Governance Policies
AMENDED AND RESTATED
GOVERNANCE POLICIES AND PROCEDURES OF
THE PRESERVE SUBDIVISION
Effective Date: March 2, 2023
These Amended and Restated Governance Policies and Procedures (“Policies”) of The Preserve Subdivision (“Community”) have been adopted and implemented to protect the investment of the members and to enhance the values of the properties subject to regulation by the Telluride Preserve Homeowners Association, a Colorado nonprofit corporation (“Association”).
These Policies are promulgated in accordance with the authority of the Association as provided for in the Amended and Restated Declaration for The Preserve Subdivision, recorded August 1, 1989 in Book 455 at page 900-937 @ Reception no. 260289, as amended or supplemented (“Declaration”) as well as the Articles of Incorporation and the Amended and Restated Bylaws for the Association (“Governing Documents”), as the same may be modified or supplemented from time to time. Terms which are defined in the Governing Documents shall have the same meaning herein, unless defined otherwise in these Policies.
These Policies do hereby fully amend, restate and replace any and all such other and prior policies, if any, regarding the governance of the Association required by applicable law.
In the event of a conflict between these Policies and the terms and conditions of the Declaration, the terms and conditions of the Declaration shall control.
The use of the term “Owner” shall mean and refer to any owner of a Lot or a Unit located within the Community.
1. DIRECTOR CONFLICT OF INTEREST.
1.1. General Duty. The Board of Directors and Committee members shall use its commercially reasonable and good faith efforts at all times to make decisions that are consistent with high principles, and to protect and enhance the value of properties of the members and the Association. All Directors and Committee members shall exercise their power and duties in a commercially reasonable and good faith manner and in the best interest of the Association, consistent with the so called “business judgment rule”. All Directors and Committee members shall comply with all lawful provisions of the Declaration and the Association’s Articles, Bylaws, and Rules and Regulations.
1.2. Conflicting Interest Transactions. A “Conflicting Interest Transaction” is defined as a contract, transaction or other financial relationship between the Association and a Director of the Association, or between the Association and a party related to a Director, or between the Association and an entity in which a Director of the Association is an officer, director or other partner, member or manage or has a financial interest. Notwithstanding to provisions of C.R.S. §7-128-501 and C.R.S. §38-33.3-310.5, a Director shall not participate in actions by the Board with respect to the negotiation, review, approval or voting on a transaction that would be considered a Conflicting Interest Transaction. The Director with the conflict shall disclose such conditions and circumstances to the other Directors. The remaining Directors, in the exercise of their reasonable discretion, may undertake a transaction that would have constituted a Conflicting Interest Transaction, provided that the Director whose participation would have resulted in the creation of a Conflicting Interest Transaction, refrains from voting and does not engage in discussions with the Board concerning the transaction and the transaction is otherwise fair and
Page 2 of 21
commercially reasonable to the Association. The minutes of the meeting shall reflect the disclosure made, the composition of the quorum and record who voted for and against.
1.3. Recusal of Directors. For purposes of this section, the term “design/use Application” shall mean an application presented to the Board of Directors or Environmental Control Committee, involving design reviews and other reviews that are required to be reviewed by the Board of Directors or Environmental Control Committee pursuant to the Governing Documents. A conflict of interest shall exist in the event that a Director or a member of the Environmental Control Committee, in the review of an application which involves: (a) property that is owned by the Director or Committee member or their immediate family (ie. husband/wife, parents, children, siblings), (b) property owned by a person or an entity to whom the Director or Committee member has a business relationship, (c) instances where the Director or Committee member would receive notice of the pending design/use application because of proximity to the property for which the Design/use Application has been submitted. Such Director or Committee member, after disclosing the conflict of interest, may participate in the discussion of the item, but shall not vote on the action. The minutes of the meeting shall reflect the disclosures and recusals made, the composition of the quorum and record who voted for and against.
2. DIRECTOR’S LIABILITY. A Director who behaves fairly and honorably and who, acting in good faith, is diligent in discharging his or her duties is not likely to be subjected to personal liability. Courts recognize that business judgment inevitably involves risk evaluation and that Directors are not normally committed to full-time involvement in the affairs of the organization. Courts further recognize that Directors must make important decisions which, in retrospect, may prove to be erroneous. If it turns out the decision of the Board was a mistake, the question of whether or not the Directors have been careless is decided in terms of the facts as they were or reasonably appeared to be when the decision was made and not in terms of 20-20 hindsight. Directors are generally protected from honest mistakes if they (1) exercised their good faith judgment without carelessness, (2) acted within the power granted to the organization by state law and the organization’s articles of incorporation and bylaws, and (3) executed such judgment after due consideration of what they reasonably believed to be the relevant facts. If, however, a Director violates his or her duty of loyalty to the organization, a court may hold the Director responsible for such willful neglect. The absence of a Director at a Board meeting usually does not excuse the Director from personal liability for actions taken at the meeting. If the Director is absent from a Board meeting, he or she is responsible for obtaining the minutes of the meeting, and if he or she objects to any action taken, promptly dissent, preferably in writing, to the entire Board. If this is not done, the Director may be deemed to have acquiesced in the action.
3. RIGHT TO INDEMNIFICATION. The bylaws of the Association sometimes authorize the Association, under certain circumstances, to indemnify its officers and Directors for costs and expenses incurred by them as a result of legal proceedings brought by a third party. The right to indemnification is governed by statute, however, and the organization may indemnify its officers and Directors only to the extent permitted by the state law. A bylaw or agreement which extends this right is unenforceable. In the absence of any right to indemnification in the organization’s bylaws or an agreement entered into between the organization and each Director, a Director’s right to indemnification is dependent on state law. Many organizations also maintain a fairly broad coverage association professional liability insurance policy that includes Directors and officers liability coverage. Directors may also want to consult with their personal insurance agent to see if a homeowner’s umbrella liability policy provides any coverage for their actions as a nonprofit Director.
4. CONDUCT OF MEETINGS. Meetings of the Owner/Members, the Board of Directors and the Environmental Control Committee shall be conducted in accordance with all applicable provisions of the Colorado Nonprofit Corporation Act (C.R.S. § 7- 135-100 et. seq.) and the Colorado
Page 3 of 21
Common Interest Ownership Act (C.R.S. § 38-33.3-101 et. seq.), as well as in accordance with Roberts Rules of Order, the Association Bylaws and these policies.
