House Bill 22-1137 – Homeowners’ Association Board Accountability and Transparency

One of the landmark bills from this past legislative session amends Colo. Rev. Stat. § 38-33.3-209.5 and changes how an HOA may collect association assessments, fines or fees. The bill imposes detailed notice and procedural requirements for the imposition of certain fines and actions to enforce payment of any delinquencies.

Some of the major changes are summarized below, but this article is not intended to be an exhaustive description of all such changes and requirements, which are numerous. Careful examination of the revised statute is required.

• One of the bill’s standout features is the creation of a notice requirement. The HOA must first “contact” the unit owner regarding the delinquency of payment of any HOA assessments, fines, or fees before seeking to collect. There are several requirements and parameters for such contact. Under the new statute, an HOA may refer any delinquent account to a collection agency or attorney only if a majority of the executive board votes to refer the matter at a meeting conducted pursuant to Colo. Rev. Stat. § 38-33.3-308(4)(e). Thus, a community manager or property management company may not refer a delinquent account to a collection agency or attorney without the board’s approval.

• The bill introduces several new limitations on fines and fees that can be charged to HOA members.

• For violations that do not threaten public safety or health that the unit owner does not cure within the 30 days, the fine for such violation may not exceed $500. In addition, an HOA may no longer pursue foreclosure against a unit owner based solely on fines owed, whether for violations that threaten public safety or health or not.

• Unit owners now have an opportunity to cure a violation of the HOA’s governing documents, and the statute provides for a procedure that unit owners can follow to demonstrate that the violation has been cured. Upon cure, the HOA must provide a detailed notice to the unit owner that complies with the statute.

• The new statute provides that an HOA must adopt certain written policies and procedures regarding the imposition of fines and use of a collection agency or other legal action to collect unpaid assessments. Close examination of the statute is necessary to ensure compliance with these requirements.

• Probably one of the biggest changes is that the bill creates a private right of action for unit owners. An HOA may be subject to a civil suit for any violation of any foreclosure laws for a period of up to five years after the violation occurred. In such action, a court may award the unit owner damages up to $25,000 plus costs and reasonable attorneys’ fees if the violation is proven by a preponderance of the evidence.