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Colorado bill would curb HOAs power to foreclose due to unpaid fees

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Posted at 5:33 PM, Mar 23, 2022
and last updated 2022-03-23 20:31:11-04

AURORA, Colo. — A group of Colorado lawmakers is proposing a bill that would require a homeowner’s association to take several steps before moving forward with a foreclosure-related to unpaid HOA fines and fees.

“House Bill 1137 is a bill that brings transparency and accountability to HOA fees,” said bill sponsor Rep. Naquetta Ricks, D-Aurora.

HB-1137 would require HOA’s to alert homeowners of delinquencies using multiple methods of communication, restrict interest rates on unpaid fines to no more than 8% a year, and require HOA’s to offer a repayment plan.

“It just seems that right now, the law is so tilted towards HOA’s,” said Ricks. “We've been working with the property managers and a lobby group that kind of lobbies on behalf of HOA fees and they're also the bill collectors. So, I think we've been able to come to some agreement.”

Ricks said she was upset after learning an HOA in Green Valley Ranch recently foreclosed on more than 50 homes, but she actually began drafting her bill months ago.

“A senior citizens group came to me this past summer and said that people were being foreclosed on because of fines so I began looking into the issue,” said Ricks.

Topazz McBride, Greater Metro Denver Ministerial Alliance vice president of Social Justice, is one person who alerted Ricks to these types of foreclosures after a woman told McBride about an HOA taking her home.

“The association started coming after her for a pipe on her property, an underground pipe. She won the case. The judge ruled in her favor. But approximately three years later, the homeowner’s association came after her again,” said McBride. “She came to me and said that someone had taken over her home and that she had been put out of her home by Denver Sheriff's Department.”

McBride investigated the issue and said the homeowner’s mortgage lender wasn’t even aware of the foreclosure and the HOA admitted the pipe dispute was the main reason behind the legal action.

“They did finally confirm that even her monthly dues were current, so everything was current,” said McBride. “There needs to be a stay on their ability, the HOA’s ability to foreclose on persons until the law is reviewed. Part of the problem is that there is a super lien law in place.”

Under Colorado law, super liens are given the highest priority over other liens, including a mortgage.

“In some cases, people are buying the homes and coming back to the homeowners saying ‘hey, do you want to rent from me?' Can you imagine that?” said Ricks.

Ricks said the suggestion is insulting and an example of why the law needs to change.