Homeowners associations, the private, usually nonprofit, corporations that govern residential communities, are often maligned as intrusive, nit-picky coalitions of busybodies. These entities, however, are meant to ensure the maintenance and upkeep of properties — and property values — within their respective communities. HOAs have the authority to set rules, and when those rules aren’t followed, to assess fines, tow unauthorized vehicles off the association’s property, and even place liens on association members’ homes. The decisions made by an HOA’s board of directors, or their designated representatives (including property management firms), are legally binding, and changing the rules or the makeup of an HOA’s governing body can be difficult.
There are more than 8,000 such associations throughout Colorado, and more are added with each new townhome or condominium development. That makes HOA management a multibillion-dollar industry, but it’s one that is largely unregulated.
Oftentimes HOAs and their association managers don’t have to answer to anyone. If homeowners want to challenge decisions made by the HOA board, or more often the association manager, they have to resort to the legal system, which is time-consuming and costly.
In competitive housing markets like Colorado Springs’, many first-time homebuyers are forced to consider condos and townhomes — as opposed to single-family housing that’s often outside their budget — becoming part of an HOA.
“It’s pressing to find anything under $200,000 right now anywhere in El Paso County,” says Jordan Guinane, owner and president of J. Elliott Construction, the developer behind the recently approved Townhomes at Jetwing in Southeast Colorado Springs. According to Colorado HOA Forum, an organization dedicated to improving Colorado HOA governance through legislative reform, nearly 60 percent of Colorado’s population lives under HOA governance.
“What folks don’t generally understand in HOAs is that they are managed by property management companies,” explains Stan Hrincevich, president of the Colorado HOA Forum. “A lot of the oversight of the HOA and day-to-day activities, financial management, etc., is ceded to a property management company. Unfortunately, most of these boards are just token or figurehead boards. Most problems in an HOA relate to HOA management companies. However, the flip side of that is they only do it by the HOA board. HOA boards hire management companies, and the way it’s supposed to work the board members are supposed to oversee all the activities in the HOA — administrative, maintenance and that type of thing.”
Jacqueline Armendariz purchased a condo last summer in Legacy Ridge Condominiums in Southeast Colorado Springs. As a new member of the Legacy Ridge Condominium Association (LRCA), Armendariz wanted to get involved with the governance of her community. “We had our annual owner’s meeting in October  and I was elected to the board,” she says. “Given my professional background [as a community organizer] I was like, ‘Awesome, I’ll be on the board, I’ll learn new things.’ Hopefully do well with my property values because I’m contributing to the community and all those nerdy things that I don’t blame most people for not paying attention to.”
As a newly elected member of the board, Armendariz was eager to assume her new responsibilities. “In October  I was elected, and in October through December, I had sent emails [to the other board members] and was like, ‘Hey, let’s go to board trainings. When are we meeting? Hey, let’s talk about this.’ Just trying to communicate. No one responded — not the board, not the property manager. I asked to meet the property manager and they blew me off. ... I was having trouble just getting them to simply answer me for low-hanging fruit they should provide like newsletters or minutes, documents like that. I always had to ask for it multiple times. All of a sudden in January, the [property manager] said, ‘You’re off the board,’ ... I was like ‘Whoa, whoa, whoa! That’s not how any of that works.’”
The association manager for the LRCA, which allegedly insisted on Armendariz’s removal from the board, is Z&R Property Management, which manages dozens of associations in Colorado Springs. In 2005, Darren Burns, Z&R’s president, was also president of the Southern Colorado Chapter of the Community Association Institute (CAI), a trade group for the HOA industry. According to its website, Z&R has been in business in Colorado Springs since 1982, and managing HOAs since 1995. In addition to Burns, Z&R’s staff consists of “several full time property managers on staff with additional support staff available to assist with on call duties or emergency situations.”
Armendariz claims Burns used a technicality to get her removed from the board. “[Burns] said that my election was null because it was Oct. 3 that I was elected, and he said I was delinquent in dues at that time. How can I be delinquent if I hadn’t even lived there two months? What do you mean? That’s one of the pitfalls of HOA governance. There’s a lot of spaces where it doesn’t say you can’t, but it doesn’t mean you should. I would say, generally speaking, he takes advantage of the fact that most people don’t fully understand how an HOA or condo association operates.”
Burns declined to comment on the case or Armendariz, but noted that association managers “are a contractor for the association working under the direction and supervision of the Board of Directors. We do not have the authority to assess fines, late fees, interest or take any positive or adverse actions without the Board’s blessing, whether by resolution or by contract.”
These actions by HOA boards and association managers are familiar to Hrincevich. “There’s no oversight of the property management industry, and we’re left with an HOA office that’s empty,” he says. “We’re winging it on our own. You have to go to court. Who has money to fight the HOA? For example, if you wanted your governing documents and you lived in an HOA, if you wanted the financial documents and they said no, most people don’t pursue it because it costs thousands of dollars to go to court. There are no rights from the homeowner’s perspective in HOAs.”
