Colorado homeowners associations will be prohibited from seeking foreclosures against homeowners solely on the basis of fines, and they will have to adhere to a cap on those fines.
Governor Jared Polis signed HB22-1137 in law Friday to set these limits for homeowners associations to avoid future large-scale foreclosures due to increasing fines and fees like these at the green valley ranch.
“No homeowner should end up in foreclosure just because of a minor charge or a fine imposed by their HOA,” said Sen. Julie Gonzales, Democrat of Denver and sponsor of the bill.
Gonzales said she encourages HOA owners and boards to educate themselves on the law, which she says isn’t difficult to follow.
âIn Montbello and Aurora as well, we’ve seen these bad actors who have really deeply affected â¦ many, many families by putting these foreclosure processes in place,â Gonzales said.
The new law requires HOAs to send written notice in the homeowner’s preferred language regarding any violations, giving homeowners 30 days to correct violations before the HOA can issue a fine, which cannot exceed $500 (the time limit is 72 hours if the breach threatens public safety or health).
The HOA is required to send two consecutive 30-day notices to owners to correct any violation before the HOA can take legal action. Interest will be limited to 8% per annum on unpaid fines or fees, and HOAs must provide notice of arrears.
The new law also requires HOAs to send homeowners monthly notifications of any outstanding balances, and it allows such issues to go to small claims court as a less expensive option. And it offers homeowners the legal remedy of bringing a civil action against an HOA for up to $25,000 plus costs and attorney’s fees if homeowners prove the HOA violated foreclosure laws. This would apply for five years after the occurrence of an offence.
Gonzales said the bill’s provision that requires homeowners to be notified in the language of their choice will have a big impact on advancing equity for families and reducing generational wealth disparities between families. colored and white, especially since many families’ greatest asset is their home. And some of those families found themselves at risk of losing it due to a minor fine or HOA-assessed fee because they didn’t receive notice or received it in a language they didn’t understand. didn’t understand and received no follow-up, she said.
“We’ve seen so many Spanish-speaking homeowners buying their first home, and often they’re the ones who end up in these foreclosure proceedings, along with other people of color,” Gonzales added.
The Denver senator acknowledged that there is still work to be done regarding HOAs at the state level, adding that the HOA lobby is strong. Lawmakers made concessions to pass HB 22-1137, removing some of the strongest protections.
Representatives of the Master Homeowners Association for Green Valley Ranch and groups that have lobbied lawmakers, including Associa and the Community Associations Institute, did not return requests for comment.
Andrew Mowery of the Colorado HOA Homeowner Advocates wrote in a statement that Colorado still needs an HOA ombudsman’s office and affordable alternative dispute resolution like other states, but he called the new law a âfirst step in helping landlords avoid litigation and associated expenses.â
Similarly, Stan Hrincevich, president of the Colorado HOA Forum, is concerned that this is not enough, and he has called for an end to super liens in Colorado, which can be placed on properties with HOA debt, as well as for prevent non-judicial HOA foreclosures, mandating HOAs can’t sell a home for less than 80% of its market value, not charging interest on unpaid fines, and limiting HOA’s attorney and collection fees. Hrincevich’s group defends homeowners living in HOAs.
HB22-1137, he said, implements “expensive and cumbersome foreclosure notification procedures” that will ultimately increase HOA costs, and there is no enforcement mechanism if an HOA violates the law, except at great expense to owners through the civil court process.
“…most of what is in this bill is not the root cause (of) the problems with HOA foreclosures, so HB 22-1137 will bring little or no reform to abusive HOA foreclosure practices,” a he said in an email. âHomes will continue to be sold at ridiculously low prices, wiping out a homeowner’s equity, attorney fees will escalate the initial minor debt into a large, major debt pushing some into foreclosure and the ability for a homeowner to challenge a Seizure will continue to be very costly and above all an out of reach and expensive process for dispute resolution.
Other HOA bills did not make their way out of the legislature this year, but another bill that did, HB 22-1387was vetoed by the governor.
Sponsor representative Brianna Titone, an Arvada Democrat, said she worked on that bill in conjunction with HOA advocates, groups that often work against her bills, to push the legislation through. .
The bill would have required HOAs to conduct a study of the reservations every 30 years and update it every five years, finding out what their community’s responsibilities are and how they will pay for that maintenance and repairs. before the problems get worse.
âHousing in the future will be more expensive and it will be more in demand,â Titone said. âLow-cost housing is going to be increasingly scarce. So if we let our buildings that are here now decay because they don’t do what they need to do, don’t think ahead, and don’t take the time to do it, so we are doing the state a disservice by not implementing this law to prevent this from happening now.
But in his veto letter, Polis said that while he agreed with some parts of the bill, other parts would end up increasing HOA costs for landlords â a point Titone refute â so he vetoed the bill.
âReducing housing costs for all Coloradans is one of my top priorities, and I take saving Coloradans money very seriously,â Polis wrote. “I am concerned about the additional costs that landlords, especially those in smaller HOA communities, may face during these times of pandemic-induced inflation as a result of this bill.”