Without assessments, community associations would be unable to function. Boards of directors have a duty to collect assessments from owners to ensure their associations can operate. While the issue of delinquent homeowners is largely unavoidable, associations can set themselves up for success when collecting late assessments by following best practices and avoiding common pitfalls.
Update your Collection Policy!
Collection notice requirements for all associations were changed with the passing of HB25-1043 on June 4, 2025. Every association will need to update its collection policy to comply with this new law, which goes into effect on October 1, 2025.
Collection policies must be revised to address new notice requirements, communication methods, and foreclosure language. Starting on October 1, 2025, your association cannot take any collection action until it has updated its collection policy to comply with these most recent legislative changes.
Once your collection policy has been updated, remember to strictly follow it. Deviations from any policy should be an exception and not the norm, because deviations can lead to allegations of selective enforcement.
Contents of Notice
Owners are required to receive at least two notices regarding their delinquencies. The first notice typically includes the amount owed, notice of late fees and interest, and a request for immediate payment.
The second notice must contain, at a minimum, the following information:
- The total amount due to the association with a breakdown of the accounting to show how that total amount was determined. This requirement can be met by sending a copy of the ledger.
- Options for the owner to enter into a payment plan and instructions for contacting the association to arrange for and enter into a plan.
- A name and contact information for an individual (not a department/position) the owner may contact to request a copy of the ledger in order to verify the amount of the debt, which copy of the ledger must be provided to the Owner within 7 business days.
- A statement indicating that action is required to cure the delinquency and that failure to do so within 30 days may result in the account being turned over for collection action and other specific possible consequences.
- Specify whether the delinquency concerns unpaid assessments, unpaid fines, fees or charges, or a combination. If the notice of delinquency concerns unpaid assessments, the notice of delinquency must notify the Owner that unpaid assessments may lead to foreclosure.
- A description of the steps the association must take before it can take legal action against the owner, including a description of the association’s covenant violation cure process as laid out in its Enforcement Policy.
- A description of the action the association or owner may take, including small claims court or injunctive relief.
- A statement that failure to cure the delinquency may result in the sale of the owner’s property at auction to pay delinquent assessments, which could result in losing some or all of the equity in the property.
- Instructions on how to access free online information through the HOA Information Resource Center (i.e. DORA) related to the association’s ability to collect assessments, to foreclosure on a lien for unpaid assessments, to force the sale of the owner’s property.
- A statement regarding the availability of free information online from the Federal Department of Housing and Urban Development regarding credit counseling before foreclosure.
- A statement regarding the owner’s right to participate in credit counseling at his/her expense, and that information related to obtaining credit counseling is available online for free through the HOA Information Resource Center.
If it appears the required language does not apply to a specific homeowner or situation, the best practice is to include the language anyway to ensure the association is legally compliant.
Delivery Requirements
Colorado law is very specific when it comes to delivering delinquency notices to owners. If the association does not send one of the required notices as required, a new letter will need to be sent correctly.
The association must send at least one notice by the following methods:
- Certified mail, return receipt request, AND
- By two of the following manners:
- Telephone call; or
- Text message; or
However, beginning October 1, 2025, if an owner has not provided a telephone number, cell phone number, or email address to the association, it may send the notice by certified mail return receipt requested AND regular mail.
We recommend sending delinquent owners a photo or scan of the written notices via text message or e-mail to ensure compliance with the delivery requirements.
Because the delivery requirements are rather strict, it is important for the association to document all attempts. It is the association’s responsibility to prove that it has complied with the law. Associations should keep copies of certified mail numbers and proofs of delivery provided by the post office, as well as any e-mail or text communications.
Also check your association’s governing documents to determine if it must comply with other delivery requirements. For example, some declarations require all notices to be sent by certified mail.
Turnover to Attorney
If an owner does not respond to the notices, and the association has gone through all the steps in its collection policy, the association should refer the matter to its attorney. Colorado law requires a board vote on each individual property in order to turn a delinquent homeowner over to the association’s attorney for legal action.
The association’s attorney will need, at a minimum, copies of the following documents:
- The required payment plan offer letter sent to the homeowner;
- Confirmation of sending a notice by certified mail, return receipt requested, and either by telephone call, text message, or email;
- A ledger going back to a $0 balance and showing an itemization of all charges, credits, and payments since then; and
- A copy of the association’s current, signed collection policy.
However, additional information may be useful to the attorney’s collection efforts. This includes, but is not limited to, when the owner is home, where the owner works, and the like.
Payment Plans
Associations must offer most delinquent owners the opportunity to enter into a payment plan. This payment plan must be for a minimum of 18 months. Associations should take this 18-month minimum into consideration when planning assessments for large-scale projects.
Rather than trying to determine whether an owner is eligible for a payment plan, we recommend offering the payment plan option to all delinquent owners.
Be aware that Colorado law now requires all payments to be first be applied to the balance of unpaid assessments, and then to all other types of charges such as attorney fees, late fees, and interest.
Tips and Tricks
- Interest Cap: The maximum amount of interest permitted to be charged on late payments is 8%. Any ledger showing interest charged higher than 8% must be recalculated.
- Late Fees: If your late fees are too low, they are not incentivizing delinquent homeowners to pay their assessments on time (which is the intended purpose). Take this into consideration when setting your late fees.
- Certified Mail Requirements: Some governing documents require all notices to homeowners to be sent by certified mail. If the governing documents require this and the association fails to do so, it is violating its own documents and the notices may be ruled non-compliant and void. If your covenants require certified mailing for all notices, consider proposing an amendment to your owners removing such requirement.
- Lien Requirements: If your governing documents require a certain person to sign or record an assessment lien or release of lien, we recommend removing this requirement as well.
Changes are Constant – So Budget for Them!
Community associations continue to be a target for the Colorado legislature. Each year, associations should expect new legislation and required updates to policies. By budgeting for anticipated policy changes, associations can be financially proactive.
If you have any questions about the collection process and requirements, please contact any of our attorneys at 303-432-9999 or [email protected].