5. COLLECTION POLICIES.
5.1. COLLECTIONS.
5.1.1. Content of Notice Prior to Referring for Collection Action. In the event that an owner has not paid an assessment of other amount due and payable to the Association, the Association shall first contact the Owner to alert the Owner of the delinquency (“Notice of Delinquency”). The Notice of Delinquency shall be written in English and in any language that the Owner has indicated a preference for correspondence and notices. The Notice of Delinquency shall provide, among other things, the following:
A. Indicate whether the delinquency concerns unpaid assessments, unpaid fines, fees or charges or both.
B. Provide a description of the steps that the Association must take before the Association may take legal action against the Owner, including a description of the Associations Cure Process.
C. The total amount due as of the date of the notice and how it was determined;
D. Offering the delinquent lot owner one-time opportunity to enter into a Repayment Plan as provided for below;
E. Listing the legal remedies, including foreclosure, available to the Association;
F. Instructions (including the name and contact information) for communicating with the Association’s manager to a) request a copy of the lot owner’s ledger to verify the amount of the past-due amounts, or b) submit a request for a payment plan;
G. That “action is required to cure the delinquency and that failure to do so within thirty (30) days may result in the owner’s delinquent account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the lot owner’s property, or other remedies available under Colorado Law”;
H. The method by which the owner’s payments may be applied;
I. The legal remedies available to the Association to collect on the delinquent account under the governing documents and Colorado law.
5.1.2. Requirements Relating to the Sending of a Notice of Delinquency. The Association shall first send the Notice of Delinquency to the Owner before taking action in relation to the delinquency pursuant to the Colorado Common Interest Ownership Act (“CIOA”) and shall maintain a record of any contacts, including information regarding the type of communication used to contact the Owner and the date and time that the contact was made. Any contacts that a community Association manager or a property management company makes on behalf of an Association pursuant to CIOA is deemed a contact made by the Association and not by a debt collector as defined in CRS section 5-16-103 (9). An Owner may identify another person to serve as a designated contact for the Owner to be contacted on the Owner’s behalf for purposes of this subsection. An Owner may also notify the Association if the
Page 4 of 21
Owner prefers that correspondence and notices from the Association be made in a language other than English. If a preference is not indicated, the Association shall send the correspondence and notices in English. The Owner and the Owner’s designated contact must receive the same correspondence and notices anytime communications are sent out; except that the Owner must receive the correspondence and notices in the language for which the Owner has indicated a preference, if any. An Association may determine the manner in which An Owner may identify a designated contact. In contacting the Owner or a designated contact, an Association shall send the same type of Notice of Delinquency required to be sent pursuant to pursuant to CIOA including sending it by certified mail, return receipt requested, and physically post a copy of the notice of delinquency at the Owner’s unit/lot. In addition, the Association shall send the Notice of Delinquency the Owner by one of the following means:
A. first-class mail;
B. Text message to a cellular number that the Association has on file because the Owner has provided the cellular number to the Association; or
C. E-mail to an e-mail address that the Association has on file because the Owner has provided the e-mail address to the Association.
5.1.3. The Association, shall refer a delinquent account to a collection agency or attorney only if a majority of the Board votes to refer the matter in a recorded vote at a meeting conducted pursuant to CRS section 38-33 .3-308 (4)(e). The Association shall not refer a delinquent account to a collection agency or an attorney unless a majority of the Board votes to refer the matter in a recorded vote at a meeting conducted pursuant to CRS section 38-33.3-308 (4)(e).
5.1.4. An Association shall not impose late fees on a daily basis against An Owner.
5.1.5. Collection Actions. Subject to compliance with Section 5.1.1 through 5.1.4 above, including the provision of a Notice of Delinquency, the Association shall pursue collections as follows:
A. Collection of Less Than $250. For outstanding balances less than $250 that are thirty (30) days or more past due, the Association may send the delinquent owner a letter advising that the amount is thirty (30) days past due, that interest is accruing on the balance, and requesting payment. The letter shall also advise that, if not paid, the amount past due will be added to the delinquent owner’s next statement with interest. The Association will not charge the delinquent owner for this letter.
B. Collection of $250 or More. For outstanding balances of $250 or more, the Association has adopted the following collection policy.
(i) For balances that are thirty (30) days or more past due, the Association may send a collection letter to the delinquent owner advising that the amount is thirty (30) days past due, that interest is accruing on the balance, and requesting payment. There is no charge for this letter.
(ii) For balances that are sixty (60) days or more past due, the Association may send a collection letter to the delinquent owner advising that the amount is sixty (60) days past due, that the Association intends to record a lien against that owner’s lot, that there is an administrative charge for the letter and that there will be an administrative charge for recording the lien. The Association will invoice this charge to the delinquent owner.
Page 5 of 21
(iii) For balances that are more than ninety (90) days past due, the Association may record a lien against the delinquent owner’s lot. If the Association records a lien, then the Association will send a copy to the delinquent owner via certified mail. The Association will invoice the administrative and legal charges for recording the lien and sending the certified mailing to the delinquent owner. The Association may also notify mortgagees of the lot of the delinquency and request payment.
(iv) For balances that are more than one hundred twenty (120) days past due, after notice to the delinquent owner and an opportunity to be heard before the board, the board may cause the total amount of such delinquent Owner’s Common Expense Assessment for the remainder of that fiscal year to become immediately due and payable, and/or file a foreclosure action against the delinquent Owner’s lot and file suit against the delinquent Owner personally for collection of all outstanding amounts.
5.1.6. Attorneys Fees and Costs of Collection. Delinquent owners are responsible for payment to the Association of all costs of collection, including the costs of collection letters, charges by the Association’s manager, reasonable attorneys fees and collection agency fees. The Associations shall not charge a fee to provide An Owner a statement of the total amount that the owner owes
5.2. REPAYMENT PLANS
5.2.1. Association Good-Faith Effort to Coordinate a Repayment Plan. In the course of collecting past-due assessments and prior to initiating any foreclosure action, the Association shall first make a good-faith effort, in writing, to coordinate with the delinquent owner to set up a Repayment Plan in accordance with these policies. The Repayment Plan will authorize the Owner to repay the debt in monthly installments over eighteen (18) months. There are no prepayment penalties should the owner elect to pay the remaining balance owed under the repayment plan at any time. Under the repayment Plan, the Owner may choose the amount to be paid each month, provided that each payment is at least twenty-five dollars ($25.00) per month. The Association is not obligated to offer a payment plan to a delinquent owner who has previously entered into a payment plan.
