A new bill introduced in the Colorado legislature seeks to impose new requirements on developers of HOA communities to obtain 30-year reserve studies and make mandatory reserve contributions. House Bill 26-1099[1] (the “Bill”) would apply to new planned communities and condominiums in Colorado under the Colorado Common Interest Ownership Act. If passed and adopted, the Bill would require the developer/declarant of these projects to obtain, at its cost, a reserve study projecting the costs of the maintenance, repair, and replacement of the common elements and shared property of the community for a 30-year period from an unaffiliated, qualified professional with knowledge of industry standards for reserve studies. The study would need to be obtained before the first sale of a unit or lot. The declarant would also be required to update the reserve study after completion of each phase of the community and update or obtain a new reserve study before the declarant transfers control of the community to the association, in each case at the declarant’s cost. Until control of the community is transferred to the association, the declarant would be obligated to deliver a copy of the reserve study to each prospective purchaser of a unit or lot at least 24 hours before such sale. Finally, when the declarant transfers control to the association, the Bill would require the declarant to pay the association 1.5% of the total amount necessary to fully fund the 30-year reserves estimated by the most recent reserve study, with such amount to be credited to the association’s reserve account.
