Colorado HOA Board wants to "qualify new candidates"

Started by RyanP2 • 42 replies • 1304 views

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RyanP2 (Colorado)
Posts: 12

Posted:

I live in a small HOA (26 units) in Colorado

We have a 5 member board which has always served one year terms and elections are basically never contested the same on board each year.

This year a few of us want to get on board/take seats from current board members.

The Board had a special meeting to consider adopting a new "Responsible Governance Policy Rule" which said that candidates must agree to submit to a background check as well as a credit check providing your SSN, and the board shall make the good faith determination concerning whether a candidate is qualified to serve.

I attended the special board meeting where the president basically said it should be like a job interview and need to be vetted. Background check to be given to all to see and decide.

They then went to executive session and it doesn't look like they passed this rule.

What they did do is have the property manager send out a "Board Candidate Form"

On the form it says

Candidates who declare an interest in running for a Seat on the Board will be required to provide
bio information and will be required to consent to the HOA performing a background check,
including criminal history as well as financial credit. After a candidate completes and returns
this form, the HOA will provide a form for the candidate to provide a bio, campaign statement
and consent to background check.

I can't find anything on something like this in any google searches for background checks etc but did find in CCIOA Colorado Common Interest Ownership Act

38-33.3-303(a) The executive board may not act on behalf of the association to amend the declaration, to terminate the common interest community, or to elect members of the executive board or determine the qualifications, powers, and duties, or terms of office of the executive board members, but the executive board may fill vacancies in its membership for the unexpired portion of any term.

What can be done about this?

MichaelS56 (Minnesota)
Posts: 859

Posted:

What is so frustrating is that situations like this is what gives HOA's such a negative image. All I see is hiring an attorney and fight this action by the Board and the Management company. The management company knows the law but appears to disregard it by sending out a candidate profile questions that should not be asked. Fighting the Board action will cost you money.

TimB4 (Tennessee)
Posts: 21,061

Posted:

If it was me, I would contact an attorney, spend $300 and have the attorney write a letter on my behalf about the legality of this requirement.

TimB4 (Tennessee)
Posts: 21,061

Posted:

The other option, bring the issue to the membership.

Cite bylaws and statutes as well as privacy concerns.
Then, if proxies are allowed, start collecting proxies.

RyanP2 (Colorado)
Posts: 12

Posted:

So I sent a letter to the membership and board before the special meeting....

12/21/2020

HOA Board of Directors

CC: HOA Members

RE: Notice of Board of Directors Meeting—Monday—December 21, 2020 - Review and Adopt Responsible Governance Policy #11-- Director Qualifications

I completely agree that the board should follow a moral code of ethics; I recommend the current board familiarize themselves with the “Model Code of Ethics for Community Association Board Members” developed by the Community Association Institute (CAI) and hopefully, address some discrepancies from those standards.

Attached to your "Board Candidate Form", you, incorrectly, state the current terms of HOA board membership citing more than a one-year service term. The current board, in its entirety, was elected for a one-year term, which has always been the term length. In each of the previous years’ annual meeting minutes, it is clearly stated, "The current board holds a one-year term; therefore, all board positions are open to election”. I have trouble believing all current members overlooked this, as each one has been nominated and elected every year they have served. For the owners who are not aware, in the last owners' meeting in February, the current board, fraudulently disqualified xxx after she won a seat to the board by vote in the last election. xxx and the HOA board falsely stated that because her name was not listed on our deed, she, therefore, did not qualify to serve on the board. The bylaws clearly state, “that a majority of board members need to be owners, but not all members”. The current board and xxx knew of this bylaw provision as, at the board meeting on August 15, 2016, two of the current board members xxx and xxx voted unanimously with the rest of the board, to keep former HOA president xxx
on the board when he sold his unit and moved after Steve had expressed his desire to stay on in accordance with the bylaw provision to advise the board and Anita.

The members of the Board of Directors must perform their obligations under the authority granted to them by statute and the association’s governing documents. The current Board of Directions also has a duty to make informed decisions. Colorado Common Interest Ownership Act (CCIOA) could not be clearer, the board has no legal authority to enact the rule changes they have proposed in "Responsible Governance Policy #11: Director Qualifications".

38-33.3-303(a) The executive board may not act on behalf of the association to amend the declaration, to terminate the common interest community, or to elect members of the executive board or determine the qualifications, powers, and duties, or terms of office of the executive board members, but the executive board may fill vacancies in its membership for the unexpired portion of any term.

The board has no legal authority to adopt the document prepared and owes the members of the association an explanation of the board's motives in trying to push this document through. The members of the association should expect to hear, from the board of directors, how this document came to be developed, as the board has held no open meetings since the resignation of the former president or had any discussions on this topic in prior open meetings. The board should be transparent to ALL members, and when drafting and revising policies, rules, and regulations, should consider the questions below from the Effective Governance of Colorado Owners Associations.

A Board should first determine whether there is a need to adopt policy or rule by asking the following questions:

Does the rule seek to further the association/community purpose to maintain, preserve, enhance, and protect the community's property values, promote harmonious community living, and preserve the common scheme and harmonious design of the community?

Is the problem the rule seeks to remedy of sufficient consequence to justify creating a policy or rule – what are the tradeoffs?

Are the existing governing documents, policies, and rules inadequate to address this problem?

What are the immediate and long-term implications of the rule?

Will the rule be favorably received by the owners?