5.2.2. Owner Request for Repayment Plan. A delinquent owner who seeks to enter into a payment plan with the Association as set forth herein shall deliver a written request to the Association’s manager via pre-paid U.S. mail, return receipt requested, or via courier such as Fedex with signature required.
5.2.3. Contents of Repayment Plan. Minimally, the Repayment Plan offered by the Association to the delinquent owner shall:
5.2.3.1. Permit the delinquent owner to payoff the past-due assessments in monthly installments over at least an 18-month period; There are no prepayment penalties should the owner elect to pay the remaining balance owed under the repayment plan at any time. Under the Repayment Plan, the Owner may choose the amount to be paid each month, provided that each payment is at least twenty-five dollars ($25.00) per month.
5.2.3.2. Not waive interest on past-due amounts, which shall continue to accrue and be part of the payment plan;
5.2.3.3. Not waive collection charges or attorneys’ fees;
Page 6 of 21
5.2.3.4. Require the delinquent owner to remain current on regular assessments as they come due during the period of the payment plan (“assessments” in this context include regular and special assessments and associated fees, charges, late charges, attorney fees, fines and interest charged);
5.2.3.5. Provide that if the delinquent owner fails to comply with the plan, the Association may pursue collection;
5.2.3.6. Be formally approved by the Board on an individual basis.
5.2.4. Application of Payments. Upon making a payment under the Repayment Plan, the Association shall first apply the payment to the Assessment owed and any remaining amount shall be applied to the payment of fines, fees or other charges owed.
5.2.5. Failure to Comply With Payment Plan. If the delinquent owner fails to comply with the approved Repayment Plan, including by failing to remit payment of an agreed-upon installment or to remain current with regular assessments (which includes regular and special assessments and any associated fees, charges, late charges, attorney fees, fines and interest charged) for three or more agreed upon installments as they come due during the Repayment Plan period, then such action constitutes a default under the Repayment Plan and the Association may pursue legal action against the delinquent owner.
5.3. Miscellaneous Collection Matters
5.3.1. Bankruptcies and Foreclosures. Upon receipt of any notice of a bankruptcy filing by an Owner, or upon receipt of a notice of a foreclosure by any holder of an encumbrance against any lot within the Association, the manager or president shall notify the Association’s attorney of the same and turn the account over to the Association’s attorney, if appropriate.
5.3.2. Judicial Foreclosure. The Association may choose to foreclose on its lien in lieu of or in addition to suing an Owner for a money judgment. The purpose of foreclosing is to obtain payment of all assessments owing in situations where either a money judgment lawsuit has been or is likely to be unsuccessful or other circumstances favor such action. The Association shall not foreclose its lien for past-due assessments unless
A. The total amount past due is at least equal to six (6) months of regular assessments, and b) the Board has formally approved the foreclosure action of that lot on an individual basis.
B. The association has complied with sections 38-33.3-209.5 and 38-33.3- 316.3
C. The association has provided the unit owner with a written offer to enter into a repayment plan which authorizes the unit owner to repay the debt in monthly installments over eighteen (18) months, provided that each payment is at least twenty-five dollars ($25.00) per month, and then, within thirty (30) days of the association making an offer to enter into a repayment plan, the Owner either: (i) Declines the repayment plan offer, or (ii) fails to pay at least three of the monthly installments within fifteen (15) days after the monthly installments were due. Associations cannot foreclose an assessment lien if the debt consists of one or both of: fines, or collection costs, or attorney fees incurred and that are only associated with assessed fines. No board member, employee of a Community Association Management Company representing the Association, employee of a law firm representing the association, or immediate family member of
Page 7 of 21
these persons may purchase the foreclosed unit. If an association violates any foreclosure laws, the affected unit owner may file a civil suit to seek damages within five (5) years after the violation occurred. Damages awarded may be up to $25,000.00 plus costs and reasonable attorney’s fees. See section 38-33.3-316.3(5)
5.3.3. Waivers. The Association is hereby authorized to extend the time for the filing of lawsuits and liens, or to otherwise modify the procedures contained herein, as the Board of Directors shall determine appropriate tinder the circumstances.
5.3.4. Defenses. Failure of the Association to comply with any provision in this Policy shall not be deemed a defense to payment of assessment fees or other charges, late charges, return check charges, attorney fees and/or costs as described and imposed by this Policy.
5.4. ASSESSMENTS.
5.4.1. Invoices; Due Date. The Association may send assessment invoices by mail or email at the address on file with the Association. All assessments shall be due as determined by the Board of Directors, but in no event less than ten (10) business days from the date invoiced. Failure to receive an invoice does not relieve an owner of his or her obligation to pay the assessment.
5.4.2. Application of Payments. The Association will apply Owner payments of outstanding balances first to collection costs, then to interest, then to the most recent invoices for assessments, and finally to the oldest assessment balance.
5.4.3. Returned Checks. There is a $25 charge for returned checks.
5.4.4. Interest. All amounts past due to the Association shall bear interest at eight percent (8%) per annum.
5.4.5. Invoices; Due Date. The Association may send assessment invoices by mail or email at the address on file with the Association. All assessments shall be due as determined by the Board of Directors, but in no event less than ten (10) business days from the date invoiced. Failure to receive an invoice does not relieve an owner of his or her obligation to pay the assessment.
5.4.6. Application of Payments. The Association will apply Owner payments of outstanding balances first to collection costs, then to interest, then to the most recent invoices for assessments, and finally to the oldest assessment balance.
5.4.7. Certificate of Status of Assessment. The Association shall furnish to an Owner or such Owner’s designee upon written request, first class postage prepaid, return receipt, to the Association’s agent, a written statement setting forth the amount of unpaid assessments currently levied against such Owner’s property for a $50.00 fee.
6. RESERVE FUND AND RESERVE STUDY POLICIES. Reserve funds, if any, may be held in a fiscally responsible, prudent investment account at the discretion of the Board of Directors.
a. Board of Directors Responsibility: It shall be the responsibility of the Board of Directors to determine the repair and replacement risk of the assets owned and maintained by the Association. It shall be the Board of Directors’ responsibility to create and maintain adequate reserves to provide for the orderly repair, restoration and replacement of these assets so as to minimize the risk to the homeowners of special assessments, deferred maintenance, or unfunded losses.
