Colorado has an estimated 8,000 individual HOAs (homeowners associations) operating throughout the state. These operate within single family home communities, condominium buildings or townhome communities. Each HOA has its own rules and guidelines and I highly recommend familiarizing yourself with the rules in your community, especially if you are planning on buying a property in an HOA controlled community. As with most things in life, there are both pros and cons to being a part of an HOA and there was a pretty impactful bill recently passed in Colorado.
Somewhat under the radar, on August 10, 2022 House Bill 22-1137 (HB22-1137) became effective in Colorado. The bill was originally passed in June 2022 and had quite a bit of deliberation. In quick summary, HB-22-1137 addresses policy changes regarding collections and compliance in regards to that practice. It will require changes regarding collections, covenant enforcement policies and compliance changes. Likely, HOAs will undergo changes to their governance policies, fee and fine collections and budgeting. If you live in an HOA controlled community, you may experience a monthly fee increase.
The goal of HB22-1137 was to create transparency and accountability for the homeowner regarding the HOA. This bill was introduced to protect homeowners from hidden fees or other practices that were not always transparent to the homeowner. The overall outcome is to create accountability within HOAs and provide more protection for the property owners that live in those communities.
Another main focus of the bill was to evaluate procedures and strategies especially when it comes to collections and enforcements. In the past, homeowners may have complained that they didn’t know when or why they incurred fines and then would get saddled with late fees. The idea of this bill is to stop practices like that.
While transparency in fines and fee collections may be a good aspect, the methodologies to enforce them may be seen as inconvenient or even invasive for homeowners who oppose the bill. For example, collections for some HOAs may become more manual by way of an HOA member posting a fine notice on a homeowner’s door or sending notices via certified mail.
Another potential drawback is that these policy changes likely create more paperwork for HOAs and will likely also cause fee increases to monthly assessments to cover these extra costs and hours. This is because the HOAs will need a bigger budget for operations, management, education and legal expenses.
No matter where you stand on the introduction of HB22-1137, it seems to be here to stay and all homeowners who live in an HOA controlled community should become aware of it because it will impact every HOA organization in the state. If you’re interested in reading the actual bill, find it here.
Do you have concerns or questions about this new bill?
Are you in the market to buy or sell your home? Call and text me at (720) 323-4176 or email me at [email protected]