Does the Board have the authority under the governing documents and CCIOA to adopt the rule?

I look forward to responses to be addressed to the entire membership and more transparency to all owners going forward.

SheliaH (Indiana)
Posts: 6,964

Posted:

Sounds like a power grab or an attempt at one. They figure if they throw all sorts of requirements out there, that will discourage people from serving. And they probably think they can get away with this because no one has ran against them until now. Frankly, you can't blame them for thinking this way - what do you expect when homeowners don't actively keep the board in check by attending meetings occasionally and ask questions.

Your documents dictate who can serve on the board and what the qualifications are, so anything beyond that would likely require an amendment to the by-laws. Those require homeowner approval, so you and your neighbors should attend the next meeting ask ask them go show you the section in the bylaws that gives them permission to set these requirements. In fact, if this is so important to them, THEY can first in line by presenting such credentials for all homeowners to see.

Start rallying the rest if your neighbors to call for a special meeting to sack this board - check your documents to see how that's done.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

RyanP2 (Colorado)
Posts: 12

Posted:

My concern is that is stated in the bylaws can be amended by 2/3 vote of the Executive Board.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By RyanP2 on 12/23/2020 7:01 AM
My concern is that is stated in the bylaws can be amended by 2/3 vote of the Executive Board.

Amending the Bylaws has to be done by a formal vote with proper notice of the meeting where the vote was taken. The rule the Board created does not count as an amendment.

Let the Board figure out it has to amend the Bylaws.

Here is the letter I would have sent (if I had the energy to deal with an incompetent board)

Dear Board of Directors,

The Declaration, Articles of Incorporation, and Bylaws give the Board certain express powers. To create rules outside of these powers is unlawful. The rule the Board has created requiring
bio information, and a background check by the HOA, including criminal history as well as financial credit, has no basis in the governing documents.

Also, the Board does not have the lawful power to disqualify a person who is not a Owner of the HOA when the Board already has a majority who are Owners.

Please let me know by January 4 whether you intend to continue to enforce these rules.

Thank you,

name
address
phone
email

After January 4, I would threaten legal action (if I had the energy).

Having an attorney write the letter would be better. Expect paying at least $2000 just for the attorney's review of the governing documents.

ChrisE8
Posts: 454

Posted:

I would run background checks on existing board members and would disclose the findings to all HOA members.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Much to wordy and makes "maybe unfounded" personal accusations plus it vered from your original post about the BOD adding restrictions to running form the BOD. Were I on that BOD I could make a case for our attorney having a "field day" with the letter. If my name were in that letter, my personal attorney might just have a "field day" with it also.

I think you tripped over yourself trying to play attorney.

RyanP2 (Colorado)
Posts: 12

Posted:

Now they sent another letter to members saying...

HOA Board Election - A property owner has suggested – and the Board agrees – that
background/credit/criminal checks should be required of all prospective Board members. They
noted that xxx is a $20 million complex with an annual budget of $150k and
reserve of several hundred thousand dollars. They pointed out that if you owned a $20 million
business that generated a couple hundred thousand dollars of income annually, wouldn’t you
vet the employees that you hire to run the company? The answer is YES! The property owners
need to know the experience, background and the history of all the candidates that they trust
to protect their investment. It is the fiduciary duty of any Board member to act in a trustworthy
manner. In addition to monetary responsibilities, each Board member has a limited access
easement to every unit. That is why we need to present a true picture of anyone running for
the Board - their experience, their background, their credit trustworthiness, their current/past
behavior and contributions as a member of the xxx community – these are the
same considerations that any $20 million company would seek in hiring and maintaining their
trusted employees. Directors are in a position of trust and all of these items are of extreme
importance.

The prospective Board members will also be required to submit a bio and answer questions –
written or in-person – submitted by the owners, at the Annual meeting, prior to the Election.
Finally, I would like to thank the HOA Board for all their hard work and commitment to the Association. They invest hundreds of hours annually and they take their fiduciary responsibility
seriously and consider the HOA as a whole – not any individual interest.

AugustinD
Posts: 5,144

Posted:

RyanP2, so what?

People post reports like you just did expecting -- what? The fun of maybe getting outrage and attention from the readers here?

Ya know, shoot me, but I think what you just posted is gossip, meaning it has no practical purpose other than to waste neural network energy in the poster's and maybe others' minds.

Write a proper demand letter. Report back with the Board's response.

ChrisE8
Posts: 454

Posted:

RyanP2, the flaw I see in the board's position is that only prospective directors (candidates) are subject to the background checks.

I would ask the board why only candidates are subject to the background checks. I would then ask the board when existing board members underwent background checks and when they will undergo background checks before the next election. I would ask them if the results of those background checks will be shared with HOA members.

I would then run my own background checks on existing directors and disclose them to all HOA members.

KevinP12 (Colorado)
Posts: 2

Posted:

Absolutely ridiculous response. Ry is absolutely researching this to the best extent that he can and I am also an owner in this complex. This letter has been "approved" by an attorney as "well written and to the point."
After reading your response, I am going to the local market to buy an apple - hopefully after I eat it I will regain the IQ point I lost by you sophmoric attack.

KevinP12 (Colorado)
Posts: 2

Posted:

that reply was to the rocket scientist who thinks an attorney would have a hay day with Ry's letter.

AugustinD
Posts: 5,144

Posted:

-- The HOA's attorney (or any attorney) would not have a "hay day" with RyanP2's letter.