Armendariz was undeterred and tried organizing with her neighbors outside of the HOA board. “I worked with other owners and was knocking doors,” she says. “I wanted to have community meetings either way.” Armendariz, through a neighbor who was admitted to the board, was instrumental in persuading other board members to allow her to be re-appointed. Shortly after, Armendariz made a friends-only Facebook post criticizing Burns and Z&R.
The post read, “#MiVidaEnYTville LMAO. … This is the property manger (Z&R) of my condo association displaying some prime yt cis male trippin. … I have organized a community meeting every month since January as a volunteer for our association. I said if anyone had questions they could ask him. So how does he respond?! He “sighted” that he is the “author-ri-ti” here, *said in a Cartman voice*. Please feel free to jump in hard on the comments to tear down this yt man foolishness because I am working to pass through the resent of this negativity and wasting of my time. Surprise, the yt man don’t appreciate me organizing the owners in my neighborhood and creating accountability for how our dues are spent!”
Armendariz’s post was brought to the attention of the board. “I don’t know how he got it,” says Armendariz. “He took that screenshot and disseminated that amongst the board and called me racist and sexist and said they need to remove me from the board because I am a liability.” On July 30 Armendariz was officially removed from the board for allegedly breaching confidentially by sharing instances of alleged harassment from another board member with Burns, who as association manager was not a member of the board.
The next month, Armendariz was served with a court summons. “In May, he had me served with this civil lawsuit,” she says. The civil complaint filed by Burns states “[Armendariz] directed racist and sexist animus toward Plaintiff Burns by insulting and denigrating his racial characteristics and perceived gender-identity on [Armendariz’s] social media platforms. [Armendariz] did so for the purpose of not only harassing and intimidating Plaintiff Burns, but also to incite her ‘followers’ to do the same, including inflicting physical and emotional violence on him, by directing them to ‘tear him down’ due to his racial and gender characteristics. [Armendariz’s] conduct in this regard is extreme and outrageous. It is conduct so outrageous in character that reasonable members of the community would regard [Armendariz’s] conduct as going beyond all bounds of decency and is utterly intolerable.”
The complaint argues that Burns suffered monetary damages as a result of Armendariz’s Facebook post and asks the court to award a monetary judgment against Armendariz. The complaint notes, “Plaintiffs estimate that their damages exceed $100,000.00.”
On Oct. 2 a default judgment was entered against Armendariz, which she is appealing, in the amount of $156,600.
In an affidavit presented to the court in support of his motion, Burns itemized how Armendariz’s Facebook post had caused $156,600 in monetary damages, to include one year of counseling totalling $15,600; “[p]ain and suffering resulting from emotional distresses related to excessive drinking and self-medicating, totaling $25,000”; pain and suffering resulting from emotional distresses related to decreased sleep, night sweats and weight gain, totaling $35,000; and additional pain and suffering totaling another $100,000. Z&R was awarded $6,000 in damages as a result of “80 additional staff hours over normal operations, as a direct result of [Armendariz’s] tortious conduct.”
Hrincevich and the Colorado HOA Forum have been trying to solve the unregulated HOA problem since 2013. “We figured it out really quickly that unless there was some oversight of management companies, problems for homeowners would not be resolved,” he says. “We pursued and were successful in working on the property management licensing law. What that was supposed to do was increase competency of property managers and raise regulatory oversight of the property management industry, which is a $2 billion enterprise in this state.”
In 2011, Colorado established the HOA Information and Resource Center under the Department of Regulatory Agencies (DORA) to register and gather basic information about HOAs and to provide information to consumers. In 2013, the resource center presented a report to the Legislature, the “2013 Study of Comparable HOA Information and Resource Centers,” which compiled best practices and made recommendations for future legislation in Colorado. The recommendations included establishing a legal foundation for possible compliance programs for HOAs, establishing a binding arbitration program for HOA disputes, developing a referral system for mediation of HOA disputes, revising registration requirements, establishing a per-unit fee, and establishing an election monitoring program. Those recommendations would lay the foundation for 2013’s House Bill 1277.
“What happened with that bill,” explains Hrincevich, “like everything else, the property management industry, in particular the CAI — this is the most anti-HOA homeowner organization in the nation —they either kill it or water it down.” As passed, the bill didn’t mandate an arbitration program for HOA disputes, or any of the other suggestions presented by DORA’s 2013 study, but it did mandate licenses for HOA managers. The bill was up for renewal in 2019, but was vetoed by Gov. Jared Polis.
“It’s not necessarily lobbying as opposed to educating,” clarifies David Firmin, a managing partner at Altitude Community Law, the oldest and largest HOA-exclusive law firm in the state. Firmin has been a CAI member since 2006 and is currently a member of its Legislative Action Committee. “The Legislative Action Committee will of course take positions on certain things, and we did take positions last year on some of the issues in the HOA bills that were proposed, but we try to do it through education and assisting the legislators see the issue. I wasn’t a member of the Legislative Action Committee at that time [in 2013]. I can tell you historically that items that come out of the Colorado HOA Forum don’t work. They are flawed in a number of areas, and CAI would have educated the Legislature, the individual sponsors of the bill, as to where those flaws might have been, and recommended alternatives that work better.”
