Colorado HOA Foreclosures
If you live in a condo or townhome in Colorado and default on homeowners association dues, the HOA can foreclose.
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If you live in a house, condo, or townhome that is part of a common interest development in Colorado, you are most likely responsible for paying dues and assessments to the homeowners’ association (HOA). If you don’t pay, in most cases the HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn about the particular requirements for HOA foreclosures in Colorado.
Colorado HOA Lien Laws
In Colorado, the Colorado Common Interest Ownership Act (CCIOA) (Colo. Rev. Stat. § 38-33.3-101 through § 38-33.3-319) governs common-interest communities, including condominiums, created after July 1, 1992.
The CCIOA modified the state’s older Colorado Condominium Ownership Act (CCOA) (Colo. Rev. Stat. § 38-33-101 through § 38-33-113) and superseded most of the CCOA for communities created under the CCIOA. (For new condominiums, only parts of the CCOA remain in effect, most of which relate to timeshares.) This article focuses on the CCIOA.
How HOA Liens Work
Almost all HOAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”).
Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property. In Colorado, the recording of the HOA Declaration of Covenants, Conditions, and Restrictions (often called CC&Rs or the declaration) constitutes record notice and perfection of the lien. No further recording of the claim of lien for assessments is required (Colo. Rev. Stat. § 38-33.3-316(4)). (In some states, the association must record the lien.)
Charges the HOA May Include in the Lien
Colorado law sets out the types of charges that the HOA may include in the assessments lien (Colo. Rev. Stat. § 38-33.3-316(1)). Unless the declaration provides otherwise, the association can include charges for:
- Assessments. Of course, the HOA can include amounts for unpaid assessments in the lien.
- Late charges. Late charges for the late payment of assessments may be included in the assessments lien as well.
- Costs of collection. The association may include costs for collection of assessments.
- Reasonable attorney fees and costs. The HOA may also include reasonable attorney fees and costs incurred in the total lien amount (Colo. Rev. Stat. § 38-33.3-316(7)).
- Fines. The association may include fines for violations of the declaration, bylaws, and/or rules and regulations of the association. (However, the HOA may not fine any owner for an alleged violation unless the association has a written policy governing the imposition of fines that includes a fair and impartial fact finding process concerning whether the violation occurred and whether the owner is the one who should be held responsible for the violation (Colo. Rev. Stat. § 38-33.3-209.5(2)(b)(I)).
- Interest. The HOA may also include interest on the past-due common expense assessments at the rate set by the association, but not exceeding 21% per year (Colo. Rev. Stat. § 38-33.3-315(2)).
- Other charges. The association may also impose certain other charges, such as charges for the preparation and recordation of amendments to the declaration or statements of unpaid assessments.
HOA Lien Priority in Colorado
An HOA’s lien is prior to all other liens, except for:
- liens recorded before the declaration
- a first mortgage or deed of trust that was recorded before the date on which the assessment sought to be enforced became delinquent, and
- liens for real estate taxes (and other governmental charges) (Colo. Rev. Stat. § 38-33.3-316(2)(a)). (Learn more about lien priority and what happens to a first mortgage in an association foreclosure in Nolo’s article What happens to my mortgages if the HOA forecloses on its lien?)
HOA Super Liens
Under certain circumstances, an HOA lien for delinquent assessments may have priority over a lender’s first mortgage or deed of trust. This is called a super lien. In Colorado, six months worth of delinquent common expense assessments have super lien status (Colo. Rev. Stat. § 38-33.3-316(2)(b)). (Learn more in Nolo’s article Homeowners’ Association Super Liens.)
Requesting a Statement of Assessments Due
If you make a written request (delivered personally or by certified mail, first-class postage prepaid, return receipt) to the HOA, the association must provide you with a statement of the assessments due. If the HOA fails to respond within 14 calendar days after receiving the request, it cannot assert a lien for the unpaid assessments that were due as of the date of the request (Colo. Rev. Stat. § 38-33.3-316(8)).
HOA Foreclosures in Colorado
If you default on the assessments, the HOA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
In Colorado, the HOA may foreclose on its lien in the same manner as a mortgage lender can foreclose on a mortgage (Colo. Rev. Stat. § 38-33.3-316(11)). Since mortgages in Colorado must be foreclosed judicially, this means that the HOA must file a lawsuit in court to foreclose its lien.
This differs from most residential foreclosures in Colorado. Colorado home loans are usually secured by a deed of trust, rather than a mortgage, so residential foreclosures are typically nonjudicial (which means the foreclosure takes place without court supervision). (Learn more about the difference between mortgages and deeds of trust and foreclosure laws and procedures in Colorado.)
HOA Foreclosure Limitations Effective January 1, 2014
Colorado has new laws, effective January 1, 2014, under House Bill 13-1276 that limit the HOA’s ability to foreclosure in certain circumstances.
Limitation Based on Amount of Delinquency
An HOA (or the assignee of the HOA's assessment lien, such as a third-party debt collector), may only foreclose if the total amount secured by the lien is equal to six months or more of common expense assessments.
Board Approval Required Before Foreclosure
The HOA board must vote in favor of foreclosure before proceeding with such a foreclosure on any given delinquent account, and may not delegate this authority to an attorney, insurer, manager or any other person. (Learn more in Nolo’s article New Homeowners Association (HOA) Laws in Colorado.)
Statute of Limitations
In order for the lien to remain valid, the HOA must initiate an action to enforce the lien within six years from the date that the full amount of the assessments became due (Colo. Rev. Stat. § 38-33.3-316(5)). This is called the statute of limitations.
What to Do if You Are Facing Foreclosure by an HOA
If you are facing an HOA foreclosure, you should consult with an attorney licensed in Colorado to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)