-- But perhaps like JohnC46, I think RyanP2 should be open to some editing in the future. I feel his letter is neither well-written nor to the point. However, and meant without flattery, the letter absolutely gives an editor plenty with which to work.

-- One of the biggest problems of his letter is that it does not reflect that the only power RyanP2 has is Thee Law. For some of the topics, the letter seems to be an attempt to flex muscle where there is none.

-- To me, one of the missions of this forum is to get participants thinking coherently about what rights, under the covenants, statutes and case law, they have and how to express themselves effectively to ensure they have these rights. Same idea for HOA Board directors who come here.

-- To be totally snarky as I stew over how a certain government agency is violating a federal statute, resulting in a friend being screwed over so royally I am thinking of switching to Libertarian and slashing the wages of every federal civil servant stealing my tax dollars and those of my friend.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Kevin,

You’re sounding a bit aggressive ... you OK?

RyanP2 (Colorado)
Posts: 12

Posted:

Lol he just is that way 🤷

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By KevinP12 on 12/23/2020 3:03 PM
that reply was to the rocket scientist who thinks an attorney would have a hay day with Ry's letter.

Love it!

JohnC77 (California)
Posts: 562

Posted:

Quote:

Posted By JohnC46 on 12/23/2020 1:24 PM

Do you feel like it is too much for a common director to read and understand? If so, you might have a point.

ChrisE8
Posts: 454

Posted:

Quote:

Posted By JohnC77 on 12/23/2020 8:16 PM
Posted By JohnC46 on 12/23/2020 1:24 PM

Posted By RyanP2 on 12/23/2020 6:55 AM

Much to wordy and makes "maybe unfounded" personal accusations plus it vered from your original post about the BOD adding restrictions to running form the BOD. Were I on that BOD I could make a case for our attorney having a "field day" with the letter. If my name were in that letter, my personal attorney might just have a "field day" with it also.

I think you tripped over yourself trying to play attorney.

Do you feel like it is too much for a common director to read and understand? If so, you might have a point.

If a common director cannot read and understand the letter, I respectfully offer that the director's inability to read and comprehend a clear and basic document ought to be disqualifying.

RyanP2 (Colorado)
Posts: 12

Posted:

OK so at Board meeting I basically shut them down, said all not legal.

Now they came back out of nowhere (wasn't discussed more at board meeting) with the following

Keep in mind we have our annual owners meeting/election in Feb each year.....

xxx HOA Notice of Combined Owners/Board meeting --January 26, 2021 5:00 PM MT via Zoom
Please provide any written comments on this update to me via E-mail, and I will share them with the Board. You may also voice your comments at the meeting. Adopting these updates will require a quorum of at least 50% of the total votes of all of the members present or by proxy at the meeting, and approval of these updates will require a vote of at least 51% of the votes of those members present. Each Condominium Unit shall have the number of votes allocable to such Unit as set forth in Exhibit "B" to the Declaration. A copy of Declaration Exhibit “B” is enclosed for reference. Also enclosed is a Directed Proxy for your use in the event you want to appoint a third party to vote for you. Approval of these updates will also require Board approval by a vote of at least two thirds of the members of the Board.