Page 8 of 21
b. Reserve Study: In order to determine funding of the reserve fund, the Board of Directors shall determine the life expectance of those portions of the community to be maintained, repaired, replaced, and improved by the Association and the anticipated costs of maintaining, replacing and improving those identified areas (the “Reserve Study”). The Reserve Study may be conducted internally or with the assistance of consultants engaged by the Board of Directors.
c. Basis of Study: The Reserve Study will include both a physical and financial analysis as follows:
1. Physical Analysis. The physical analysis will include:
a. A component inventory identifying those portions of the community the Association is obligated to maintain, including the useful like of each component; and
b. Estimates of the remaining useful life and replacement cost of each component.
2. Financial Analysis: The financial analysis will include: a. An analysis of the funds currently held in the Association’s reserve funding relation to the expected needs of the Association per the reserve study: and
b. A future funding plan to meet the requirements of the reserve study.
3. Frequency. Each year following the establishment of the initial baseline study as provide above, the Association shall cause the reserve study to be evaluated to determine any increases in replacement costs and decreases in the useful like of the components of the Reserve Study to address any changes that need to be made.
4. Funding: The reserve fund will be funded through regular assessments and, when necessary, special assessments levied by the Association. The reserve fund shall be funded at a level such that the reserve fund shall at all times maintain a positive balance and shall target a surplus contingency amount which shall be set by the Board of Directors from time to time.
7. RESERVE STUDY INVESTMENTS POLICIES.
a. Scope. In order to properly maintain areas in the Association that are the responsibility of the Association, to comply with state statutes, to manage reserve funds, and to protect the market value of Owner units/lots, the Board of Directors determines that it is necessary to have policies and procedures for the investment of reserve funds.
b. Purpose of the Reserve Fund. The purpose of the reserve fund shall be to responsibly fund and finance the projected repair and replacement of those portions of the community that the Association is responsible for and for such other funding as the Board of Directors may determine.
Page 9 of 21
The portions of the community that the Association is responsible for typically have limited but reasonably predictable useful lives.
c. Investment of Reserves. The Board of Directors of the Association shall invest funds held in the Reserve Funds accounts to generate revenue that will accrue to the Reserve Funds accounts balance pursuant to the following goals, criteria and policies:
i. Safety of Principal. Promote and ensure the preservation of the Reserve Fund’s principal.
ii. Liquidity and Accessibility. Structure maturities to ensure availability of assets for projected or unexpected expenditures.
iii. Minimal Costs. Investments costs (redemption fees, commissions, and other transactional costs) should be minimized.
iv. Diversify. Mitigate the effects of interest rate volatility upon reserve assets.
v. Return. Funds should be invested to seek a reasonable rate of return.
d. Limitation on Investments. Unless otherwise approved by the Board of Directors, all investments will be FDIC (Federal Deposit Insurance Corporation) insured and/or by the United States Government.
e. Strategy. The investment strategy of the Association should emphasize a long-term outlook by diversifying the maturity dates of fixed-income instruments within the portfolio utilizing a laddered investment approach.
f. Independent Professional Investment Assistance. The Board of Directors of the Association may hire a qualified investment counselor to assist in formulating a specific investment strategy.
g. Review and Control. The Board of Directors shall review Reserve Fund investments periodically to ensure that the funds are receiving competitive yields and shall make prudent adjustments as needed.
h. Reserve Study. In order to determine funding of the Reserve Fund, the Board of Directors shall determine, with the assistance and advice of professionals, the life expectancy of those portions of the community to be maintained by the Association and the anticipated costs of maintaining, replacing and improving those identified areas (hereinafter referred to as a “Reserve Study”).
i. Review of Reserve Study. The Board of Directors shall cause the Reserve Study, if any, and reserve funding to be reviewed and updated periodically, at least once every three years, to adjust and make changes in costs, inflation and interest yield on invested funds, plus modification, addition or deletion of components.
8. INSPECTION AND COPYING OF ASSOCIATION RECORDS.
Page 10 of 21
8.1. Record Retention. The Association shall permanently retain the following records as required by Colorado law:
8.1.1. Records specifically defined in the Association’s declaration or bylaws;
8.1.2. Records the Association is required to disclose within 90 days after the end of the fiscal year as required by CCIOA;
8.1.3. Detailed records of receipts and expenditures affecting the operation and administration of the Association;
8.1.4. Records of claims for construction defects and amounts received pursuant to settlement of those claims;
8.1.5. Minutes of all meetings of its owners and board, a record of all actions taken by the owners or board without a meeting, and a record of all actions taken by any committee of the board;
8.1.6. Written communications among, and votes cast by, board members that are: (i) directly related to an action taken by the board without a meeting pursuant to the Colorado Revised Nonprofit Corporation Act; or (ii) directly related to an action taken by the board without a meeting pursuant to the Association’s bylaws;
8.1.7. A list of the names of all owners and the physical mailing addresses at which the Association communicates with them, showing the number of votes each owner is entitled to vote;
8.1.8. The Association’s current declaration, covenants, bylaws, articles of incorporation, rules and regulations, responsible governance policies and other policies adopted by the board;
8.1.9. Financial statements for the past 3 years and tax returns of the Association for the past 7 years;
8.1.10. A list of the names, email addresses and physical mailing addresses of the current board members and officers;
8.1.11. The most recent annual report (if any) delivered to the Secretary of State;
8.1.12. Financial records sufficiently detailed to enable the Association to provide an owner with a written statement stating the amount of unpaid assessments currently levied against the owner’s lot;
8.1.13. The Association’s most current reserve study (if any);
8.1.14. Current written contracts to which the Association is a party and contracts for work performed within the past 2 years;
8.1.15. Records of board or committee actions to approve or deny any requests for design or architectural approval from owners;
8.1.16. Ballots, proxies and other records related to voting by owners for 1 year after the election, action or vote;
Page 11 of 21
8.1.17. Resolutions adopted by the board relating to the characteristics, qualifications, limitations, and obligations of members;
