Private Membership Club Covenants

Second Regular Session Seventy-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 26-0413.02 Christopher McMichael x4775 HOUSE BILL 26-1316 HOUSE SPONSORSHIP Hamrick, SENATE SPONSORSHIP (None), House Committees Senate Committees Transportation, Housing & Local Government A BILL FOR AN ACT CONCERNING PRIVATE MEMBERSHIP CLUB COVENANTS. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) On and after January 1, 2027, the bill prohibits the recording of a new covenant or declaration that purports to encumber residential property by requiring the owner to acquire and pay for membership in a private membership club. The bill requires a private membership club to provide a property owner with certain information related to the budget and operations of the private membership club by mailing information to property owners and posting the information on the private membership club's public website. Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.

Capital letters or bold & italic numbers indicate new material to be added to existing law. Dashes through the words or numbers indicate deletions from existing law.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add 38-30-170.5 as follows:

38-30-170.5. Private club membership covenants void and unenforceable - disclosure related to private club budget and operations required - compliance - definitions.

(1) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES:

(a) "COVENANT" MEANS A RECORDED INSTRUMENT BETWEEN OWNERS OF REAL PROPERTY THAT IMPOSES MUTUAL RESTRICTIONS OR REQUIREMENTS ON THE OWNERS OF REAL PROPERTY FOR THE BENEFIT OF ALL OWNERS AND RESIDENTS WITHIN A COMMUNITY.

(b) "DECLARATION" HAS THE MEANING SET FORTH IN SECTION 38-33.3-103 (13).

(c) (I) "PRIVATE MEMBERSHIP CLUB" OR "CLUB" MEANS AN ORGANIZATION, A BUSINESS ENTITY, A CORPORATION, A NONPROFIT ASSOCIATION, OR ANOTHER ENTITY THAT:

(A) ADMITS MEMBERS AND REQUIRES MEMBERS TO PAY MONETARY DUES, ASSESSMENTS, OR FEES IN EXCHANGE FOR ACCESS TO CLUB FACILITIES, PROGRAMS, OR SERVICES; AND

(B) IS PRIVATELY OWNED OR OPERATED.

(II) "PRIVATE MEMBERSHIP CLUB" INCLUDES A COUNTRY CLUB, A SPORTS AND RECREATION CLUB, A GOLF CLUB, A TENNIS CLUB, AND AN EQUESTRIAN CLUB.

(III) "PRIVATE MEMBERSHIP CLUB" DOES NOT INCLUDE:

(A) A UNIT OWNERS' ASSOCIATION ORGANIZED PURSUANT TO

SECTION 38-33.3-301;

(B) A METROPOLITAN DISTRICT, AS DEFINED BY SECTION 32-1-103 (10); OR

(C) A RECREATIONAL CLUB, AMENITY, OR FACILITY THAT IS OWNED OR OPERATED BY A METROPOLITAN DISTRICT, A UNIT OWNERS' ASSOCIATION, OR OTHER COMMON INTEREST COMMUNITY, AS DEFINED BY

SECTION 38-33.3-103 (8).

(2) A COVENANT OR DECLARATION FOR A RESIDENTIAL PROPERTY THAT IS RECORDED ON OR AFTER JANUARY 1, 2027, AND THAT REQUIRES THE OWNER OF THE RESIDENTIAL PROPERTY TO JOIN A PRIVATE MEMBERSHIP CLUB IS VOID AND UNENFORCEABLE.

(3) A PRIVATE MEMBERSHIP CLUB THAT COLLECTS DUES OR FEES FROM AN OWNER OF A RESIDENTIAL PROPERTY, WHICH RESIDENTIAL PROPERTY IS SUBJECT TO A COVENANT OR DECLARATION THAT REQUIRES THE PROPERTY OWNER TO PAY DUES OR FEES TO THE CLUB, SHALL MAKE THE FOLLOWING INFORMATION AVAILABLE IN ACCORDANCE WITH SUBSECTION (4) OF THIS SECTION:

(a) THE AMOUNT OF DUES OR FEES THAT THE PRIVATE MEMBERSHIP CLUB ANTICIPATES COLLECTING FROM PROPERTY OWNERS IN THE CLUB'S CURRENT FISCAL YEAR, INCLUDING A TOTAL AMOUNT OF FEES AND A CALCULATION OF THE AMOUNT OF FEES COLLECTED PER PROPERTY OWNER;

(b) THE ACTUAL AMOUNT OF DUES OR FEES COLLECTED BY THE PRIVATE MEMBERSHIP CLUB FROM PROPERTY OWNERS IN THE CLUB'S PRIOR FISCAL YEAR;

