Homeowners associations’ foreclosure filings on thousands of Coloradans’ houses over unpaid fines and fees have spurred fresh attempts by lawmakers to better regulate HOAs and metropolitan districts with the hope of preventing more people from losing their homes.

Lawmakers have introduced several reform bills that would restrict foreclosures from delinquent fees and require HOAs and metro districts to adopt written policies, enhance notifications to homeowners and add licensing requirements for professional managers. The legislation would also set regulations on how much homeowners can be charged. HOAs would be required to work with homeowners before beginning any foreclosure proceedings.

“As more Coloradans find themselves living in HOAs and metro districts, it is more important than ever that homeowners be protected from losing the largest asset they will ever invest in through unnecessary foreclosure,” said Rep. Iman Jodeh, an Aurora Democrat who is sponsoring two bills.

Homeowners associations in Colorado legally have the power to place liens on residents’ homes that supersede even those of the banks that hold their mortgages. An HOA can then sell a property to collect the money a resident owes — and the owner still would be left with mortgage debt and none of the equity they had built.

About half of Colorado residents live in communities overseen by an HOA.

The associations’ power drew more scrutiny in 2022 following media reports, including by The Denver Post, about the Master Homeowners Association for Green Valley Ranch in far-northeast Denver. That HOA filed nearly half of all HOA foreclosures in Denver the prior year.

The foreclosed homes included affordable housing-designated units that were sold in auctions to investors, in violation of city covenants.

Neighborhood residents who are Black, Asian or Latino said they sometimes weren’t notified of the fines or would continue to accrue new fees and interest even after resolving the violations. In some cases, residents didn’t even know their homes had been placed in foreclosure proceedings until someone showed up at their door and said they now owned the home.

A 2022 analysis by ProPublica and Rocky Mountain PBS found that the state’s HOAs filed more than 2,400 foreclosure cases from January 2018 through February 2022.

The legislature passed a law in 2022 to protect homeowners from accumulating HOA fines and fees that they may not be aware of by requiring HOAs to provide written notice to residents, in their preferred language, about any violations. It also capped the fees HOAs could assess.

“We want to make sure people stay housed in Colorado”

But lawmakers say there is much more to be done for communities across metro Denver to limit HOA-driven foreclosures and protect homeowners from predatory or mismanaged companies.

“We’re fighting for homeowners,” said Rep. Naquetta Ricks, an Aurora Democrat, adding that this was especially important amid the state’s ongoing housing crisis. “We want to make sure people stay housed in Colorado.”

A statewide committee, the HOA Homeowners’ Rights Task Force, was charged with studying issues related to metro districts and HOAs, and its members recommended multiple areas of focus for the 2024 session. Lawmakers have incorporated at least two recommendations into new bills — creating an alternative dispute resolution process and addressing licensure of community association managers.

The task force is expected to release a final report by April 15.

The new bills introduced so far during the 2024 session include:

HB24-1267, which would require metro districts that conduct covenant enforcement like HOAs to adopt written policies on fines and fees and on governing disputes. It also would prevent the metro district from foreclosing on any lien because of delinquent fees.
HB24-1158, which would require changes to HOA notifications to owners on delinquent accounts and before lien foreclosures, and it would establish a minimum bid.
HB24-1337, which would limit a homeowner’s reimbursement of collection costs and attorney fees to 50% and prohibit an HOA from foreclosing on a lien until it has tried to serve an owner with a civil action within 180 days or obtained a personal judgement in a civil action. It also would prohibit the purchaser of a home in foreclosure from selling for 180 days, with the former owner having first priority of buying the home again.
HB24-1078, which would reestablish license requirements for HOA community association managers (a program that expired in July 2018).

So far, just two bills have been considered by committees. HB-1267 passed 10-0 in a House committee Wednesday, and no one spoke in opposition to the bill. Jodeh said she worked with metro districts when crafting the legislation.

HB-1078, the licensure bill, passed 8-3 in a House committee Feb. 14, eliciting support from homeowners who had faced HOA foreclosures and opposition from community management associations.

Arvada Democratic Rep. Brianna Titone, a former HOA president, is one of the sponsors of the bill. The legislature passed a similar bill in 2019, but Gov. Jared Polis vetoed it. At the time, Polis’ office said he was concerned about costs to get licensed that would then be passed to consumers, even though a 2017 report from the Colorado Department of Regulatory Agencies recommended an extension, and a 2021 report also recommended regulation.

Titone said the new licensing bill would “make sure that people are educated about the law and make sure that no felons are getting involved in having full access to communities’ money.”

The bill would also ensure managers know how to do their jobs, Titone added, so that they don’t have to hire attorneys to help, costing residents even more money. And it would require companies to disclose relationships that include identifying whom they’re providing kickbacks to, she said.

The requirements would apply only to professional management companies, not employees directly hired by HOA boards.

“I’ve come here with licensing in 2019. I’ve come with licensing in 2022. And I’ve come with licensing today,” Titone said at the committee hearing, and “nobody has ever suggested an alternative. … They just say no. … You should ask yourself why they don’t want this. It’s because because they’re making a lot of money off of the backs of the people they work for and they’re hired by.”

Licensing bill draws opposition

Despite the bill’s similarity to the 2022 bill Titone worked on with Colorado’s Division of Real Estate, Deputy Director Eric Turner testified against the bill at the hearing, calling it “well-intentioned.” He said it “does not address the various issues about living in an HOA, imposes barriers to entry into the profession and increases costs for homeowners.”

John Kreger, who testified for Associa, the largest community management association in the country, jokingly said that “after the unflattering characterizations of our industry today, I feel compelled to assure the committee that on behalf of Associa and the hundreds of Coloradans we employ, we are not crooks or idiots.”

Kreger and other community association managers argued the bill would not be effective at protecting consumers but instead would just raise costs. Kreger said there wasn’t enough data to show a widespread problem, and any theft of funds or misuse should be handled within the criminal justice system.

Homeowners and nonprofit foreclosure attorneys have attended committee hearings to describe horror stories about themselves or their clients losing their homes over fines and fees from HOAs and metro districts, even if they’d never missed a mortgage payment.

Monica Villela, who lived in a Green Valley Ranch home with her family for 19 years, choked back tears at Wednesday’s hearing. She told lawmakers that during the COVID-19 pandemic, it became difficult to keep up with maintenance and HOA fees that ballooned.

Her family had never missed a mortgage payment and had never even refinanced their home, she said, but they didn’t have the money to pay the $8,000 in fees they owed or for an attorney to fight them.

They lost their home, just as her son would have started college.

“We no longer have that option,” she said. “Our family has honestly been deeply affected. It really hurts seeing my kids being depressed by this horrible situation. We have been hurt.”

She urged lawmakers to pass reforms “to keep families in their homes all across Colorado so we can keep our most holy possession: our homes.”

While a majority of the HOA and metro district legislation introduced at the Colorado statehouse this year centers around protecting homeowners, at least two bills aim to make processes easier on HOAs: HB24-1233 would reduce some of the requirements placed on HOAs when collecting delinquent payments, while HB24-1091 would allow HOAs to set standards for (though not prohibit) the use of fire-hardened building materials for fencing.

Polis’ office declined to comment on the specifics of pending HOA bills or to discuss the HOA task force’s recommendations. Spokesperson Shelby Weiman issued a statement that said his office would monitor the bills’ progress, adding that Polis commends lawmakers’ efforts to provide more flexibility for homeowners.

“Governor Polis believes that burdensome HOA policies shouldn’t be so restrictive that they reduce fire safety, drain individuals and families of their finances, or force people from a home they love over something like untrimmed grass,” she wrote.

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