Homeowner Associations in Colorado are typically organized as nonprofit corporations. As such, they are considered businesses. And while HOAs in Colorado certainly do bring in revenue (by way of regular and special assessments, as well as fines and fees), as a nonprofit, any revenue received above expenditures should be reinvested into the community by means of capital expenditures or contribution to reserves.
Section 38-33.3-401 of the Colorado Common Interest Ownership Act (“CCIOA”) requires every unit owners' association to register annually with the director of the Division of Real Estate. A registration is valid for one year. If an association fails to register, or whose annual registration has expired, their right to impose or enforce a lien for assessments under section 38-33.3-316 or to pursue an action or employ an enforcement mechanism otherwise available to it under section 38-33.3-123 is suspended until the association is validly registered pursuant to this section.
A lien for assessments previously recorded during a period in which the association was validly registered or before registration was required pursuant to this section is not extinguished by a lapse in the association's registration, but a pending enforcement proceeding related to the lien is suspended, and an applicable time limit is tolled, until the association is validly registered pursuant to this section. An association's registration in compliance with section 38-33.3-401 revives a previously suspended right without penalty to the association.
Since an expired registration results in the suspension of an HOA’s right to impose or enforce a lien for assessments or to pursue other enforcement action available to it under section 38-33.3-123, HOA leadership should be aware of it’s registration status at all times and should create policies and procedures to ensure compliance. Without proper registration, an HOA may miss out on or delay the receipt of revenue generated by assessments, fines or fees.
As a Board member, you should carefully review sections 38-33.3-401, 38-33.3-316 & 38-33.3-123, and familiarize yourself with the requirements therein. Consider reviewing your association documents regarding the roles and responsibilities of Board members and amending, if necessary, to include registration and renewal as responsibilities of a specific Board member. As a unit owner, you should always contact a licensed attorney before deciding to not comply with an association’s request for payment in connection with any assessment, fee, fine or charge. The failure to pay an assessment, fee, fine or charge because your association is unregistered or expired may result in additional fees.
For more information please see the Colorado Common Interest Ownership Act & The Division’s HOA Registration Services.