The ABCs of HOA Foreclosure: What Homeowners in Colorado Springs Need to Know

The ABCs of HOA Foreclosure: What Homeowners in Colorado Springs Need to Know

Living in an HOA comes with several benefits, like appealing amenities and good home values, but it's an expensive undertaking.

Over 2 million Colorado residents live in one of the state's 9,200 HOAs. Together, they contribute $4.3 billion toward maintaining their communities.

This money comes from HOA fees, also called assessments. Without these monthly or annual contributions from the homeowners, the HOA community cannot operate effectively.

As a result, homeowners who don't pay their dues on time may face serious consequences, like an HOA foreclosure.

HOA Fees, Fines, and Foreclosures

To enjoy the benefits of HOA living, homeowners must comply with a set of CC&Rs, or rules, and pay the agreed-upon HOA fees. From time to time, the HOA may levy an additional fee, called a special assessment, to pay for extraordinary expenses like major upgrades or repairs to common property.

Failure to comply with the HOA rules can result in fines, while non-payment of monies owed leads to an automatic lien against the homeowner's property. A lien clouds the title of a property, making it difficult to sell the home or refinance it.

In Colorado, an HOA must allow the homeowner at least 60 days to rectify any rule contraventions before fining them. They may charge late fees on delinquent HOA fees after the number of days specified in the HOA CC&Rs.

Collecting Late Fees in Colorado

Foreclosure is a last resort in the HOA fee collection process. The HOA will first attempt more conventional fee collection measures, such as:

  • Limiting the resident's right to use amenities
  • Calling them and demanding payment
  • Filing a lawsuit or money judgment

Before taking legal action against the homeowner, the HOA must send a notice of delinquency via certified mail and post a copy at their home.

The homeowner may contact the HOA to set up a payment arrangement to catch up with late fees over 18 months. The HOA must provide a detailed statement of all money owed at the homeowner's request.

If all else fails, the HOA may proceed with foreclosing on the resident's HOA property if:

  • The total amount exceeds six months of HOA assessments
  • They have board approval

In Colorado, an HOA may not include outstanding fines in a foreclosure action.

The HOA Foreclosure Procedure

An HOA must foreclose on a lien within 6 years, or the lien is extinguished.

Colorado has non-judicial and judicial foreclosures, but the latter is rare. In most cases, foreclosure starts when the HOA files a Notice of Election and Demand with the public trustee, who records it with the recorder and county clerk.

The trustee then sets a foreclosure sale date between 110 and 125 days from when the NED is recorded. The court must approve that the HOA has the right to foreclose at a Rule 120 hearing.

A homeowner can defend their case at the rule 12o hearing, but the best way to avoid an HOA foreclosure is by paying the outstanding fees in full.

Avoiding Late Fees in an HOA

An HOA foreclosure is a disruptive and unpleasant situation. An HOA management company can help you avoid HOA liens and foreclosures with effective fee collection services and accurate record-keeping.

PMI Pikes Peak is your perfect partner in ensuring the smooth running of your HOA, thanks to our many years of experience in the industry. Discover an easier way to collect fees, enforce the rules, and maintain harmony in your community today.