And the Pendulum Swings: HB22-1137 – HOA Board Transparency and Accountability
The Colorado General Assembly passed HB22-1137 increasing HOA Board requirements before filing lawsuits and limiting interest on delinquent accounts. We have mixed emotions about this law. On one hand, we have seen some heavy-handed HOA boards and lawyers taking advantage of the previous law. On the other hand, the pendulum has swung far the other direction. Highlights:
An HOA must contact the owner regarding a delinquency by sending a notice of delinquency to the owner by certified mail and by posting a copy of the notice on the owner’s property. In addition, the HOA must contact the owner by at least one other method of communication. Examples include first-class mail, e-mail, or text message.
The HOA is prohibited from referring a delinquent account to a collection agency or attorney unless a majority of the HOA’s board vote to refer the matter on the record during an executive or closed session. Doing so outside of executive/closed session may give rise to a claim for invasion of privacy.
An HOA is prohibited from imposing daily late fees or fines. The HOA must provide an owner a period to cure a violation of any HOA governing documents before the HOA may fine the owner. If the violation is not a threat to public safety or health, the HOA must provide the owner 2, 30-day periods to cure the violation before the HOA may take legal action against the owner. A legal action for unpaid fines cannot include foreclosure. A violation that the HOA reasonably determines is a threat to public safety or health requires a 72-hour period to cure before the HOA may fine the owner.
The maximum interest an HOA may charge on unpaid assessments, fines, or fees may not exceed 8% per year. Monthly, the HOA must send each delinquent owner an itemized list of all assessments, fines, fees, and charges owed. The HOA is prohibited from assessing a fee for providing the owner a statement of the total amount owed.
The HOA must adopt a policy to provide information regarding an alleged violation, a description of the steps that the HOA must take before it can take legal action against an owner, and a description of the types of legal action that the HOA may take against an owner.
Before initiating a foreclosure action against an owner, the HOA must offer the owner a repayment plan to pay the debt in monthly installments over 18 months in an amount determined by the owner so long as installments are $25 or greater.