(c) THE DATE ON WHICH THE CLUB'S FISCAL YEAR COMMENCES;

(d) THE CLUB'S OPERATING BUDGET FOR THE CURRENT FISCAL YEAR;

(e) A LIST, BY TYPE, OF THE CLUB'S CURRENT ASSESSMENTS, INCLUDING BOTH REGULAR AND SPECIAL ASSESSMENTS;

(f) THE CLUB'S ANNUAL FINANCIAL STATEMENTS, INCLUDING ANY AMOUNTS HELD IN RESERVE FROM THE PRIOR FISCAL YEAR;

(g) A LIST OF ALL CLUB INSURANCE POLICIES, INCLUDING, BUT NOT LIMITED TO, PROPERTY INSURANCE, GENERAL LIABILITY, PROFESSIONAL LIABILITY, AND FIDELITY POLICIES.

COMPANY NAMES, POLICY LIMITS, POLICY DEDUCTIBLES, ADDITIONAL NAMED INSUREDS, AND EXPIRATION DATES OF THE POLICIES LISTED.

(h) ANY RELEVANT BYLAWS, ARTICLES, AND RULES OF THE CLUB; AND (i) THE LIST SHALL INCLUDE THE THE MINUTES OF THE EXECUTIVE BOARD AND MEMBER MEETINGS FROM THE PRIOR FISCAL YEAR.

(4) (a) A PRIVATE MEMBERSHIP CLUB SHALL MAKE THE INFORMATION DESCRIBED IN SUBSECTION (3) OF THIS SECTION AVAILABLE BY:

(I) POSTING THE INFORMATION IN A CONSPICUOUS MANNER ON THE PRIVATE MEMBERSHIP CLUB'S PUBLIC WEBSITE AND SENDING AN ACCOMPANYING NOTICE OF THAT WEBSITE ADDRESS TO EACH PROPERTY OWNER THAT PAYS DUES OR FEES TO THE PRIVATE MEMBERSHIP CLUB VIA FIRST CLASS MAIL OR EMAIL; AND

(II) MAILING OR PERSONALLY DELIVERING THE INFORMATION TO EACH PROPERTY OWNER THAT PAYS DUES OR FEES TO THE PRIVATE MEMBERSHIP CLUB.

(b) A PRIVATE MEMBERSHIP CLUB SHALL MAKE THE INFORMATION DESCRIBED IN SUBSECTION (3) OF THIS SECTION AVAILABLE AT NO COST TO THE PROPERTY OWNERS.

(c) A PRIVATE MEMBERSHIP CLUB SHALL MAKE THE INFORMATION DESCRIBED IN SUBSECTION (3) OF THIS SECTION AVAILABLE TO PROPERTY OWNERS WITHIN NINETY DAYS AFTER THE END OF THE PRIVATE MEMBERSHIP CLUB'S FISCAL YEAR AND PROVIDE UPDATED INFORMATION EACH FISCAL YEAR THEREAFTER.

(5) (a) IF A PRIVATE MEMBERSHIP CLUB DOES NOT MAKE THE INFORMATION DESCRIBED IN SUBSECTION (3) OF THIS SECTION AVAILABLE OR OTHERWISE VIOLATES THIS SECTION, ANY COVENANT THAT REQUIRES A PROPERTY OWNER TO PAY DUES OR FEES TO THE PRIVATE MEMBERSHIP CLUB IS VOID AND UNENFORCEABLE UNTIL THE PRIVATE MEMBERSHIP CLUB MAKES THE INFORMATION DESCRIBED IN SUBSECTION (3) AVAILABLE IN ACCORDANCE WITH SUBSECTION (4) OF THIS SECTION.

(b) (I) IF A PRIVATE MEMBERSHIP CLUB IS NOT IN COMPLIANCE WITH THIS SECTION, A PROPERTY OWNER IS NOT REQUIRED TO PAY ANY DUES OR FEES TO THE PRIVATE MEMBERSHIP CLUB AND MAY BRING A CIVIL CLAIM FOR RELIEF AGAINST THE PRIVATE MEMBERSHIP CLUB.

(II) A PROPERTY OWNER THAT PREVAILS IN A CIVIL CLAIM AGAINST A PRIVATE MEMBERSHIP CLUB PURSUANT TO THIS SECTION MAY BE AWARDED ACTUAL DAMAGES, PUNITIVE DAMAGES, AND ATTORNEY FEES.

SECTION 2. Act subject to petition - effective date. This act takes effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 12, 2026, if adjournment sine die is on May 13, 2026); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part will not take effect unless approved by the people at the general election to be held in November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.