Side Streets, carried in the Saturday edition of The Gazette in Colorado Springs, highlighted an interview with Mark Ferrandino – the new Speaker of the Colorado House.  Clearly, the Speaker is not a fan of HOAs and believes members of HOAs need "a way to complain and enforce the laws . . . "  As a result, he’s in favor of providing the HOA Information Officer with the authority to investigate and enforce Homeowner Bill of Rights provisions of the Colorado Common Interest Ownership Act ("CCIOA"). 

The Speaker’s disenchantment with HOAs comes from personal experience.  Evidently, at some point in time, the Speaker purchased a home in an HOA and thought the assessments were being handled through his mortgage payment.  As a result, he did not make his $25.00 monthly assessment payment.  After six months of not paying his assessments, the Speaker received notice that a lien had been recorded on his home. 

The Speaker told the reporter for The Gazette that he "was shocked that his HOA board would take such a predatory approach to a new neighbor."  He further stated, "The president of my HOA wasn’t smart enough to just walk down the street, knock on my door and ask for a check.  I could have just written the check for $75.00."

While a statutory lien (which requires no recording) automatically arises under CCIOA when a homeowner becomes delinquent in paying ssessments, the bigger lesson here is for boards of HOAs to take a look at the process it utilizes to handle assessment delinquencies.    

Here are some questions the board of every HOA should review: (1)  How does the declaration for our HOA address delinquent assessments?  (2)  Does our HOA have a collections policy in place as required by CCIOA? (3) Does the collections policy require the HOA to send written notice of the delinquency to a homeowner prior to recording the lien? (4) What is the timeframe and process for handling delinquent accounts?  (5) Does our community association manager handle notices of delinquencies?  (6) Is our manager giving notice to delinquent homeowners in accordance with our collections policy?  (7) How do we communicate assessment obligations to new owners?  (8) Do we send payment coupons or a letter to owners informing them about their obligation to pay assessments and how they can make those payments?  (9) Have we communicated with all owners about their assessment obligations and what can happen if they do not make timely payment of assessments? 

While in most cases HOAs are complying with the letter of the law relating to delinquent assessments and it is the fiduciary duty of directors to take action to collect deliquencies, it is also important to clearly communicate with owners regarding their assessment obligations and methods for making payment. Homeowners also have the responsibility to proactively ask questions if they are unclear about their assessment obligations and options for making payment.  Owners should also communicate with their HOA if they are having problems making their assessment payments and need to work out a payment plan with their HOA to deal with their delinquency.