Colorado lawmakers are again eyeing reform measures for homeowners associations, building off past efforts to establish guardrails on a largely unregulated sector that governs millions of Colorado property owners. 

Roughly 2.7 million Coloradans lived under an HOA as of 2023, representing around half the state’s population. In recent years, HOAs have been mired in controversies. 

A 2023 Colorado Sun investigation found that associations in the state had foreclosed on over 250 homes since 2018 because of delinquent payments, selling the properties for a fraction of market value and erasing years of homeowners’ equity. 

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State residents, including those in the High Country, have spoken out over the escalating fees they pay their associations as the cost of maintenance and property insurance rises. This past fall, a group of property owners rallied outside the state Capitol, sharing stories of mistreatment by their HOAs and calling for more government oversight and protection. 

“HOAs serve a great purpose for maintaining values of a property and helping to keep a standard,” said state Rep. Naquetta Ricks, D-Aurora, who has supported past HOA reform measures. “But we also know that there have been bad actors within HOAs that have been very abusive to homeowners.”

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The legislature in 2024 approved a package of laws primarily aimed at preventing HOA foreclosures by giving homeowners more time and options for paying off their debt.

This year, Ricks wants to add additional safety nets with bills aimed at protecting equity during foreclosure sales and requiring mediation before homeowners and HOAs go to court. 

Homeowner rights groups that have called for reform measures say some of the proposed solutions are a step in the right direction, particularly around equity protection. But they have raised concerns about forced mediation. 

The bills also face pushback from organizations like the Rocky Mountain chapter for the Community Associations Institute, an HOA trade group. 

“I think a lot of this legislation is premature,” said Aaron Goodlock, a Colorado-based attorney and chapter member. “I think we don’t necessarily have sufficient data or information to support what some of the bills are attempting to accomplish.”

One of those is House Bill 1043, which is sponsored by Ricks and Sen. Tony Exum, an El Paso Democrat. 

It would give homeowners the ability to seek a nine-month pause on a foreclosure sale and use that time to try to sell the home for its market value. If a homeowner can’t sell at market value, they could seek a lien on the home that would allow them to retain some equity during the sale. 

“When we talk about not only helping people purchase homes and correcting the homelessness issues that we have in Colorado, we also must look at equity when it comes to foreclosure,” Ricks said. “We cannot have people losing their homes and someone else profiting off their misfortune.” 

Goodlock said HOA foreclosures aren’t a common occurrence. He pointed to the Sun article, which found that of roughly 3,000 foreclosures initiated by HOAs over six years, around 250 — or 8% — resulted in homes being sold at an auction. 

“If you do the math on that, it comes down to about 42 HOA foreclosures per year,” Goodlock said. “Which is extremely low, especially in comparison to other foreclosures that are initiated by banks. So, it’s interesting to me that there has been such a significant focus on HOA foreclosures when they are actually exceedingly rare.” 

Ricks said the state needs more data to understand the scope of the problem, which is why her bill would also require HOAs to report information annually to the Colorado Department of Regulatory Agencies. That would include data on how many units were behind in payments, whether payment plans were enacted with a homeowner and the number of foreclosure actions that were filed.

Homeowner rights advocates say they are generally supportive of the bill, which they see as important for mitigating the impact of foreclosures and establishing more transparency from HOAs. But their biggest concern remains around enforcement. 

As it’s currently written, House Bill 1043 does not include penalties for HOAs that may violate the law. 

“It’s like putting up a speed limit sign and then there’s no police that ever enforce the speed limit,” said Patrick Johansen, founder of the grassroots advocacy organization HOA Reform Leaders National Group. 

Ricks said she is open to looking at penalties and enforcement tactics for HOAs, something Johansen said is desperately needed. 

Because HOA disputes are treated under civil law, a homeowner’s only recourse is to sue their association if they suspect wrongdoing, which can lead to costly court battles that take years to resolve, Johansen said. 

That was the case for Frisco homeowner Holly Crystal, who’s been locked in a 10-year legal fight with her HOA over a property rights dispute that has cost her more than $400,000 in attorney fees. 

Crystal, who helped form the HOA reform group that rallied at the Capitol last fall, said she is supportive of measures to bring more protection for homeowners who belong to HOAs, like House Bill 1043. But she’s frustrated by what she sees as a lack of enforcement by the state.

“We’ve got zero oversight, we’ve got zero enforcement of the law and we have zero accountability,” Crystal said. “Citizens of Colorado should not have to enforce our HOA laws through civil lawsuits — that’s the government’s job.”

Crystal and Johansen are not in support of Ricks’ other bill, House Bill 1123, which would require HOAs and homeowners to go through an internal mediation process to try and resolve disputes before going to court. The bill is also being sponsored by Rep. Junie Joseph, D-Boulder. 

Ricks said the measure is intended to help homeowners avoid expensive legal fights via civil lawsuits. 

Crystal said while mediation can be a good tactic, she doesn’t think it should be a mandate for homeowners who would be on the hook for their share of the fees for the mediator plus attorney costs. 

Unless the state provides alternate ways for holding HOAs accountable, Crystal said homeowners have little choice but to sue in civil court. Forced mediation would only add another cost to homeowners. 

“I’m for mediation. I’m not for putting the bill of mediation on a homeowner,” Crystal said. “That’s not what homeowners need.” 

Ricks said she would like to see the state eventually take on more of the oversight and enforcement of HOA compliance, including around conflict resolution. 

But that would take dedicated staff that the state isn’t currently able to fund amid a major budget shortfall that is forcing lawmakers to cut spending this session, Ricks said. 

“Because of the budget situation now, the best route we can take right now is to put maybe a few bricks in place and build upon this in the future,” Ricks said. “We really would like to have something that’s more in-house — and I think homeowners are demanding something like that — but we’re really restricted right now.”

House Bill 1043 passed a committee hearing in a 9-4 vote along party lines on Tuesday, with Democrats in favor and Republicans opposed. It now heads to the full House for a preliminary floor vote. House Bill 1123 is still awaiting a hearing.