8.1.18. All written communications within the past 3 years sent to all owners.
8.2. Inspection/Copying Association Records. An Owner or his/her authorized agent is entitled to inspect and copy any of the books and records of the Association, subject to the exclusions, conditions and requirements set forth below:
8.2.1. The inspection and/or copying of the records of the Association shall be conducted during the regular business hours of 9:00 a.m. to 4:00 p.m.; at the offices of the Association’s manager, from time to time;
8.2.2. The Owner shall give the Association’s manager a written demand, stating the specific Records for which the inspection and/or copying is sought, at least ten days before the date on which the Owner wishes to inspect and/or copy such records;
8.2.3. Inspections may be made by the Owner or a duly appointed agent, for which a written authorization is presented to the Association;
8.2.4. The Association reserves the right to have a third party present to observe during any inspection of record by an Owner or the Owner’s representative;
8.2.5. No Owner shall remove any original book or record of the Association from the place of inspection nor shall any Owner alter, destroy or mark in any manner, any original book or record of the Association;
8.2.6. Nothing contained herein shall be construed to require the Association to create records that do not exist or compile records in a particular format or order.
8.3. The following Records may be withheld from copying and inspection:
8.3.1. Architectural drawings, plans, and designs, except to the extent such materials and documents are posted on the Association website as part of its review of an application submitted to the Association. Other documents shall not be released upon the written consent of the legal owners of the drawings, plans, or designs;
8.3.2. Contracts, leases, bids or records related to transactions to purchase or provide goods or services that are currently in or under negotiations;
8.3.3. Communications with legal counsel that are otherwise protected by attorney-client privilege or the attorney work product doctrine;
8.3.4. Disclosure of information in violation of law;
8.3.5. Records of an executive session of an Association board; or
8.3.6. Records relating to or concerning individual lots other than those of the requesting owner.
Page 12 of 21
8.4. The following Records must be withheld from copying and inspection:
8.4.1. Personnel, salary, or medical records relating to specific individuals; or
8.4.2. Personal identification and account information of members, including bank account information, telephone numbers, electronic mail addresses, driver’s license numbers, and social security numbers.
8.5. Use of Records. Association records shall not be used by any Owner for:
8.5.1. Any purpose unrelated to an Owner’s interest as an Owner;
8.5.2. The purpose of soliciting money or property unless such money or property will be used solely to solicit the votes of the Owners in an election to be held by the Association;
8.5.3. Any commercial purpose;
8.5.4. For the purpose of giving, selling, or distributing such Association records to any person; or
8.5.5. Any improper purpose as determined in the sole discretion of the Board.
8.6. Fees/Costs. Any Owner requesting copies of Association records shall be responsible for all actual costs incurred by the Association for the costs of labor and material for gathering and copying the Records. The Association may require prepayment of the actual cost of the requested Records. Failure to pay such prepayment of costs shall be valid grounds for denying Owner copies of such Records. If after prepayment it is determined that the actual cost was more than the prepayment, Owner shall pay such amount prior to delivery of the copies. If after prepayment it is determined that the actual cost was less than the prepayment, the difference shall be returned to the Owner with the copies.
8.7. Use of Membership Lists.
8.7.1. Without the consent of the board of directors, a membership list (or any part of that list) may not be obtained or used by any person for any purpose unrelated to a lot owner’s interest as a lot owner.
8.7.2. A membership list may not be used for any commercial purpose.
8.7.3. A membership list may not be sold to or purchased by any person.
9. ENFORCEMENT OF COVENANTS; RULES AND POLICIES.
9.1. Reporting Violations. Complaints regarding alleged violations of the declaration, Bylaws, Covenants, Rules/Regulations and Policies may be reported by an Owner or resident within Association, a group of Owners or residents, the Association’s management company, Board member(s) or committee member(s) by submission of a written complaint.
9.2. Complaints.
Page 13 of 21
9.2.1. Complaints by Owners or residents shall be in writing and submitted to the Board of Directors through the Association’s manager. The complaining Owner or resident shall have observed the alleged violation and shall identify the complainant (“Complainant”), the alleged violator (“Violator”), if known, and set forth a statement describing the alleged violation, referencing the specific provisions which are alleged to have been violated, when the violation was observed and any other pertinent information. Non-written complaints or written complaints failing to include any information required by this provision may not be investigated or prosecuted at the discretion of the Association.
9.2.2. Complaints by a member of the Board of Directors, a committee member, or the manager, if any, may be made in writing or by any other means deemed appropriate by the Board if such violation was observed by the Director or Manager.
9.3. Actions and Investigation. Upon receipt of a complaint by the Association, if additional information is needed, the complaint may be returned to the Complainant or may be investigated further by the Association’s manager or a member of public safety staff.
9.4. Policies and Procedures for Enforcement. In all events, the following requirements, limitations and restrictions shall control and supersede any Policy that is inconsistent with the following provisions:
9.4.1. Fines assessed for violations of the declaration, bylaws, covenants, or other governing documents of the Association. An Association may only impose fines for violations in accordance with CIOA.
9.4.2. With respect to any violation of the declaration, bylaws, covenants, or other governing documents of an Association that the Association reasonably determines threatens the public safety or health, the Association shall provide the Owner written notice, in English and in any language that the Owner has indicated a preference for correspondence and notices pursuant to CIOA, of the violation informing the Owner that the Owner has seventy-two hours to cure the violation or the Association may fine the Owner. The Notice of Violation shall be sent through certified mail, return receipt requested.
9.4.3. If, after an inspection of the unit/lot, the Association determines that the Owner has not cured the violation within seventy-two hours after receiving the notice, the Association may send a letter to the Violator about the uncured status of the violation and may thereupon, impose fines on the Owner every other day and may take legal action against the Owner for the violation and list the type and nature of the enforcement mechanisms that the Association may utilize in undertaking such enforcement; except that, in accordance with CIOA, the Association shall not pursue foreclosure against the Owner based on fines owed. The letter shall further state that the alleged Violator is entitled to a hearing on the merits of the matter provided that such hearing is requested in writing within ten (10) days of the date on the second violation letter. If the alleged Violator does not timely request a hearing, he or she shall be deemed to have waived any and all rights to a hearing with respect to the matter. The notice shall summarize the steps that the Association must take before the association may take legal action, including a description of the association’s cure process.
