This article was produced for ProPublica’s Local Reporting Network in partnership with Rocky Mountain PBS. Sign up for Dispatches to get articles like this as soon as they’re published.
A Colorado House committee on Wednesday limited the power of homeowners associations to file foreclosure lawsuits based on fines for violating community rules, limiting such penalties and increasing due process for homeowners. voted narrowly on Wednesday to advance bipartisan measures aimed at
Colorado law allows HOAs to seek judicial foreclosure against homeowners who are six months or more behind on regular dues (also known as assessments). However, that total may include other charges, such as fines, late fees, and collection costs, including HOA’s attorneys’ fees.
As Rocky Mountain PBS and ProPublica reported last week, between January 2018 and February 2022, statewide HOAs filed more than 2,400 foreclosure lawsuits, including those involving fines. It prevented many mortgage lenders from enforcing their mortgages.
D-Boulder Rep. Edie Hooton, who voted in favor of the bill, said: “We hope to see meaningful progress on her HOA law in Colorado.”
House Bill 22-1137 does not stop the HOA from seeking foreclosures against homeowners who fall behind their regular valuations, but the association’s lien on homes is limited only to fines or the cost of collecting them. Prohibits foreclosure in configured situations. The proposal would also prevent the HOA from charging daily fines, imposing a fine of $500 for each violation, the bill’s sponsors said.
“Someone came to us and told us that the fee started at $150 and ended up at $3,000. told Rocky Mountain PBS and ProPublica, “If you bought a property, paid a mortgage, and now have a small breach or fee, can the HOA foreclose and evict you from your home?” is that correct? No, it’s not.”
The Transport and Local Government Commission heard testimony on the bill in early March but did not vote on it until Wednesday. In the meantime, the bill’s sponsors met with community stakeholders, including representatives of the HOA industry.
Representatives of the Community Associations Institute, the HOA trade group, and its administrators told Rocky Mountain PBS and ProPublica that they support the overall goal of eliminating foreclosures based solely on HOA fines. opposes several provisions of the current proposal, including a cap on fines, but hopes to find common ground as the bill moves forward.
“This means that if the homeowner wants to paint the house pink and the request is denied and they do it anyway, the homeowner is allowed to make an additional payment of $500.00 in violation of the rules. The Association’s only option for enforcing the Covenant is to take the owner to court, rather than impose fines that make breaking the rules practically unattractive. ,” said Lindsay Smith, HOA attorney at the Community Associations Institute.
The bill also requires HOAs to notify homeowners of arrears several times in various ways, including by posting notices on their homes. HOA leaders have argued that such provisions can increase administrative costs. HOA homeowner advocate Stan Hrincevich said he disagrees with the argument that the proposal would increase costs for homeowners who pay on time, saying that the HOA would normally give delinquent homeowners He said that he would charge such costs directly to the company.
R-Highlands Ranch Rep. Kevin Van Winkle voted against the bill, telling the committee that the HOA is run by a volunteer committee and that homeowners who do not agree with the decisions being made in the community should vote to the committee. I said I had the option to get involved and change the situation. “It’s actually a very incredible microscopic level of micromanagement,” he said.
The commission passed the bill by a 7-6 vote, with several lawmakers calling for action the dozens of foreclosure lawsuits filed against homeowners of the Master Homeowners Association of Green Valley Ranch. pointed out.
“It’s imperative that we address this issue,” said D-Greenwood Village Rep. Meg Frohlich, adding that the issue was “at a critical moment.”
The bill must pass the House and Senate.