Exhibit A
to the First Amended and Restated Bylaws of
xxx Condominium Association, Inc.
Director Qualifications
1. Background. Members of the Board of Directors (“Directors”) have a fiduciary
duty to the Association and all owners within the Community (“Owners”). The
Association’s purpose is to preserve, enhance and protect the values of the properties of
members. Directors oversee the collection and expenditure of Owners’ funds for
community maintenance and improvements, including operational funds and significant
capital reserve funds.
2. Governance. The Association is governed by the Colorado Common Interest
Ownership Act, C.R.S. sec. 38-33.3-1-1 et seq. (“CCIOA”) as well as the Colorado
Revised Nonprofit Corporation Act, C.R.S. sec. 7-121-101, et seq. (“Nonprofit Act”).
The Association is responsible for the governance, maintenance and operation of the
Community.
3. Duties. In addition to their fiduciary duty, Directors owe a duty to the
Association and the Owners to perform their obligations in accordance with the authority
granted to them by statute and in the Association’s governing documents. Under
CCIOA, the Nonprofit Act and the Governing Documents, Directors have a duty of care,
duty of loyalty, duty to avoid improper conflicts of interest, duty of confidentiality, duty
to make informed decisions, duty to avoid unlawful distributions of Association assets.
4. Director Qualifications. Recognizing the position of trust and confidence
Directors occupy, the Association requires Directors to meet the following qualifications:
a. Directors. Directors shall also be adults aged twenty-one (21) years or older.
b. Good Standing. Directors shall be in good standing with the Association.
This is defined as the Unit such Director is representing not being delinquent in
assessments or in violation of the Governing Documents.
c. Participation. Directors shall actively participate in Board meetings.
Continued absence from Board meetings will disqualify Directors from continued
service.
d. Personal Qualifications. The following factors, considerations and conditions
are grounds to disqualify any candidate from seeking office and/or holding any position
on the Board, and the existence of any one of which is sufficient to disqualify:
1. Being convicted of any felony in any state or country.
2. Being convicted of any misdemeanor or gross misdemeanor which:
a. is a crime of violence,
Exhibit A to xxx First Amended and Restated Bylaws p. 2 of 4
b. has any element which is an act of violence
c. is a crime involving fraud, theft, or dishonesty
d. is a crime of trespass or burglary
e. is a crime involving violation of a restraining order
3. Delinquency in the payment of any and all financial obligations to the HOA
including but not limited to: monthly HOA dues, assessments, fines, attorneys fees, cost,
assessments, and damage repair caused by any candidate or his/her occupants and guests.
4. Non-conformity with any provision of the Colorado Common Interest
Ownership Act (“CCIOA”), the HOA Declarations, the HOA Bylaws or any Board
Resolutions.
5. Being delinquent in the payment of any San Miguel County real estate
taxes, business licenses or Town of Telluride taxes regarding any Unit owned by the
candidate.
6. Refusing to submit to a background check conducted by or on behalf of the
HOA.
7. Possessing personal or business underwriting risks or factors which would
cause any HOA insurer to cancel, not issue, or substantially raise the premiums for any
HOA-held insurance policies, such a D & O, fidelity, flood and general liability.
8. Deemed to be unfit to serve after taking some or all of the following factors
into considerations:
a. History of violation of CCIOA, HOA Declarations, Bylaws or
Resolutions.
b. History of confrontational or uncivil behavior.
c. Hostility toward anyone based on race, gender, religion, marital status,
national origin, ethnicity, age, language, or sexual preference.
d. Current or past instances of criminal behavior.
e. Violations or Town of Telluride or San Miguel County ordinances,
laws, rule and regulations regarding landlord obligations.
f. Allowing unsafe conditions in and around the Owner’s Unit(s).
g. Violating Town of Telluride, San Miguel County and State of Colorado
laws regarding open fires, grills, fire lanes and other public safety laws.
h. Disregarding common trash/recycle area rules.
i. Unpermitted entry into any Unit.
j. Having engaged in conduct rising to the level of moral turpitude. Moral
turpitude is defined as an act or behavior that gravely violates the sentiment or accepted
standard of the Community or a quality of dishonesty or other immorality.
e. Exercise Duty of Care. Directors shall exercise a high duty of care to the
Association and the Owners. Directors shall (1) act in good faith; (2) using the care an
ordinarily prudent person in a like position would exercise under similar circumstances;
Exhibit A to xxx First Amended and Restated Bylaws p. 3 of 4
and (3) in a manner the Director reasonably believes to be in the best interests of the
Association.
f. Duty of Undivided Loyalty and to Avoid Improper Conflicts of Interest.
Directors shall adhere to their duty to act for the Association’s benefit and not for their
personal benefit. A Director shall not use the Director’s position for individual personal
advantage. CCIOA and the Nonprofit Act place strict limits on conflicting interest
transactions. The duty of loyalty requires Directors to exercise their powers in the
Association’s best interests. A conflict of interest is present whenever a Director has a
material personal interest in a proposed contract or transaction to which the Association
may be a party. This interest can occur either directly or indirectly. The Director may be
personally involved with the transaction, or may have an employment or investment
relationship with an entity with which the Association is dealing, or it may arise from
some family or business relationship. A conflict of interest may result from a Director
performing services for the Association (e.g., a landscape contractor, banker, insurance
agent, attorney or real estate broker). The Association Policy #2, Handling of Conflicts
of Interest Involving Board Members, sets forth procedures for handling conflicts of
interest. Importantly, Directors shall disclose all conflicts of interest to their fellow
Directors and to the Owners.
g. Duty of Confidentiality. Directors are also prohibited from disclosing
information about the Association’s financial and other activities to the public. A
Director should treat as confidential all matters involving the Association unless there has
been general public disclosure or the information is a matter of public record or common
knowledge. Individual Directors are not a spokespersons for the Association. Disclosure
of Association information should be made only after Board approval.
h. Duty to Make Informed Decisions. The “Business Judgement Rule” requires
Directors work to become reasonably informed prior to making decisions. Before
making decisions affecting the Association, Directors can and should consult
professionals, including, as appropriate, architects, engineers, contractors, property
managers, attorneys and accountants. Directors should also be familiar with the terms of
all Association Governing Documents and should enforce these provisions fairly among
all Owners.
i. Duty to Avoid Unlawful Distributions of Association Assets. CCIOA and the
Nonprofit Act impose personal liability on a Director who votes for or assents to a
distribution of Association assets made in violation of these laws or the Association
Governing Documents.
j. Civility. Directors shall conduct themselves in a professional manner.
Directors shall maintain civility among themselves and with the Owners. Directors
should engage in discourse concerning Association matters. However, Directors shall not
engage in disruptive, argumentative or unprofessional conduct.