Hrincevich blames CAI for many of the problems with HOA legislation. “It was vetoed in 2019 by the governor for lack of consumer protections and the inability of new people to enter the [HOA industry],” he says. “We had that covered in our mandates for the bill. They were taken out by the CAI and other lobbyists. Right now there is no oversight of that industry. They can do whatever the hell they want. The other problem there, just like any other HOA homeowner complaint, the only venue in this state for homeowner dispute resolution is our court system. Which means it’s you the homeowner against the unlimited resources and legal counsel of the HOA. Guess who wins?”
Firmin says the modifications made to HOA bills are actually due to their taxpayer burden. “This was the problem with many of the Colorado HOA Forum’s proposals that they believe are very cheap...,” he says. “When they were put into House Bill 1200 [renewing the HOA Information and Resource Office] last year they carried a $2.5 million fiscal note for taxpayers. The proposals didn’t work. They’re not cheap. They are very expensive to operate and very expensive to run, and given the fact that the COVID pandemic stripped the state of much of its budget money, anything with a fiscal note that cost new taxes was removed. That’s why most of those features were removed from that bill.”
Even when HOA homeowners are able to successfully maintain a position on their board, removing an association manager can prove challenging. In 2014, the Erindale Place Townhome Association (EPTA) tried, unsuccessfully, to remove Z&R as its association manager. According to the EPTA’s July 10, 2014, complaint for declaratory and injunctive relief, “Z&R, amongst other things, refused to properly follow instructions or directions given by the Association Board of Directors or its representatives; failed to properly maintain the Erindale Townhomes property for which it was responsible; misrepresented the status of the Association’s ownership or rights concerning its website; and failed to properly supervise and control the work of others for which it was responsible.”
Burns denies those claims. “They are untrue,” he says. “This was [the board] looking for ammo that didn’t exist.”
Burns allegedly refused to turn over the records, funds and access to EPTA’s website, and he also allegedly, “Without approval, authority, consultation, or notice to the Association Board of Directors, on or about June 2, 2014, Defendant Burns in retaliation for the termination of Defendant Z&R authored and sent a letter to the Association members on Association letterhead purporting to be from the Association.”
Included with the letter, allegedly, “were several electronic mail exchanges in which Defendant Burns discloses confidential information, falsely accuses members of the Association Board of Directors of breaching several duties, threatens them with liability, and makes further damaging statements concerning coverage under the Association’s insurance policies, all in an attempt to improperly influence the Association members against certain members of the Association Board of Directors which had elected to terminate the Z&R Contract.”
Burns claims the letter was part of his fiduciary duties. “I was drafting a very harsh letter to the [board of directors] for what I felt was highly unethical and in some cases illegal behavior,” he says. “Despite how it appears, I do my best to prevent clients from getting sued when possible. The [board members] were tap dancing in legal mine fields on a regular basis.”
The “Burns Letter” also included a petition, which allegedly, “sought to call a special meeting of the Association members for the purposes of discussing the allegations in the Burns Letter and possible removal of board members.”
Burns claims the petition was organized by one of the owners in the association. “[A homeowner] came out of nowhere and started collecting signatures,” he says, “and a special owners meeting was called to recall the [the board].”
The EPTA bylaws, an association’s governing document, allows for the calling of special meetings, “At any time by the president of the board of directors, or upon written request of the members,” and notes, “Any director may be removed from the board, with or without cause, by a majority vote of the members of the association.” The minutes of the July 10, 2014, special meeting, which 80 owners attended, show that the vote to remove the three members of the board of directors, who had filed the request for injunctive relief, was nearly unanimous.
“I was 100% vindicated and I still manage the community and still get hugs at board meetings,” says Burns. “[I] got a standing ovation at the annual meeting after the recall was finished. I really care about those people and that community and I stuck my neck way out for them and they responded in a way I’d never seen before and threw out the trash.”
According to Hrincevich, such cases illustrate the need for greater oversight of HOAs and association managers. “If HOAs and homeowners within them had a venue for disputes, this costly litigation could be avoided or mitigated,” he says. “When a property management company does not release the records and cooperate with that transition, they would have a complaint filed against them, it would be investigated, and DORA, in this case, would say, ‘Turn over those records or we’re going to legally pursue you, and we’re going to fine you, and we’re probably going to revoke your license to practice in the state.’ That was all taken away from us. That’s the root of the problem.”
Firmin agrees the issues with HOAs are complex, but doesn’t think legislation is the answer. “Some of the owner complaints are very, very valid,” he admits. “It depends on the association. What I believe, as with everything, is there’s a level of reasonableness in all operations. It requires some education. As with everything, you have human personalities; you have humans on both sides of the equation. Are there some valid complaints? Of course there are valid complaints. Not every association is 100 percent pure. At the same time, many of the owner complaints are self-inflicted, and if they would understand the documents and their rights and obligations and duties of the board and what the board is required to do, it would go a long way.”
Editor's Note: This article has been clarified to reflect that Armendariz's second removal form the LRCA board was not due to her Facebook post, but rather due to an alleged breach of confidentiality.