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New Laws Protect Homeowners in HOA Foreclosures, Regulate Metro Districts Acting as HOAs

The Colorado Legislature has taken a hard look this session at issues facing common interest communities and unit owners within them, considering several bills related to attorney fees in homeowner association ("HOA") foreclosures, licensure requirements for community managers, new policies and requirements for metro districts, and execution requirements for community declarations.

Here's what became of those bills.

HB24-1337 Real Property Owner Unit Association Collections - Passed (Awaiting Signature by Governor)

HOAs have long been permitted to require unit owners to reimburse HOAs for attorney fees and costs incurred in connection with the owner's failure to pay monies due and failure to abide by the community's governing documents, regardless of whether the HOA institutes legal proceedings against the owner. On April 30, 2024, the legislature passed HB 24-1337, which limits the amount of attorney fees recoverable by the HOA to $5,000 or 50% of the outstanding assessments and other monies owed, whichever is less. The limitation applies to attorney fees incurred as a result of the unit owner's non-payment or non-compliance--in the latter case, limiting fees to 50% of the actual cost incurred by the association--but gives courts authority to award fees to an HOA in excess of the limits if an owner willfully fails to comply with the HOA's governing documents despite a financial, physical, and reasonable ability to so comply. The recoverable attorney fee cap applies regardless of whether HOAs institute legal proceedings for enforcement. The bill further clarifies that recoverable costs are limited to the actual costs incurred as a result of owner non-compliance or non-payment. HOAs must now also notify owners of their right to mediation prior to instituting foreclosure actions.

HB 24-1337 included further changes not discussed in full here, including a statutory right of redemption after foreclosure. Consult with your Sherman & Howard attorney or review the full bill text for a comprehensive overview of the changes in the law.

HB24-1078 Regulation of Community Association Managers - Failed

The bill proposed to re-establish licensure requirements for business entities offering management services to common interest communities and would have made the practice without a license unlawful as of July 1, 2025. Community association managers ("CAMs") were subject to regulation for a brief period after the general assembly passed HB 13-1277 in 2013; however, proposed legislation to continue the regulatory program failed in 2018 and 2019, and CAMs have not since been regulated. Following a survey of the industry, homeowners, and other stakeholders finding 64% of CAMs and 82% of homeowners favored regulation, the department of regulatory agencies conducted a sunrise review and concluded, in 2021, that “minimal regulatory programs should be enacted to ensure that CAMs who commit acts such as theft are held accountable through 16 regulatory oversight . . .” and while "regulation may not prevent thefts from occurring in the future, it would potentially prevent a practitioner from practicing again in Colorado." (HB 24-1078, § 1(e))

Under HB 24-1078, CAM licensure was to be administered by the Division of Real Estate and would have required entities to meet insurance requirements, designate a controlling manager for the business' HOA management activities, pay a fee, and obtain criminal background checks on employees managing HOAs to obtain licensure. The bill died on the calendar of the House Appropriations Committee without reaching a vote.

HB 24-1383 Common Interest Community Declarations - Signed

On May 16, 2024, Governor Polis signed HB24-1384, which fills a gap in the Colorado Common Interest Ownership Act ("CCIOA") by identifying who is required to execute declarations forming common interest communities in the state. Under the bill, the declaration and any amendments that add real estate to a common interest community must be “executed by or with the express written authorization of the owner or owners of the real estate that is to be included in the common interest community, as shown by the records of the county clerk and recorder's office of the county where the real estate is located.”

HB 24-1267 Metropolitan District Covenant Enforcement Policy - Signed

Increasingly, metropolitan districts are taking over covenant enforcement and other duties typically handled by an HOA, but until now, metro districts have not been obligated to operate under CCIOA-mandated policies applicable to traditional, HOA-run communities. On April 19, 2024, Governor Polis signed HB 24-1267 into law, which requires metro districts engaging in covenant enforcement and design review services to adopt written policies regarding imposition and collection of fines, how disputes between the district and residents are addressed, and refraining from prohibiting residents from engaging in certain activities regarding the use of their properties, including the following:

  • Displaying flags and signs;
  • Parking vehicles in a driveway;
  • Removing vegetation for fire mitigation purposes;
  • Performing reasonable property modifications to accommodate disabilities;
  • Using xeriscape, nonvegetative turf grass, or drought-tolerant landscaping;
  • Using a rain barrel;
  • Operating a family childcare home;
  • Using renewable energy generation devices or installing and using energy efficient measures; and
  • Requiring the use of cedar shakes or other flammable roofing materials.

For more information about any of the foregoing bills or other proposed laws affecting real property, contact your Sherman & Howard attorney.

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civil & commercial litigation, corporate & transactional, real estate, litigation trials & appeals