Exhibit A
to the First Amended and Restated Bylaws of
xxx Condominium Association, Inc.
Director Qualifications
1. Background. Members of the Board of Directors (“Directors”) have a fiduciary
duty to the Association and all owners within the Community (“Owners”). The
Association’s purpose is to preserve, enhance and protect the values of the properties of
members. Directors oversee the collection and expenditure of Owners’ funds for
community maintenance and improvements, including operational funds and significant
capital reserve funds.
2. Governance. The Association is governed by the Colorado Common Interest
Ownership Act, C.R.S. sec. 38-33.3-1-1 et seq. (“CCIOA”) as well as the Colorado
Revised Nonprofit Corporation Act, C.R.S. sec. 7-121-101, et seq. (“Nonprofit Act”).
The Association is responsible for the governance, maintenance and operation of the
Community.
3. Duties. In addition to their fiduciary duty, Directors owe a duty to the
Association and the Owners to perform their obligations in accordance with the authority
granted to them by statute and in the Association’s governing documents. Under
CCIOA, the Nonprofit Act and the Governing Documents, Directors have a duty of care,
duty of loyalty, duty to avoid improper conflicts of interest, duty of confidentiality, duty
to make informed decisions, duty to avoid unlawful distributions of Association assets.
4. Director Qualifications. Recognizing the position of trust and confidence
Directors occupy, the Association requires Directors to meet the following qualifications:
a. Directors. Directors shall also be adults aged twenty-one (21) years or older.
b. Good Standing. Directors shall be in good standing with the Association.
This is defined as the Unit such Director is representing not being delinquent in
assessments or in violation of the Governing Documents.
c. Participation. Directors shall actively participate in Board meetings.
Continued absence from Board meetings will disqualify Directors from continued
service.
d. Personal Qualifications. The following factors, considerations and conditions
are grounds to disqualify any candidate from seeking office and/or holding any position
on the Board, and the existence of any one of which is sufficient to disqualify:
1. Being convicted of any felony in any state or country.
2. Being convicted of any misdemeanor or gross misdemeanor which:
a. is a crime of violence,
Exhibit A to xxx First Amended and Restated Bylaws p. 2 of 4
b. has any element which is an act of violence
c. is a crime involving fraud, theft, or dishonesty
d. is a crime of trespass or burglary
e. is a crime involving violation of a restraining order
3. Delinquency in the payment of any and all financial obligations to the HOA
including but not limited to: monthly HOA dues, assessments, fines, attorneys fees, cost,
assessments, and damage repair caused by any candidate or his/her occupants and guests.
4. Non-conformity with any provision of the Colorado Common Interest
Ownership Act (“CCIOA”), the HOA Declarations, the HOA Bylaws or any Board
Resolutions.
5. Being delinquent in the payment of any San Miguel County real estate
taxes, business licenses or Town of Telluride taxes regarding any Unit owned by the
candidate.
6. Refusing to submit to a background check conducted by or on behalf of the
HOA.
7. Possessing personal or business underwriting risks or factors which would
cause any HOA insurer to cancel, not issue, or substantially raise the premiums for any
HOA-held insurance policies, such a D & O, fidelity, flood and general liability.
8. Deemed to be unfit to serve after taking some or all of the following factors
into considerations:
a. History of violation of CCIOA, HOA Declarations, Bylaws or
Resolutions.
b. History of confrontational or uncivil behavior.
c. Hostility toward anyone based on race, gender, religion, marital status,
national origin, ethnicity, age, language, or sexual preference.
d. Current or past instances of criminal behavior.
e. Violations or Town of Telluride or San Miguel County ordinances,
laws, rule and regulations regarding landlord obligations.
f. Allowing unsafe conditions in and around the Owner’s Unit(s).
g. Violating Town of Telluride, San Miguel County and State of Colorado
laws regarding open fires, grills, fire lanes and other public safety laws.
h. Disregarding common trash/recycle area rules.
i. Unpermitted entry into any Unit.
j. Having engaged in conduct rising to the level of moral turpitude. Moral
turpitude is defined as an act or behavior that gravely violates the sentiment or accepted
standard of the Community or a quality of dishonesty or other immorality.
e. Exercise Duty of Care. Directors shall exercise a high duty of care to the
Association and the Owners. Directors shall (1) act in good faith; (2) using the care an
ordinarily prudent person in a like position would exercise under similar circumstances;
Exhibit A to xxx First Amended and Restated Bylaws p. 3 of 4
and (3) in a manner the Director reasonably believes to be in the best interests of the
Association.
f. Duty of Undivided Loyalty and to Avoid Improper Conflicts of Interest.
Directors shall adhere to their duty to act for the Association’s benefit and not for their
personal benefit. A Director shall not use the Director’s position for individual personal
advantage. CCIOA and the Nonprofit Act place strict limits on conflicting interest
transactions. The duty of loyalty requires Directors to exercise their powers in the
Association’s best interests. A conflict of interest is present whenever a Director has a
material personal interest in a proposed contract or transaction to which the Association
may be a party. This interest can occur either directly or indirectly. The Director may be
personally involved with the transaction, or may have an employment or investment
relationship with an entity with which the Association is dealing, or it may arise from
some family or business relationship. A conflict of interest may result from a Director
performing services for the Association (e.g., a landscape contractor, banker, insurance
agent, attorney or real estate broker). The Association Policy #2, Handling of Conflicts
of Interest Involving Board Members, sets forth procedures for handling conflicts of
interest. Importantly, Directors shall disclose all conflicts of interest to their fellow
Directors and to the Owners.
g. Duty of Confidentiality. Directors are also prohibited from disclosing
information about the Association’s financial and other activities to the public. A
Director should treat as confidential all matters involving the Association unless there has
been general public disclosure or the information is a matter of public record or common
knowledge. Individual Directors are not a spokespersons for the Association. Disclosure
of Association information should be made only after Board approval.
h. Duty to Make Informed Decisions. The “Business Judgement Rule” requires
Directors work to become reasonably informed prior to making decisions. Before
making decisions affecting the Association, Directors can and should consult
professionals, including, as appropriate, architects, engineers, contractors, property
managers, attorneys and accountants. Directors should also be familiar with the terms of
all Association Governing Documents and should enforce these provisions fairly among
all Owners.
i. Duty to Avoid Unlawful Distributions of Association Assets. CCIOA and the
Nonprofit Act impose personal liability on a Director who votes for or assents to a
distribution of Association assets made in violation of these laws or the Association
Governing Documents.
j. Civility. Directors shall conduct themselves in a professional manner.
Directors shall maintain civility among themselves and with the Owners. Directors
should engage in discourse concerning Association matters. However, Directors shall not
engage in disruptive, argumentative or unprofessional conduct.

