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June 6, 2024

ICYMI: Gov Signs Bills to Prevent HOA Homeowner Foreclosures, Price Gouging on Rent After a Disaster

DENVER, CO - Governor Jared Polis yesterday signed two bills into law administratively to limit HOA-driven foreclosures and prevent excessive increases in rent in the wake of a disaster.

“Millions of Coloradans live in HOA communities, and although we have passed numerous laws to protect HOA homeowners, they are still at risk of losing their home over minor issues,” said Rep. Iman Jodeh, D-Aurora, sponsor of HB24-1337. “No family should forego buying food, medicine, or other necessities just to keep up with ballooning charges from their HOA. This legislation creates safeguards against foreclosures initiated by HOAs and ensures that Coloradans in HOAs will not lose their homes due to fines, fees, and exorbitant attorney fees, keeping Coloradans safely housed.”

“No one should be at risk of losing their home for being in violation of minor HOA rules,” said Senate President Pro Tempore James Coleman, D-Denver, sponsor of HB24-1337. “In addition to ensuring Coloradans won’t have to pay sky–high attorney fees, this new law will give homeowners the right to purchase their property back before it's transferred, which creates more housing stability.”

“Housing affordability is a serious issue for Coloradans, and excessive HOA fees and collections threaten housing security for thousands of families,” said Rep. Jennifer Bacon, D-Denver, sponsor of HB24-1337. “This law creates a pathway for homeowners to cure their debts and remain in their homes or allows affordable housing advocates to have an opportunity to buy the home before corporate developers. This change is crucial in keeping more Coloradans safely housed and preserving affordable housing.”

“Home ownership is supposed to create generational wealth, but right now the housing crisis is creating generational debt,” said Senator Tony Exum, Sr., D-Colorado Springs, sponsor of HB24-1337. “This law helps ensure HOA foreclosure is a last resort while lowering legal costs and providing Coloradans with the opportunity to buy back their property and stay in their communities. It’s a great step to improving financial and housing stability in Colorado.”

Currently, HOAs can require a homeowner to reimburse the HOA for collection costs and attorney fees associated with collecting HOA fines and fees without starting a legal proceeding. HB24-1337 limits the reimbursement amount to 50 percent of the underlying payment owed or $5,000, whichever is less. 

The law prohibits foreclosing on a lien if the homeowner is in compliance with a repayment plan for the owed amount and requires an HOA to take specific steps before foreclosing on a home, ensuring foreclosure is the last resort.

The law also creates a right of redemption for properties in an HOA that have been foreclosed on, which would allow unit owners, tenants, nonprofits, community land trusts, and other entities the opportunity to purchase the property before it’s transferred.

HB24-1259 prohibits rental price gouging for one year after a disaster declaration issued by the Governor or the U.S. President, where the declaration specifically declares a material decrease in housing. Rent increases are to be capped at the percentage of the rent increase for the prior year or 10 percent compared to the unit’s rent immediately before the disaster, whichever is greater.

“Many Coloradans saw rents skyrocket after the Marshall Fire, and those who had lost their homes were forced to juggle exorbitant rents while they tried to rebuild their lives,” said Rep. Kyle Brown, D-Louisville, sponsor of HB24-1259. “We know disasters cause financial and emotional trauma, and no one deserves to be taken advantage of while they try to piece their life back together. This legislation adds essential protections for Coloradans so they don’t experience excessive rent increases in the aftermath of a disaster.”

“After the Marshall Fire, affected Coloradans saw their rents skyrocket, and those who lost their everything were thrown into a priced-gouged market that strained them even more,” said Senator Lisa Cutter, D-Jefferson County, sponsor of HB24-1259. “As our planet continues to warm, we know that wildfire season is a year-round threat and natural disasters like this one will become more frequent. This law will protect Coloradans from rental price gouging in the wake of disasters, and ease the burden of housing during already-difficult times.”

“After the Marshall Fire, hundreds of families suddenly had to find housing overnight because they lost everything they had, only to experience huge increases in rent because of the influx of renters in the market,” said Rep. Mike Weissman, D-Aurora, sponsor of HB24-1259. “Disasters devastate communities and have a ripple effect on neighboring communities that now must house Coloradans post-disaster. This consumer protection legislation reigns in price-gouging of rent for a one-year period after a declared disaster, preventing disaster survivors from being taken advantage of."

The law makes it a deceptive trade practice to price gouge when providing rental housing during the year following a disaster that materially reduces housing units, allowing the Attorney General or a district attorney to pursue enforcement actions, including civil penalties, under the Colorado Consumer Protection Act. Affected tenants are also able to pursue civil action for violations.

While homeowners insurance policies cover up to two years of rent for people whose homes are uninhabitable, people who were renting prior to a natural disaster don’t have this support. In the year after the devastating Marshall Fire, a report showed many impacted residents saw their rents increase 30 to 50 percent.

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