HOA Information about Assessments/Delinquency

Common Interest Communities (“CICs”) across Colorado include homeowners’ associations, property owners’ associations, condominium owners’ associations, and cooperatives.  One fundamental element of CICs is the right to charge assessments to unit owners. In general, there are two types of assessments: regular (also known as “dues”) and special. 

Regular assessments are commonly paid on a monthly, quarterly, or annual basis and are used for the overall operational costs in the regular operation of the business.  This might include maintenance, landscaping, legal fees, registration fees, insurance, and others.  

Special assessments, on the other hand, are usually less frequent and made on an ad hoc basis. Special assessments are made for a specific purpose.  Examples might include repair or replacement of a common element, new construction, unexpected major expenses, or even the allocation of funds to reserves.  

While the Colorado Common Interest Ownership Act (“CCIOA”) does not address any time periods in which the board has to require the payment of a special assessment, your governing documents may. Unit owners should carefully review their governing documents for any applicable provisions pertaining to special assessments and how they may be levied.

The community’s developer, commonly called the “Declarant”, prepares a variety of documents to create the community. Perhaps the most important document created by the Declarant is the Declaration of Covenants, Conditions and Restrictions.  This document might be referred to by a few different names, including, but not limited to the “Decs”, the “CCRs”, the “CC&Rs” or the “Covenants”. This document is mandatory for an association. Everyone should understand that this document may have been amended since it was originally prepared and recorded, but any amendment would require the consent of a significant amount of community support. Whether amended or not, this document would have been filed in the Clerk and Recorder's office for the county where your association is located.

The manner in which assessments are originally calculated is an important part of an association’s Declaration. If the community was formed after July 1, 1992, it is subject to the Colorado Common Interest Ownership Act (“CCIOA”). Section 38-33.3-315(2) of CCIOA requires every Declaration of Covenants, Conditions, and Restrictions (“CCRs”) to state what the formula is for allocating assessments. There are several different ways that a community might choose to allocate assessments.  Assessments might be allocated equally across all units, while others might be allocated by the total square footage of each unit or based on the usage of amenities.

If your community was formed before July 1, 1992, your association should have a statement of how assessments are allocated in its Declaration, as well. No matter the age of your community, you should carefully review your Declaration so that you understand how assessments are allocated in your community. 

Different communities collect and process assessments differently. Some options might be in-person drop-off, by mail, by manual electronic payment (ACH), by automatic electronic payment (ACH), or even by credit card payment. 

Boards and Community Association Managers should carefully consider the different options available to collect assessments. Furthermore, they should make best efforts to accommodate the different needs of their community owners.  For instance, online payment portals are readily available at little or no cost. Some communities have unit owners who do not live in the community and may reside in another state or even another country. In such a case, just accepting payments in person at an office is not a good option. Similarly, ONLY accepting payments electronically may not be a good option either, since not every community member has ready access to a computer or electronic payment portals.

In any event, associations should promptly process payments and credit them to the correct unit owner’s account.  CCIOA grants the right to a ledger for unit owners no later than seven business days upon request by a unit owner. It is the professional expectation of unit owners that ledgers are accurate, current, and itemized to reflect regular assessments, special assessments, fines, interest, and any other type of fee. Board members should discuss with their accountant or Community Association Manager to better understand what information is available on a unit owner’s ledger. 

An association’s board or Community Association Manager may have several different options when a unit owner does not pay assessments when due. This includes the possibility of losing access to association’s amenities (like entry to a pool or gym), losing voting rights in elections, losing the right to assign a proxy, incurring late fees, incurring interest fees, incurring attorney’s fees and costs, having a lien filed against the owner’s property, and even having the owner’s property foreclose on an association’s lien.  Foreclosure may include the forced sale of the unit owner’s home.  

There are a variety of reasons why a unit owner may fall behind in paying their assessments. Regardless of the reason, unit owners should know that there are important resources that are available to help.  The opportunity to be heard by the board and payment plan information are listed below.