AugustinD
Posts: 5,144

Posted:

Ryan, have you a question?

RyanP2 (Colorado)
Posts: 12

Posted:

Yes sorry, can the board legally sit down and decide if someone qualified or unqualified based on leaving mess in trash room or being "confrontational"

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By RyanP2 on 01/16/2021 11:04 AM
Yes sorry, can the board legally sit down and decide if someone qualified or unqualified based on leaving mess in trash room

The required qualifications of a candidate are set by the Bylaws and sometimes, the Declaration. If the latter governing documents say nothing about messes in trash rooms, then no, the Board may not lawfully disqualify a person as a candidate for the board in an upcoming membership election.

Quote:
or being "confrontational"
No, a Board may not disqualify a person as a candidate for the board in an upcoming membership election because the person is "confrontational." Tell them to stuff it. They are itching for a lawsuit.

If you are talking about a Board with a vacant seat and the Board refuses to appoint a person for xyz reason, then usually, this is lawful. Examples of when this might not be lawful is if the Board refuses to appoint a person and expressly says something stupid like, "We don't want Black people on the Board" or "No Jewish people allowed on the Board" or "No Christian people on the Board" and similar. These examples violate federal Fair Housing law.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By RyanP2 on 01/16/2021 11:04 AM
Yes sorry, can the board legally sit down and decide if someone qualified or unqualified based on leaving mess in trash room or being "confrontational"

There are many cases of a BOD trying to control who can and cannot run for election to the BOD. One way they do this is any owner has a Covenant Violation they cannot run for office then the BOD begins handing out Violation Notices right before an election making that person unable to run for office or even vote. A common tactic.

You can do several things:

1. Hire a lawyer and be sure their "requirements' are legal.
2. Get owners to vote against the "requirements" part of which would be for you to collect Proxies voting against the requirements.
3. Accept the changes.
4. Move.

Ball is in your court.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By JohnC46 on 01/16/2021 11:20 AM
Posted By RyanP2 on 01/16/2021 11:04 AM
Yes sorry, can the board legally sit down and decide if someone qualified or unqualified based on leaving mess in trash room or being "confrontational"

ADD ON

They are saying 51% of Member at a meeting to change the Bylaws. Typically it requires 51% of ALL OWNERS to do so. Check the Bylaws.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I agree with John's and Augustin's comments.

This will be stream of consciousness as I think of things...

Seriously, who wrote this new document? There are things in there that are vague and not enforceable. If it is the board, that's reason alone to vote no. Legal documents must be drafted by lawyers. Otherwise, it's very likely that there will be something that doesn't pass muster, which will set the stage for legal wrangling in the future.

I noticed that the quoted document started off referring a number of times to "fiduciary duty". I agree that board members do have such a duty. However, this duty does not entitle them to perform unlawful acts, no matter how much they may believe the unlawful acts may benefit the association. The statements regarding fiduciary duty strike me as an attempt to create legitimacy where it does not exit.

Bylaws are legally subordinate to the Declaration. I'm not a lawyer, but I doubt that the bylaws can create additional restrictions beyond those in Declaration, or remove rights granted by the Declaration.

I hate to argue against this because incompetent board members are the bane of many HOAs. But that doesn't justify what they're trying to do. Perhaps a qualification for serving on the board is knowledge of what the board can legally do...? (OK, that was snarky.) As I'd mentioned earlier, there are ways to accomplish what they want to do - for example, a felony conviction is a legitimate election issue and should convince enough owners not to vote for the person.

Finally, the board is attempting to force the homeowners to make good decisions by eliminating options to make bad ones. I understand wanting to do that, but I believe that owners do have the right to make bad decisions (I can't believe I just wrote that - this needs more thought since I also think there should be limits on people's right to harm others).

RyanP2 (Colorado)
Posts: 12

Posted:

Yes just seems to me that they basically trying to have a blanket "policy" where they can just make sure it is them who stay in charge. They have all been on board for years and this year could see the dissent and others coming.

I'm trying to find out on what legal basis I can challenge them on this part where they basically decide if someone is qualified.

Reasonable things such as no felonies, etc. I have seen on other boards and is not the issue but I'm concerned about the fact that the 5 of them get to decide if someone left mess in trash room they now are unqualified.

They have been using an attorney of course paid for by HOA to attempt to exclude others from board, I'm not certain that attorney drafted this but I won't be surprised if he did. I just want to make sure I know what I am challenging.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By RyanP2 on 01/16/2021 12:15 PM
...snip ...
I'm not certain that attorney drafted this but I won't be surprised if he did. I just want to make sure I know what I am challenging.

Is he charging by the word? (I appear to be in snark mode today.)

There is so much vague and unenforceable verbiage in there - it just looks like sloppy work to me. However, there are some HOA attorneys that will do whatever a board tells them to do, unfortunately, and they can give HOA attorneys a bad name.

