When you buy a home in a planned community, you'll most likely be part of a homeowners' association (HOA). An HOA is a legal entity that manages and maintains a neighborhood. Its members usually consist of homeowners in the community. The original developer of the community typically creates the HOA.
The main functions of the HOA are to collect assessments (monthly dues and special assessments) and enforce the rules of the community. The community's rules are outlined in the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
Also, Colorado has laws that provide protections for debt collection practices, foreclosure, and landscaping, among other things, for residents who are part of an HOA.
In 2013, Colorado passed an "HOA Reform Package" (including House Bill 13-1276, House Bill 13-1277, and Senate Bill 183) to hold HOAs to stricter standards in certain areas, like debt collection, foreclosure, and landscaping.
On June 3, 2022, Colorado Governor Jared Polis signed HB22-1137 into law. This law, effective August 10, 2022, prohibits HOAs in Colorado from seeking foreclosure against homeowners based solely on fines for violating community rules. In addition, the law implements other changes to Colorado's HOA laws.
Colorado law requires most HOAs to adopt a policy governing the collection of unpaid assessments, including before using a collection agency or taking legal action to collect unpaid assessments. (Colo. Rev. Stat. § 38-33.3-209.5, § 38-33.3-316.3). The policy must specify:
Before the HOA can turn a delinquent account over to an attorney or collections agency, the HOA must provide a notice to the homeowner specifying:
The HOA and any debt collector must also make a good-faith effort to coordinate with a delinquent homeowner to set up a payment plan to pay off past-due assessments and other delinquent payments. The homeowner may pay off the delinquency by making equal installments over a period of at least 18 months. But an HOA doesn't have to offer a payment plan to a unit owner who has previously entered into a plan. (Colo. Rev. Stat. § 38-33.3-316.3).
If the delinquent owner fails to comply with the payment plan or fails to remain current on regular assessments during the plan, the HOA may then pursue legal action. (Colo. Rev. Stat. § 38-33.3-316.3).
An HOA (or the assignee of the HOA's assessment lien, like a third-party debt collector) may foreclose only if the past-due total amount is equal to six months or more of common expense assessments. (Colo. Rev. Stat. § 38-33.3-316).
An HOA may not foreclose its lien if the debt securing the lien consists of one or both of the following: (1) fines or (2) collection costs or attorneys' fees the association incurred that are only associated with assessed fines. (Colo. Rev. Stat. § 38-33.3-316(1)). In addition, the law also prevents HOAs from assessing fines on a daily basis and limits the total amount of fines for a violation to $500. (Colo. Rev. Stat. § 38–33.3–209.5.)
Also, 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).
Under Colorado law, HOAs can't needlessly require homeowners to maintain water-dependent landscaping. Among other things, Colorado law prohibits:
But HOAs are permitted to adopt and enforce design or aesthetic guidelines that:
Except that the guidelines or rules must not prohibit the use of nonvegetative turf grass in the backyard of a residential property. (Colo. Rev. Stat. § 37-60-126).
If you're behind in your HOA payments and facing a possible foreclosure, consider consulting with a local attorney to discuss the legal options that are available in your particular circumstances.
You might also want to consider talking to a lawyer if you're having a disagreement with your HOA over your landscaping or another matter.