9.4.4. If an Association reasonably determines that An Owner committed a violation of the declaration, bylaws, covenants, or other governing documents of the Association, other than a violation that threatens the public safety or health, the Association shall, through certified mail, return receipt requested, provide the Owner written notice, in English and in any language that the Owner has indicated a preference for correspondence and notices pursuant to CIOA, of the violation informing the Owner that the Owner has thirty days to cure the violation or the Association, after conducting an
Page 14 of 21
inspection and determining that the Owner has not cured the violation, may fine the Owner; however, the total amount of fines imposed for the violation may not exceed five hundred dollars, provided that such cap does not include costs and expenses for consultant work, contractor labor costs and materials/equipment, machinery and other similar expenses that the Association has incurred in curing or correcting the violation, should the Association elect to cure/correct the default.
9.4.5. An Association shall grant An Owner two consecutive thirty-day periods to cure a violation before the Association may take legal action against the Owner for the violation. In accordance with CIOA, an Association shall not pursue foreclosure against the Owner based on fines owed.
9.4.6. If the Owner cures the violation within the period to cure afforded the Owner, the Owner may notify the Association of the cure and, if the Owner sends with the notice visual evidence that the violation has been cured, the violation is deemed cured on the date that the Owner sends the notice. If the Owner’s notice does not include visual evidence that the violation has been cured, the Association shall inspect the unit/lot as soon as practicable to determine if the violation has been cured.
9.4.7. If the Association does not receive notice from the Owner that the violation has been cured, the Association shall inspect the unit/lot within seven days after the expiration of the thirty-day cure period to determine if the violation has been cured. If, after the inspection and whether or not the Association received notice from the Owner that the violation was cured, the Association determines that the violation has not been cured:
9.4.7.1. a second thirty-day period to cure commences if only one thirty-day period to cure has elapsed; or
9.4.7.2. the Association may take legal action pursuant to this section if two thirty-day periods to cure have elapsed.
9.4.8. Once the Owner cures a violation, the Association shall notify the Owner, in English and in any language that the Owner has indicated a preference for correspondence and notices pursuant to CIOA:
9.4.8.1. that the Owner will not be further fined with regard to the violation; and
9.4.8.2. of any outstanding fine balance that the Owner still owes the Association.
9.4.8.3. Thereafter, on a monthly basis and by first-class mail and, if the Association has the relevant e-mail address, by e-mail, an Association shall send to each Owner who has any outstanding balance owed the Association an itemized list of all assessments, fines, fees, and charges that the Owner owes to the Association. The Association shall send the itemized list to the Owner in English or in any language for which the Owner has indicated a preference for correspondence and notices pursuant to CIOA and to any designated contact for the Owner
9.5. Notice of Hearing. If a hearing is requested by the alleged Violator, the Board, committee or other person conducting such hearing as may be determined in the sole discretion of the Board (the “Hearing Panel”), may serve a written notice of the hearing to all parties involved at least ten (10) days prior to the hearing date. The Hearing Panel must be composed of “Impartial Decision
Page 15 of 21
Makers”. An Impartial Decision Maker but must be a person who does not receive any greater benefit or detriment from the outcome of the hearing than any other member of the Association.
9.6. Hearing. At the beginning of each hearing, the presiding officer, shall introduce the case by describing the alleged violation and the procedure to be followed during the hearing. Each party or designated representative, may, but is not required to, make an opening statement, present evidence and testimony, present witnesses, and. make a closing statement. The presiding officer may also impose such other rules of conduct as may be appropriate under the given circumstances. Neither the Complainant nor the alleged Violator are required to be in attendance at the hearing. The Hearing Panel shall base its decision solely on the matters set forth in the Complaint, results of the investigation and such other credible evidence as may be presented at the hearing. Unless otherwise determined by the Hearing Panel, all hearings shall be open to attendance by all Owners. After all testimony and other evidence has been presented at a hearing, the Hearing Panel shall, within a reasonable time, not to exceed ten (10) days, render its written findings and decision, and impose a fine, if applicable. A decision, either a finding for or against the Owner, shall be by a majority of the Hearing Panel members present at the hearing. Failure to strictly follow the hearing procedures set forth above shall not constitute grounds for appeal of the hearing committee’s decision absent a showing of denial of due process.
9.7. Failure to Timely Request Hearing. If the alleged Violator fails to request a hearing within ten (10) days of any letter, or fails to appear at any hearing, the Hearing Panel may make a decision with respect to the alleged violation based on the Complaint, results of the investigation, and any other available information without the necessity of holding a formal hearing if a violation is found to exist, the alleged Violator may be assessed a fine pursuant to these policies and procedures.
9.8. Notification of Decision. The decision of the Hearing Panel, shall be in writing and provided to the Violator and Complainant within ten (10) days of the hearing, or if no hearing is requested, within ten (10) days of the final decision.
9.9. Fines. Associations are not allowed to impose the following on a daily basis:
9.9.1. Late Fees against a unit owner, or
9.9.2. Fines assessed for violations of the declaration, bylaws, covenants, or other governing documents.
9.9.3. If a unit owner has both unpaid assessments and unpaid fines, fees or other charges, any payments made shall first be applied to the assessments owed.
9.10. Fine Schedule. The following fine schedule has been adopted for all recurring covenant violations:
9.10.1. First violation: Warning letter
9.10.2. Second Violation (of same covenant or rule): $250
9.10.3. Third Violation (of same covenant or rule): $500.00
Third and subsequent covenant violations may be turned over to the Association’s attorney to take appropriate legal action.
Page 16 of 21
9.11. Waiver of Fines. The Board may waive all, or any portion, of the fines if, in its sole discretion, such waiver is appropriate under the circumstances. Additionally, the Board may condition waiver of the entire fine, or any portion thereof, upon the Violator coming into and staying in compliance with the Articles, Declaration, Bylaws or Rules.
9.12. Other Enforcement Means. This fine schedule, and enforcement process is adopted in addition to all other enforcement means which are available to the Association through its Declaration, Bylaws, Articles of Incorporation and Colorado law. The use of this process does not preclude the Association from using any other enforcement means.
9.13. DRB Violations. Notwithstanding any provisions contained in these policies, in the event of any specific violations of DRB rules and regulations or design guidelines, then enforcement provisions of the design guidelines or DRB rules and regulations shall apply if they are inconsistent with the provisions of this Resolution.
9.13.1. Collections of fines imposed by these Policies shall comply with the provisions of these policies regarding the collection of Assessments.
