working with the insurance company, etc. So far as I can tell, meetings have not been held for a number of years, but everything seems to be working okay. I am concerned that if I insist the HOA get in compliance, the current "President" will insist that I take over her duties, which I don't want to do. I would appreciate input on the risks that the HOA and its members face operating in this manner. I am a lawyer, but don't specialize in real estate. My guess is the HOA would have a very hard time enforcing covenants, collecting dues, etc. if someone refused to follow the Declarations. . Also that the current"president" could face personal liability. I am a lawyer but do not specialize in real estate. I would appreciate input on any other risks I should be thinking about.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

If the owners are happy than the worst thing they need is a lawyer mixing it up. For their sake (and maybe yours), walk away.

PitA
Posts: 1,416

Posted:

fuh-ged-bout the risks

? why on earth would you want the aggravation ?

Danger, Will Robinson ! DANGER !

You actually DID Caveat Emptor - now follow up and RUN

RUN FAST

RUN FAR

LarryB13 (Arizona)
Posts: 4,099

Posted:

Small condo associations typically operate very informally because no one wants to do anything. The whole reason for buying a condo is to own a home where you don't have to be bothered by the realities of home ownership. It is not realistic to expect that people who bought in because someone else does all the work are suddenly going to take an interest in their association.

To me, a condo is an inherently bad investment because its operation depends entirely on people who are not interested in their own investments, much less in yours. I think your expectation that the association can be forced to get its act together is not realistic. It just ain't gonna happen. Not in this association or any other small association. My advice is to walk away from this deal.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RyanS5 on 11/27/2016 1:49 PM

I am concerned that if I insist the HOA get in compliance, the current "President" will insist that I take over her duties, which I don't want to do.

First, I always find it interesting when those who want nothing to do with the job want to tell others they are doing the job improperly.

Regardless if the job is being done properly or not, that is the individual who was willing to do the job and will likely be insulted if you (or anyone) say they are doing the job wrong but then add that they aren't willing to help to make sure the job is done properly. Sometimes, the limiting factor is simply how much time someone has to donate to get the work done and a better job could be done if someone was willing to step up to work with that individual.

As for the risks:

Realistically, if the bills are paid, maintenance is being done, funds are being handled properly (reserves spent on reserve items and the reserves are funded), government paperwork (taxes, corporate reports, etc) and insurance is kept up to date there will likely be no issues. That is, unless someone from within the Association decides to make them.

The other risk, is that this one person becomes too comfortable doing things this way and gives over to temptation. However, the only fix for that is that members become involved and help out or remove the individual from that position and do the work themselves.

I know that this likely isn't what you wanted to hear.
I hope it helps.

Tim

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By RyanS5 on 11/27/2016 1:49 PM
. . . the HOA operates in a very loose manner. . . . but everything seems to be working okay. . . . I am a lawyer, but don't specialize in real estate. . . . I would appreciate input on any other risks I should be thinking about.

Ryan S5 Col :
1 - Respectfully there may be several questions worth answering to yourself : For example , what's your comfort zone for small partnership-like scenarios ? Or as one of a number of partners in a small legal firm where everything has a veneer of tranquillity ? Is a veneer of tranquillity a credible sign of sound management ? Sort of like a marriage where shooting hasn't yet started . . .

2 - Could you handle having your advice politely ignored or received with the comprehension level of some cattle ? Maybe another owner who is a lawyer or related professional may have something to clarify from owning in this scale of community.

3 - Forums like this tend to hear about lots of dysfunction. Sort of like a psychiatrist hearing so much neuroses or worse, that along comes a healthy balance individual & cannot be recognized as healthy.

That said however, some of the comments above raise valid questions why you should at all risk getting into shared ownership if - IF - you could instead afford to avoid it.

4 Several of the 70 sets of owners are lawyers in my own substantially benign, bare tenancy in common with a voluntary no-vires HOA & large waterfront common lands but minimal 'built environment'.

I silently watched one's sound advice being next ignored in a General Member vote about liability. Is that in your comfort zone ?

( Neither am I a lawyer nor do I do anything but monitor, PAY & work, and prepare for the day that this benign environment may get nasty as it has from time to time in the past. The Positive Covenant Rule in my jurisdiction - from English jurisprudence more than a century old - thankfully weakens a lot of what harm such HOAs can get into here. )

Respectfully, care should be taken . . .

SueW6 (Michigan)
Posts: 814

Posted:

Ryan
Please describe your HOA - how many homes, what common areas need overseeing.

You said there is a management company involved. What do you know about this company?
Have all legal paperwork been filed with the IRS, State and county?
Did you look at end of year financials?
Do you know if there has ever been a challenge to the CCRs? If so, how was it handled?
Why do you think this kind of leadership could not enforce the CCRs?

Really - it sounds like there is a small executive committee running the HOA with the guidance of a management company. Nothing wrong with that.

SueW6 (Michigan)
Posts: 814

Posted:

Sorry, I see you are a six unit townhouse.

FredS7 (Arizona)
Posts: 927

Posted:

> First, I always find it interesting when those who want nothing to do with the job want to tell others they are doing the job improperly.

+1

PitA
Posts: 1,416

Posted:

we are beating a dead horse

the dust has settled from the OP's rapid escape

BeccaT (Idaho)
Posts: 1

Posted:

If you're not comfortable with how it's being run, don't purchase the property unless you're willing to get involved. Expecting others to change what they're comfortable with and NOT be involved is not going to end well for your peace of mind.

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