Homeowner Associations – Collecting Overdue Assessments

Everyone is a little short on cash these days, especially homeowner associations with members behind in paying association dues and assessments. While the governing documents of the homeowner association may say the homeowner must promptly pay dues and assessments, collecting what is owed can be quite a bit more difficult.

In the days where most homes had built up equity, homeowners were motivated to promptly pay dues and assessments else face a lawsuit and perhaps foreclosure. Today, many homeowners have little or no equity in their homes. Getting those owners to pay up can be difficult, especially if a lender has begun or threatened foreclosure.

Homeowner associations have some tools at their disposal to collect dues and assessments. Under Colorado law, the homeowner association has a priority lien for the most recent 6 months of homeowner association dues and assessments. So, even if a lender completes a non-judicial foreclosure, the homeowner association should receive a portion of what it is owed.

The homeowner association has an automatic lien against the real property for the total amount of delinquent dues and assessments. Typically, this includes not just the delinquent dues and assessments but also fees, charges, late charges, attorney fees, fines and interest. The recording of the declaration is considered the perfection of this lien. However, many homeowner associations record a notice of assessment lien to give others notice of the lien and to place a little pressure on the homeowner.

Under most governing documents, the homeowner association dues and assessments are personal liabilities of the homeowner that cannot be avoided by abandonment of the real property. Many homeowners in foreclosure but with good jobs forget this fact. These homeowners incorrectly assume that the homeowner association can only foreclose on the real property. Not true.

Homeowner association dues and assessments can be enforced by a lawsuit against the homeowner. When the homeowner association requests that the real property be sold to pay the delinquent dues and assessments, this is called a judicial foreclosure. Judicial foreclosures must be filed in the district court, which is typically more expensive than county court.

If the amount owed is less than $15,000.00, the homeowner association can file in county court. Even if the legal fees and other subsequent charges go over $15,000.00, as long as the starting point was under $15,000.00, most Colorado county courts will issue a judgment for the full amount owed.

Getting homeowners to pay dues and assessments can be difficult and uncomfortable. However, the tools are available to the homeowner association to collect what is owed, including attorney fees.