When you buy a home that is part of a planned, covenanted community, you will most likely be part of a homeowners’ association (HOA). Colorado has passed laws that provide protections for residents in HOAs when it comes to debt collection practices, foreclosure, and landscaping, among other things. Read on to learn more about these laws and how they can protect you if you live in an HOA community in Colorado.

Understanding Colorado Homeowners’ Associations

An HOA is a legal entity set up to manage and maintain a neighborhood. Its members usually consist of homeowners in the community. The original developer of the community typically creates the HOA.

The rules of the community are set forth in what is called the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The main functions of the HOA are:

• to collect assessments (including monthly HOA dues and special assessments), and
• to enforce the rules of the community.

(Learn more about homeowners’ associations in Nolo’s article Homeowners' Associations (HOAs) and CC&Rs.)

The Colorado HOA Reform Package

Colorado passed an “HOA Reform Package” (House Bill 13-1276, House Bill 13-1277, House Bill 13-1134, and Senate Bill 183) in 2013 that holds HOAs to stricter standards in the areas of debt collection, foreclosure, and landscaping. This legislation addresses the following main areas:

HOAs Must Establish a Consistent Debt Collection Policy

As of January 1, 2014, House Bill 13-1276 requires most HOAs to adopt a policy governing the collection of unpaid assessments that specifies:

• the date on which assessments must be paid to the HOA (and when an assessment is considered past due and delinquent)
• any late fees and interest the HOA is entitled to charge on a delinquent owner's account
• any returned-check charges the HOA is entitled to charge, and
• the circumstances under which a delinquent owner is entitled to enter into a payment plan and the minimum terms of the payment plan.

Written Notice for Delinquent Accounts

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 total amount due (along with an accounting of how the total was determined)
• whether the homeowner can enter into a payment plan (along with instructions for contacting the association to enter into such a payment plan)
• the name and contact information for the individual the homeowner may contact to request a copy of the ledger to verify the debt amount
• that the homeowner must take action to cure the delinquency, and
• that failing to cure the delinquency within 30 days may result in the account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the owner's property, and other remedies available under Colorado law.

Third party debt collectors must also adopt this collection policy if collecting an HOA debt.

Payment Plans for Assessments

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 six months. (However, the HOA does not have to offer a payment plan to a unit owner who has previously entered into a plan.)

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 immediately pursue legal action.

Limits on Foreclosure

An HOA (or the assignee of the HOA's assessment lien, such as a third-party debt collector), may only foreclose if the past-due total amount is equal to six months or more of common expense assessments.

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. (Learn more about HOA foreclosures in Nolo’s article HOA Liens & Foreclosures: An Overview.)

HOA Community Managers Must Be Licensed

House Bill 13-1277 requires that HOA community managers be licensed under the Colorado Division of Real Estate.

Further Study of HOA Issues by the Colorado Division of Real Estate

House Bill 13-1134 required the Division of Real Estate to conduct a study to assess options, costs, and the need for the Division of Real Estate to (among other things):

• offer to mediate HOA complaints
• require the mediation of complaints
• refer disputes to alternative dispute resolution services, and
• provide owners with an expedited and inexpensive administrative hearing process specific to HOA disputes.

This law also requires all HOAs to register with the state.

HOA Landscaping Rules

Senate Bill 183 addresses drought conditions and ensures that HOAs do not needlessly require homeowners to maintain water-dependent landscaping. Among other things, the bill prohibits:

• restrictive covenants that forbid or limit xeriscaping
• requirements that homeowners use turf grass in landscaping, and
• requirements that homeowners water their landscaping in violation of water use restrictions.

However, HOAs are permitted to adopt and enforce design or aesthetic guidelines that:

• require the installation of drought tolerant vegetative landscapes
• regulate the type, number, and placement of drought-tolerant plantings, and
• regulate the hardscapes (such as concrete patios, pavers, stone walls, etc.) that an owner may install.

Learn More

To learn more, see Title 38, Article 33.3 (the Colorado Common Interest Ownership Act) of the Colorado Revised Statutes.