HB 22-1387

House Bill 22-1387, also known as the Common Interest Communities Reserve Funds Act, requires property management associations in Colorado to conduct regular financial assessments for major shared components like buildings and infrastructure. This ensures that communities have enough money set aside to maintain, repair, or replace these elements over time. The bill mandates developers to provide these reserve studies to potential buyers and to hand them over to the homeowners' association when they transfer control of the community. It also allows associations to collect additional funds from unit owners if there are urgent safety issues that existing reserves can't cover. This law is now in effect since it has been signed by the governor, meaning all relevant communities must comply with these new requirements starting July 1, 2024.

Official Summary

The act requires mandatory reserve studies for common interest communities that have major shared components, including common elements or property that the unit owners' association (association) is responsible for maintaining, repairing, or replacing. The act: Specifies the level of reserve study required and the necessary components of the reserve study at each level; Requires a declarant to obtain reserve studies commencing with the development of the common interest community and to provide reserve studies to potential purchasers of units in the common interest community in the seller's disclosures; and Requires the declarant to provide a reserve study at the time the declarant turns the common interest community property over to the association, along with reserve funds recommended by the reserve study. The act defines "emergent life circumstances" and authorizes an association's executive board to obtain additional funding from unit owners to address dangerous conditions if the reserve funds are not sufficient to address the conditions. The act limits the investment of reserve funds in financial instruments that are not insured by a federal agency. The act clarifies that certain reserve study requirements in the act apply to preexisting common interest communities with respect to events and circumstances occurring on or after July 1, 2024. (Note: This summary applies to this bill as enacted.)

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