Colorado Passes HOA Foreclosure Reform Law

Colorado passed a law to protect homeowners from HOA fines and foreclosures.

By , Attorney

On June 3, 2022, Colorado Governor Jared Polis signed HB22-1137 into law. This law, once it goes into effect, prohibits homeowners' associations (HOAs) in Colorado from seeking foreclosure against homeowners based solely on fines for violating community rules.

The new law also prevents HOAs from assessing fines on a daily basis in some cases and limits the total amount of fines for a violation to $500 if the violation doesn't threaten public safety or health.

In addition, the law implements the following changes, among others, to Colorado's HOA laws.

  • Before taking action on a delinquency, an HOA must alert the homeowner about the amounts due. And the HOA must keep records of the contact, including the type of communication and the date and time of communication attempts.
  • An HOA must send a written notice in the homeowner's preferred language (see below) of any violations, giving 30 days to correct the problem before imposing a fine. (The period to fix a violation is 72 hours if it threatens the public safety or health.)
  • The association must give the homeowner another 30-day period (so, two consecutive 30-day periods) to cure a violation before taking legal action.
  • A homeowner may notify the association if they prefer that correspondence and notices from the HOA be in a language other than English. Then, the HOA must provide notices in that language.
  • An HOA must send homeowners monthly notifications (in their language of choice) by first-class mail and, if the HOA has an email address for the owner, by email, of any outstanding balances with an itemized list of all assessments, fines, fees, and charges that the homeowner owes.
  • An HOA must send a notice of delinquency in the homeowner's preferred language by certified mail, return receipt requested, post a copy at the home, and send notice by first-class letter, text, or email. In addition, an HOA must send homeowners a notice by certified mail, return receipt requested, before the HOA can turn a delinquent account over to a collection agency or an attorney for legal action. (Currently, Colorado law merely requires the HOA to have a policy in place to send a notice of delinquency.)
  • Interest on any unpaid assessments, fines, or fees is limited to 8% per year. (Currently, state law sets the amount at 21%.)
  • An HOA must attempt to set up a payment plan with the homeowner before initiating a foreclosure. The plan must allow the homeowner to pay the debt in monthly installments over 18 months. Under the payment plan, the owner may choose the amount to be paid each month, so long as each payment is in an amount of at least $25.
  • 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.
  • Homeowners may file a civil lawsuit against an HOA for no more than $25,000, plus costs and attorneys' fees if they can prove that the HOA violated foreclosure laws. The suit must be filed within five years after the violation happened.

These legal changes go into effect on August 10, 2022.

Effective date: August 10, 2022