10. INTENT TO AVOID LITIGATION.
10.1. The Association, its officers, directors, committee members and all persons subject to the Declaration including Owners, and any person not otherwise subject to the Declaration who agrees to submit to this Policy (collectively, “Bound Parties”) agree to encourage the amicable resolution of disputes involving the Association, without the emotional and financial costs of litigation. Accordingly, each Bound Party covenants and agrees that those claims, grievances or disputes described herein (“Claims”) prior to filing suit in any court shall comply with these requirements.
10.2. Unless specifically exempted below, all claims, grievances or disputes arising out of or relating to the interpretation, application or enforcement of the Governing Documents or the rights, obligations and duties of any Bound Party under the Governing Documents shall be subject to the provisions of this Section. Notwithstanding the above, unless all parties thereto otherwise agree, the following shall not be Claims and shall not be subject to the provisions of this Section:
10.2.1. Any suit by the Association against any Bound Party to enforce the provisions of the Declaration relating to Assessments and the collection of Assessments.
10.2.2. Any suit by the Association to obtain a temporary restraining order (or equivalent emergency equitable relief) and such other ancillary relief as the court may deem necessary in order to maintain the status quo and preserve the Association’s ability to enforce the architectural standards and use restrictions and rules;
10.2.3. Any suit between Owners, which does not include the Association as a party, if such suit asserts a Claim which would constitute a cause of action independent of the Governing Documents;
10.2.4. Any suit in which any indispensable party is not a Bound Party; and
10.2.5. Any suit as to which any applicable statute of limitations would expire within 180 days of giving the notice required below.
Page 17 of 21
10.3. Notice. Any Bound Party having a Claim (“Claimant”) against any other Bound Party (“Respondent”) (collectively, the “Parties”) shall notify each Respondent in writing (the “Notice”), stating plainly and concisely:
10.3.1. The nature of the Claim, including the Persons involved and Respondent’s role, in the Claim;
10.3.2. The legal basis of the Claim (i.e., the specific authority out of which the Claim arises);
10.3.3. Claimant’s proposed remedy; and
10.3.4. That Claimant will meet with Respondent to discuss in good faith ways to resolve the Claim.
10.4. Negotiation and Mediation.
10.4.1. The Parties shall make every reasonable effort to meet in person and confer for the purpose of resolving the Claim by good faith negotiation. If requested in writing, accompanied by a copy of the Notice, the Board of Directors may appoint a representative to assist the Parties in resolving the dispute by negotiation.
10.4.2. If the Parties do not resolve the Claim within thirty (30) days of the date of the Notice (or within such other period as may be agreed upon by the Parties) (“Termination of Negotiations”), Claimant shall have thirty (30) additional days to submit the Claim to mediation under the auspices of a reputable and knowledgeable mediation group providing such services in San Miguel County, or, if the Parties otherwise agree, to an independent agency providing dispute resolution services in the San Miguel County, Colorado area.
10.4.3. If Claimant does not submit a claim to mediation within thirty (30) days after Termination of Negotiations, or does not appear for the mediation, Claimant shall be deemed to have waived the Claim, and Respondent shall be released and discharged from any and all liability to Claimant on account of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to any person other than the Claimant.
10.4.4. Any settlement of the Claim through mediation shall be documented in writing by the mediator. If the Parties do not settle the Claim within thirty (30) days after submission of the matter to the mediation process, or within such time as determined by the mediator, the mediator shall issue a notice of termination of the mediation proceedings (“Termination of Mediation”). The Termination of Mediation notice shall set forth that the Parties are at an impasse and the date that the mediation was to be mediated.
10.4.5. Within five (5) days of the Termination of Mediation, the Claimant shall make a final written settlement demand (“Settlement Demand”) to the Respondent and the Respondent shall make a final written settlement offer (“Settlement Offer”) to the Claimant. If the Claimant fails to make a Settlement Demand, Claimant’s original Notice shall constitute the Settlement Demand. If the Respondent fails to make a Settlement Offer, Respondent shall be deemed to have made a “zero” or “take nothing” Settlement Offer.
Page 18 of 21
10.4.6. If the Parties do not agree in writing to a settlement of the Claim within fifteen (15) days of the Termination of Mediation, the Parties may proceed with litigation or, if mutually agreed upon by the Parties, the Parties may proceed with Arbitration as provided for below.
10.5. Final And Binding Arbitration. If the Parties do not agree in writing to a settlement of the Claim within fifteen (15) days of the Termination of Mediation, with the consent of all parties thereto, any of the above may be submitted to the alternative dispute resolution procedures set forth below. If agreed upon by the Parties, the Claimant shall have fifteen (15) additional days to submit the Claim to arbitration in accordance with the rules of arbitration as may be required by the agency providing the arbitrator. The arbitrator shall be a single arbitrator to be appointed by the Parties: If the Parties are unable to agree upon an arbitrator within thirty (30) days of the Claim being submitted to arbitration, a sitting judge for the District Court of San Miguel County, Colorado shall appoint a qualified arbitrator upon application of a Party. No person shall serve as the arbitrator where that person has any financial or personal interest in the result of the arbitration. Any person designated as an arbitrator shall immediately disclose in writing to all Parties any circumstance likely to affect the appearance of impartiality, including any bias or financial or personal interest in the outcome of the arbitration (“Arbitrator Disclosure”). If any Party objects to the service of any arbitrator within fourteen (14) days after receipt of that Arbitrator’s Disclosure, such arbitrator shall be replaced in the same manner in which that arbitrator was selected. If not timely submitted to arbitration or if the Claimant fails to appear for the arbitration proceeding, the Claim shall be deemed abandoned, and Respondent shall be released and discharged from any and all liability to Claimant arising out of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to persons other than Claimant. This subsection is an agreement to arbitrate and is specifically enforceable under the applicable arbitration laws of the State of Colorado. The arbitration award (“Award”) shall be final and binding, and judgment may be entered upon it in any court of competent jurisdiction to the fullest extent permitted under the laws of the State of Colorado. If the Parties do not agree to arbitration, then the Claimant may proceed with litigation in a manner provided for by applicable law and the Declaration.
