Colorado HOA Foreclosures

If you default on your homeowners' association payments in Colorado, the HOA may foreclose.

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.

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 § 38-33-101 through § 38-33-113) and superseded most of the CCOA for communities created under the CCIOA.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 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.)

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 may include charges for:

  • Assessments. Of course, the HOA can include amounts for unpaid assessments in the lien.
  • Late charges. 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 attorneys' fees and costs. The HOA may also include reasonable attorneys' 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, or rules and regulations of the association. But 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, like 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 What happens to my mortgages if the HOA forecloses on its lien?)

HOA Super Liens

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)).

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'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)).

HOA Foreclosures in Colorado

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.

HOA Foreclosure Limitations

Colorado law limits the HOA’s ability to foreclosure in certain circumstances.

Limitation Based on Amount of Delinquency

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)).

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. (Colo. Rev. Stat. § 38-33.3-316(11)).

Statute of Limitations

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.)

Talk to a Lawyer

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.

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