The document looks like a laundry list of "legalese" that throws together everything the board could think of, without any true understanding of how it all hangs together. The author knows the words but not what they really mean. For example:

It looks like the document is attempting to force a code of conduct on the board members. I noticed one clause that referred to the importance of the Business Judgement rule. However, some lawyers have opined that signing a code of conduct may make a board member ineligible for the business judgement defense, since the board member is agreeing ahead of time to behave is pre-determined ways.

But you'll probably need to talk to an attorney who is well-versed in HOA law. My intuition about this is NOPE. Would not vote to approve it, would not agree to abide by anything I have not signed voluntarily.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By RyanP2 on 01/16/2021 12:15 PM
I'm trying to find out on what legal basis I can challenge them on this part where they basically decide if someone is qualified.

From case law, the legal basis is the following: The only qualifications to which all Owners agreed are those in the Bylaws or Declaration. The Bylaws and Declaration are contracts.

In the last few years even felony convictions are starting to be disallowed as reasons to turn a person down for a job or a position on a HOA/condo board. This requires a longer post to explain. For now, I'll just say this is the direction many states are going, in part because of federal anti-discrimination law.

RyanP2 (Colorado)
Posts: 12

Posted:

appreciate it, let me know if find.

most concerning is them basically deciding

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By AugustinD on 01/16/2021 2:18 PM
... snip ...

In the last few years even felony convictions are starting to be disallowed as reasons to turn a person down for a job or a position on a HOA/condo board. This requires a longer post to explain. For now, I'll just say this is the direction many states are going, in part because of federal anti-discrimination law.

That's interesting. I wonder how they reconcile this with an HOA's requirement to obtain insurance as spelled out in the CC&Rs to which the ex-felon agreed (I think they're mutually exclusive). Are they saying this falls under Fair Housing laws?

This could be another of our long-winded but very informative discussions.

Back to the topic at hand...

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By RyanP2 on 01/16/2021 2:23 PM
appreciate it, let me know if find. most concerning is them basically deciding

I am not going looking for it in your state. The argument you should make in a letter of demand is that the Board and all members are bound by state statute and the governing documents (here, the covenants, the articles of incorporation, and the Bylaws). The governing documents are contractual terms. The Board cannot change contractual terms. The contractual terms contain no restrictions pertaining to messes in trash rooms or a member being "confrontational." Therefore, these restrictions are unlawful.

If you are not capable of putting this into a demand-letter-lite, then hire an attorney.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By CathyA3 on 01/17/2021 8:12 AM
Posted By AugustinD on 01/16/2021 2:18 PM
... snip ...
In the last few years even felony convictions are starting to be disallowed as reasons to turn a person down for a job or a position on a HOA/condo board. This requires a longer post to explain. For now, I'll just say this is the direction many states are going, in part because of federal anti-discrimination law.

-- Your point is well-taken, regarding possible conflicts with insurability of a felon.

-- Yes, HUD has begun saying restrictions on felons at HOAs may violate the Fair Housing Act. Here's a 2016 statement from HUD on the subject:
https://www.hud.gov/sites/documents/HUD_OGCGUIDAPPFHASTANDCR.PDF

-- I note that this was a statement made in the last year of the Obama administration, in April. If this position changed (or if a wink wink nudge nudge about not "enforcing" what this guidance says occurred during the Trump years?), then I expect the Biden administration will take the same position.

-- As CathyA3 rightly points out, this could set up a conflict between Fair Housing law and the rights of insurers to set certain terms pertaining to felons on the boards of HOAs, especially felons who undertake the treasurer's duties or sign checks on behalf of the felon.

-- My feelings on the topic are a mix of disgust with HUD for advertising often it will enforce xyz and then failing to do so; awareness of insurer's concerns; awareness of some of the concerns HUD puts forth in its 2016 memo about a disproportionate number of folks of color landing in jail; and awareness that some states now prohibit questioning a person about her or his criminal background.

-- A little tidbit from the top of my head, and so subject to scrutiny: Years ago, weren't health insurers and auto insurers allowed to charge different rates based on gender? Then in the last decade or so, federal law prohibited this? When I learned this, I said, "wha.. ?" These distinctions made sense to me years ago. Especially the reality that, a decade+ ago, women paid less just for being female, on account of females got into less accidents. (This busts some stereotypes about women being bad drivers.) It makes sense, right? Well legislators said it no longer makes sense. My thinking is adjusting as well about the hiring of felons. I am not quite at the point where I think an employer or HOA (or insurer?) should be prohibited from asking about criminal past. But I am closer.

RyanP2 (Colorado)
Posts: 12

Posted:

The board is trying to incorporate into the bylaws with a 50% owner vote (of who attends meeting called) for this purpose

under the guise of "The HOA Board has been busy working with our expert HOA attorney in updating bylaws and other HOA legal documentation. It appears that some of these documents have not been updated since the inception of xxx. We have found discrepancies between current bylaws and CCIOA (Colorado Common Interest Ownership Act). It appears that some regulations in the Colorado Act and declaration of condominiums did not align with our bylaws. Our attorneys and Board members have been diligent in locating these discrepancies and are taking corrective action as well as providing additional guidance. "

RyanP2 (Colorado)
Posts: 12

Posted:

The board held a special owners meeting, they sent out email to owners saying the bylaws needed to be changed to make sure they aligned with state law, but all they did was change terms for board, and add qualifications including crazy ones they get to "determine". They came to meeting with proxies from out of town owners who I'm sure they misled on reason. They passed with about 60% vote. Many on the call also had concerns about this section below and wanted removed but board said couldn't do that at the meeting it was yes or no and if there are problems they could "change it later" LOL

This is what concerns me......what can I do?