10.6. Enforcement Of Resolution. After resolution of any Claim, if any Party fails to abide by the terms of any agreement or Award, then any other Party may file suit or initiate administrative proceedings to enforce such agreement or Award without the need to again comply with the procedures set forth in this Section. In such event, the Party taking action to enforce the agreement or Award shall be entitled to recover from the non-complying Party (or if more than one non-complying Party, from all such Parties pro rata) all costs incurred in enforcing such agreement or Award including, without limitation, attorneys’ fees and court costs.
11. ADOPTION OF POLICIES.
11.1. Scope. The Board of Directors of the Association may, from time to time, adopt certain Policies as may be necessary to facilitate the efficient operation of the Association, including the clarification of ambiguous provision in other documents, the Governing Documents, or as may be required by law. In order to ensure that such Policies are necessary and properly organized, the Board of Directors shall follow the following procedures when adopting Policy.
11.2. Drafting Procedure. The Board of Directors shall consider the following in drafting Policy: a) Whether the Governing Documents or Colorado law grants the Board of Directors the authority to adopt such Policy: (a) The need for such Policy based upon the scope and importance of the issue and whether the Governing Documents adequately addresses the issue; and (b) The immediate and long-term impact and implication of the Policy.
Page 19 of 21
11.3. Adoption Procedure. Any Policy shall be adopted by the Board of Directors at a duly called and noticed meeting of the Board of Directors and must be approved by a majority of a quorum of the Board of Directors. Upon adoption of a Policy, the Policy or notice of such Policy (including the effective date) shall be provided to all Owners in accordance with the provisions set forth in the Declaration.
11.4. Policy Book. The Board of Directors shall keep copies of any and all adopted Policies in a book designated as a Policy Book. The Board of Directors may further categorize Policies, Rules and Regulations, Resolutions and Guidelines but shall not be required to do so.
12. PROTECTION OF PERSONAL IDENTIFYING INFORMATION
12.1. Disposal and Destruction. Unless otherwise required by state or federal law or regulation, upon the Association deeming a record is no longer necessary all paper or electronic records within the custody or control of the Association that contain “Personal Identifying Information” as defined and required by Colorado law will be destroyed by either shredding, erasing, or otherwise modifying the Personal Identifying Information to make the Personal Identifying Information unreadable or indecipherable through any means.
12.2. Protection by the Association. The Association shall take all reasonable measures to protect Personal Identifying Information in the Association’s possession from unauthorized access, use, modification, disclosure, or destruction.
12.3. Third Party Service Providers. The Association shall require any third-party service provider it engages which has access to Personal Identifying Information to implement and maintain reasonable security procedures and practices that are appropriate to the nature of the Personal Identifying Information disclosed to the third-party service provider and reasonably designed to help protect the Personal Identifying Information from unauthorized access, use, modification, disclosure, or destruction.
12.4. Investigation of Suspected Breach. If the Association or any third-party service provider suspects that a security breach involving Personal Identifying Information may have occurred, the Association shall immediately notify the President and conduct a good faith and prompt investigation to determine the likelihood that Personal Information has been or will be misused. Unless the investigation determines that the misuse of information regarding Personal Identifying Information has not occurred and is not reasonably likely to occur, the Association shall give notice to the affected party, as provided in this policy below and take further action as necessary under this Policy. If the investigation determines that the misuse of information regarding a Personal Identifying Information has not occurred and is not reasonably likely to occur, the Association is not required to take further action pursuant to this Policy.
12.5. Notice of Suspected Breach. In the event the Association determines that a breach regarding Personal Identifying Information has occurred the Association shall provide notice to the impacted parties as set forth in these Policies.
12.6. Timing of Notice. Notice shall be in the most expedient time possible and without unreasonable delay, but no later than ten (10) days after the date of determination that a breach has occurred.
12.7. Content of Notice. If the Association is required to provide Notice, it shall provide the information to all affected parties regarding the date, estimated date, or estimated date range
Page 20 of 21
of the breach and a description of the Personal Identifying Information that was reasonably believed to have been acquired as part of the breach.
12.8. Notice by Third-Party Service Providers. If a third-party service provider was involved in any breach involving Personal Identifying Information, the third-party service provider shall be responsible for giving notice as required by section 7 of this policy and shall cooperate with the Association and any impacted parties.
13. MISCELLANEOUS.
13.1. Conflict of Documents. In the event of a specific conflict between the Governing Documents and these Policies, the Governing Documents shall prevail, unless the provisions of these Policies are required by applicable law.
13.2. Email Notices. Notices and invoices may be sent by the Association to Owners via email unless the Owner requests a different method.
13.3. Modification, Amendment, Repeal, Re-enactment. Notwithstanding anything to the contrary contained in these Policies, the Association hereby reserves the right, at any time and from time to time hereafter, to modify, amend, repeal and/or re-enact these Policies. In order to encourage Owner participation in the development of such Policies and to insure that such Policies are necessary and properly organized, the Board shall follow the following procedures when adopting any Policy:
13.4. No Waiver. Failure by the Association, the Board or any person to enforce any provision of these Policies shall in no event be deemed to be a waiver of the right to do so thereafter.
13.5. Definitions. Unless otherwise defined in these Policies, initially capitalized or terms defined in the Declaration and Bylaws shall have the same meaning herein.
13.6. Supplement to Law. The provisions of this Resolution shall be in addition to and in supplement of the terms and provisions of the Governing Documents and the applicable laws of the State of Colorado governing Association.
13.7. Deviations. The Board may deviate from the procedures set forth in these Policies if in its sole discretion such deviation is reasonable under the circumstances.
13.8. Severability. The provisions of these Policies shall be deemed to be independent and several, and the invalidity of any one or more of the provisions hereof, or any portion thereof, by judgment or decree of any court of competent jurisdiction, shall in no way affect the validity or enforceability of the remaining provisions, which provisions shall remain in full force and effect.
13.9. Construction. Unless the context provides or requires to the contrary, the use of the singular herein shall include the plural, the use of the plural shall include the singular, and the use of any gender shall include all genders.
13.10. Caption and Headings. The captions and headings to the sections are inserted herein only as a matter of convenience an for reference, and are in no way to be construed so as to define, limit or otherwise describe the scope of these policies and procedures or the intent of any provision hereof.
Page 21 of 21
APPROVAL AND EXECUTION
The foregoing Governance Policies are hereby adopted by the Association, through its Board of Directors as of the Effective Date.
Telluride Preserve Homeowners Association,
a Colorado nonprofit corporation
By:________Keith Swanson___________________
Title:________Board President_____________________________