If you live in a house, condo, or townhome that’s part of a common-interest development in Colorado, you're most likely responsible for paying dues and assessments to a homeowners' association (HOA). If you don’t make the payments, in most cases, the HOA can get a lien on your property that could lead to a foreclosure.
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 § 38-33-101 through § 38-33-113) and superseded most of the CCOA for communities created under the CCIOA.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.
Almost all HOAs have the power to place a lien on a homeowner's property if that owner becomes delinquent in paying the monthly dues or special assessments, collectively referred to as "assessments."
Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to the 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, an association must record its 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 may include charges for:
An HOA's lien is prior to all other liens, except for:
Sometimes, under state law, an HOA lien for delinquent assessments has priority over a lender's first mortgage or deed of trust. This type of lien is called a "super lien."
In Colorado, an HOA gets a super lien in an amount equal to the common expense assessments which would have come due during a six-month period before the HOA or a lender with a senior lien starts a foreclosure action. (Colo. Rev. Stat. § 38-33.3-316(2)(b)).
If you make a written request (delivered personally or by certified mail, first-class postage prepaid, return receipt) to the HOA's registered agent, 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 can’t 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)).
In Colorado, the HOA may foreclose its lien in the same manner as a lender can foreclose a mortgage. (Colo. Rev. Stat. § 38-33.3-316(11)). Because mortgages in Colorado must be foreclosed judicially, this means that an HOA must file a lawsuit in court to foreclose. This process 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.
Colorado law limits the HOA’s ability to foreclosure in certain circumstances.
An HOA (or the assignee of the HOA's lien, like a third-party debt collector) may foreclose only if the total amount secured by the lien is equal to six months or more of common expense assessments. (Colo. Rev. Stat. § 38-33.3-316(11)).
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. (Colo. Rev. Stat. § 38-33.3-316(11)).
For the lien to remain valid, the HOA must initiate an action to enforce the lien within six years from the date the full amount of the assessments became due. (Colo. Rev. Stat. § 38-33.3-316(5)). (Learn more about Colorado laws that provide protections for homeowners who're part of an HOA when it comes to debt collection practices, foreclosure, and landscaping, among other things, in Homeowners’ Association (HOA) Laws in Colorado.)
If you’re behind in assessments and facing an HOA foreclosure in Colorado, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.