On August 9, 2022, Colorado legislature passed into law House Bill 22-1137 – Homeowners’ Association Board Accountability and Transparency. Under this bill, sweeping changes have been made to how Associations can collect unpaid assessments, fines and fees, and limitations on the use of common elements.
Below is a summarized explanation of some of the major changes from this bill:
Collections
In addition to sending a notice of delinquency to a unit Owner, the HOA must contact the unit owner regarding the delinquency. This contact must be through certified mail and by posting a copy of the notice on the unit owner’s property, and all records of the contact must be kept by the unit owner. Further, if requested by the unit owner, the notice must be presented in a language other than English.
Once the collection efforts above have been satisfied, the HOA can refer the delinquent account to a collection agency or attorney once there is a majority vote by the HOA’s Board of Directors to do so.
Fines and Fees
Assuming violations do not threaten public safety or health, HOA’s are now prohibited from imposing daily fines for a 30-day period once the violation occurs, and any legal action for unpaid fines cannot be pursued in foreclosure against the unit owner. A violation that the HOA has determined is a threat to public safety or health requires only a 72-hour period to cure before the HOA may fine the unit owner. Last, HOA’s must now adopt a written policy regarding for fines and fees and the use of a collection agency or other legal action to collect unpaid amounts.
Once fines and fees are assessed, the HOA is required to send the unit owner an itemized invoice of all fines and fees, including all assessments unpaid to date.
Unit Owner Rights
If an owner unit determines that the HOA is in violation of any foreclosure laws, the unit owners may seek damages in an amount up to $25,000 plus costs and reasonable attorney fees.
In summary, HB 22-1137 was passed to address a wide range of issues and clarify others in HOA’s. The discussion above is not meant to provide legal advice or interpretation, but to inform unit owners and HOA’s of the changes. Please consult with your general counsel for further clarification and guidance.
If you have any questions regarding this, you can also contact your trusted advisor at Reese Henry.