Market Update, April 26, 2024

The Colorado state legislature just approved new reforms related to Metro Districts and is likely to pass rule changes for HOAs. These reforms will make it more difficult for HOAs and Metro Districts to foreclose on homeowners.

Many homebuyers enjoy living in homes located in Metro Districts or neighborhoods with homeowner’s associations, primarily because of the amenities and protections homeowners feel they provide. In fact, if you want to buy a newer home in our area, you’re going to have a tough time finding one in a neighborhood without an HOA. Metro Districts have also become very common.

Metro Districts and HOAs can place liens on homes and ultimately foreclose on them if owners haven’t paid fines or dues. Unfortunately, thousands of homeowners in our area have faced foreclosure by their own homeowner’s association or local metro district.

Tomorrow, Governor Polis will sign HB24-126, the Metropolitan District Covenant Enforcement Policy, into law.

According to the state’s General Assembly website, the law “prohibits a metropolitan district from foreclosing on any lien based on a resident’s delinquent fees or other charges owed to the metropolitan district. The bill also imposes certain procedural requirements regarding court actions filed by or against a metropolitan district based on an alleged violation of the metropolitan district’s declaration, rules and regulations, or other instrument.”

House Bill 1337 will likely be passed, changing how HOAs must approach delinquent homeowners. HOAs could still foreclose but would be required to obtain “a personal judgment against the unit owner in a civil action” or be unable to do that because of the unit owner’s death or incapacity.

The official description of HB 1337 states, “Current law requires the association to attempt to enter into a payment plan to collect amounts due from a unit owner. The bill prohibits foreclosure on the lien if the unit owner is in compliance with the payment plan.” The bill includes other reforms that we think will help more homeowners stay in their homes. Take a look at the summary for more information.

A bill that would require the licensing of HOA community managers has not passed and looks unlikely to.