An amended version of House Bill 13-1276 (HB 1276), the bill which addresses HOA debt collections, just sailed through the Senate on a unanimous vote of 35 to 0. Given the sometimes ugly partisan politics which have been present in these final days of the 2013 legislative session – a 35 to 0 vote in the Senate is rather astounding and demonstrates a bipartisan commitment to ensuring that HOAs are dealing fairly with owners who are delinquent in their assessments. The bill will now go back to the House for concurrence with Senate amendments and then on to the Governor who we expect to sign HB 1276 into law with an effective date of January 1, 2014.
Here are highlights of HB 1276:
HB 1276 requires HOAs to have a Collection Policy which must include at a minimum:
● The date on which assessments must be paid to the association and when an assessment is considered past due;
● Any late fees and interest the association is entitled to charge on a delinquent account;
● Any returned-check charges the association is entitled to charge;
● The circumstances under which a delinquent owner is entitled to enter into a payment plan and the minimum terms of the payment plan;
● Before the association turns over a delinquent account to an attorney or collections agency, the association must send the delinquent owner a written notice specifying:
○ The total amount of the arrearage, with an accounting of how the total arrearage was determined;
○ Whether the opportunity to enter into a payment plan exists and instructions for contacting the association to enter into the payment plan;
○ The name and contact information for the individual the owner may contact to request a copy of the owner’s ledger to verify the amount of the debt; and
○That action is required to cure the delinquency and failure to do so within 30 days may result in the account being turned over to a collection agency, a lawsuit being filed against the owner, the filing and foreclosure of a lien against the owner’s property and other remedies available under Colorado law.
Note: 3rd party purchasers of an association’s debt or lien must also adopt this Collection Policy and comply with the terms of it prior to taking action to foreclose on the lien or collect on the debt.
An association, or the holder or assignee of the association’s lien, may only proceed to foreclosure if the total amount secured by the lien would equal or exceed 6 months of assessments. Also, the board of an association must vote to proceed with foreclosure on any given delinquent account. Boards are not permitted to delegate this responsibility to authorize a foreclosure action to an attorney, insurer, manager or any other person.
Delinquent owners have a one-shot opportunity at a payment plan to bring their delinquent account current. The payment plan must be for a minimum of six months, but can be longer if the association so wishes. The delinquent owner must make the scheduled payment as required by their payment plan and pay their current month assessment obligations. If they fail to make these payments, the association may immediately proceed with collections.
This one-time opportunity to enter into a payment plan does not extend to lenders who take title to the property as a result of a default on the mortgage or flippers.
Note: 3rd party purchasers of an association’s debt must also comply with the payment plan provisions.
As always, stay tuned to this blog for the latest new on HB 1276 and other bills impacting HOAs!