8. Deemed to be unfit to serve after taking some or all of the following factors
into considerations:
a. History of violation of CCIOA, HOA Declarations, Bylaws or
Resolutions.
b. History of confrontational or uncivil behavior.
c. Hostility toward anyone based on race, gender, religion, marital status,
national origin, ethnicity, age, language, or sexual preference.
d. Current or past instances of criminal behavior.
e. Violations or Town of Telluride or San Miguel County ordinances,
laws, rule and regulations regarding landlord obligations.
f. Allowing unsafe conditions in and around the Owner’s Unit(s).
g. Violating Town of Telluride, San Miguel County and State of Colorado
laws regarding open fires, grills, fire lanes and other public safety laws.
h. Disregarding common trash/recycle area rules.
i. Unpermitted entry into any Unit.
j. Having engaged in conduct rising to the level of moral turpitude. Moral
turpitude is defined as an act or behavior that gravely violates the sentiment or accepted
standard of the Community or a quality of dishonesty or other immorality.
e. Exercise Duty of Care. Directors shall exercise a high duty of care to the
Association and the Owners. Directors shall (1) act in good faith; (2) using the care an
ordinarily prudent person in a like position would exercise under similar circumstances;
Exhibit A to xxx First Amended and Restated Bylaws p. 3 of 4
and (3) in a manner the Director reasonably believes to be in the best interests of the
Association.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

This is when I ask my usual questions: How much do you love your home? How easily can you replace it? Can you live with the current situation?

If not, at the very least you'll have a long fight on your hands, either to oust the current board or via lawsuit challenging the legality of the new bylaw. To do either of these, you'll need help from other homeowners and/or a competent attorney.

Is it worth it to you, or would you be better off moving?

The reality is that anyone who buys into an HOA or COA becomes the legal and financial partner of every other homeowner in the association. Unfortunately, no matter how much due diligence and "caveat-ing emptor" you do before signing on the dotted line, you can't vet your new business partners. There is no way to avoid the kind of situation you're dealing with, since even the most competent boards can be replaced by a bunch of nincompoops.

Personally, I'm pragmatic. I've yet to find any housing situation that was so unique and so wonderful that I couldn't find an acceptable replacement. But this is an individual decision - others may have different ideas.

I've also come to the conclusion that I can't save people from their own foolishness, and at my age I'm not willing to spend my increasingly precious time in a constant state of alertness and fighting. I want a home that is a refuge from all that, not the source of it.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Ryan

Like what they did r nit, and I for one do not, it seems they got it passed/implemented properly.

RyanP2 (Colorado)
Posts: 12

Posted:

Would you say those are "reasonable" qualifications however?

If you put trash in wrong spot they can disqualify you

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By RyanP2 on 01/28/2021 11:25 AM
Would you say those are "reasonable" qualifications however?

If you put trash in wrong spot they can disqualify you

Ryan

It does not matter what I think. It is what your fellow owners want. You had better learn to accept these type decisions happen in associations.

ChrisE8
Posts: 454

Posted:

Quote:

Posted By RyanP2 on 01/28/2021 1:11 AM
The board held a special owners meeting, they sent out email to owners saying the bylaws needed to be changed to make sure they aligned with state law, but all they did was change terms for board, and add qualifications including crazy ones they get to "determine". They came to meeting with proxies from out of town owners who I'm sure they misled on reason. They passed with about 60% vote. Many on the call also had concerns about this section below and wanted removed but board said couldn't do that at the meeting it was yes or no and if there are problems they could "change it later" LOL

This is what concerns me......what can I do?

8. Deemed to be unfit to serve after taking some or all of the following factors
into considerations:
a. History of violation of CCIOA, HOA Declarations, Bylaws or
Resolutions.
b. History of confrontational or uncivil behavior.
c. Hostility toward anyone based on race, gender, religion, marital status,
national origin, ethnicity, age, language, or sexual preference.
d. Current or past instances of criminal behavior.
e. Violations or Town of Telluride or San Miguel County ordinances,
laws, rule and regulations regarding landlord obligations.
f. Allowing unsafe conditions in and around the Owner’s Unit(s).
g. Violating Town of Telluride, San Miguel County and State of Colorado
laws regarding open fires, grills, fire lanes and other public safety laws.
h. Disregarding common trash/recycle area rules.
i. Unpermitted entry into any Unit.
j. Having engaged in conduct rising to the level of moral turpitude. Moral
turpitude is defined as an act or behavior that gravely violates the sentiment or accepted
standard of the Community or a quality of dishonesty or other immorality.
e. Exercise Duty of Care. Directors shall exercise a high duty of care to the
Association and the Owners. Directors shall (1) act in good faith; (2) using the care an
ordinarily prudent person in a like position would exercise under similar circumstances;
Exhibit A to xxx First Amended and Restated Bylaws p. 3 of 4
and (3) in a manner the Director reasonably believes to be in the best interests of the
Association.

If you look hard enough, that list would likely ban all current board members from being elected.

I'd run a background check and review all decisions that they've made, and raise everything you find.

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