Legislators Looking at Issue of Colorado HOA Foreclosures

Approximately 60% of Coloradans live under what are called covenants, conditions and restrictions (CCRs) of a homeowners association (HOA). Violations of CCRs, if unresolved, can ultimately lead to foreclosure on a property. A state real estate agency reported that HOAs filed more than 2,400 foreclosure cases in a four-year period ending in 2022. A 2023 report by the Colorado Sun news outlet also found that HOAs had foreclosed on thousands of Colorado properties due to unpaid HOA fees, and that hundreds of such properties had been auctioned off, often for a fraction of their market value. In some cases the practice has wiped out years of an owner’s equity in a property, including older Coloradans who had established a significant amount of such equity. State legislators are vowing to look into what they allege are “predatory practices” by HOAs. As recently as 2022 Colorado passed a law that prohibits HOAs from seeking foreclosure against homeowners based solely on unpaid fines for violating community rules. These fines are separate from the regular dues and assessments owners pay to HOAs. And HOAs can foreclose only if the total amount due to the association meets a certain threshold. Further, the 2022 law requires that an HOA must alert the homeowner about the amounts due for a CCR violation before taking any delinquency action, give 30 days to correct the problem before imposing a fine, and give another 30-day period to cure a violation before taking legal action. Finally, an HOA must attempt to set up a payment plan with the homeowner before initiating a foreclosure. If you are ever threatened with foreclosure by an HOA, it’s vital to know your rights and also the HOA’s obligations. In fact, homeowners may file a civil lawsuit against an HOA if they can prove the HOA violated foreclosure laws. See details on all of this at the Colorado HOA Information and Resource Center (https://dre.colorado.gov/hoa-center). Nolo.com offers related information at https://www.nolo.com/legal-encyclopedia/colorado-hoa-foreclosures.html.

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