Ownership in the form of time share estates is common in vacation areas, such as the beautiful mountains of Colorado. Owners of time shares or interval interests (“time shares”) must pay assessments on their interests as do full, fee simple owners of units.
Given the current economy, many time shares are now worth less than what the owners paid for them. Sometimes, the assessments levied each year alone exceed the fair market value of the time share. Because of this, many time share owners are defaulting on their obligation to pay assessments to the associations.
What is an association to do? It is often inefficient from a cost standpoint for an association to foreclose on a single time share interest when the amount owed exceeds the fair market value of that interest.
Under C.R.S. 38-33.3-316.5, titled “Time share estate – foreclosure,” associations fortunately have a remedy. An association may commence a single judicial foreclosure action, joining multiple owners of time share estates along with all junior lienors, if any, if:
- The judicial foreclosure is filed on behalf of a single association;
- The association’s declaration creates default and remedy obligations that are substantially the same for each owner named as a defendant in the judicial foreclosure;
- The action is limited to a claim for judicial foreclosure only; and
- The association does not assert its claim to a “superlien” under C.R.S. 38-33.3-316(2)(b)(I) against any junior lienor.
What is the purpose of this statute? It allows an association to file a single lawsuit against all of its delinquent owners. The association may also publish a single notice of the foreclosure on all owners for whom service by publication is permitted, so long as the notice references each owner’s individual interest (i.e. week number, amount owed, etc.). This saves the association money on court filing fees and publication costs, which can be substantial if the association is seeking to foreclose on numerous interests.
What happens if a matter is contested, or when the association proceeds to sale? When a matter is contested, the court may sever for separate trial any disputed claim. After judgment is obtained and publication of the sale has run, each time share estate foreclosed would be subject to a separate foreclosure sale, and all cure or redemption rights with respect to each time share estate would remain separate.
This statute provides a cost effective, relatively expeditious, and preferable remedy for an association seeking to foreclose on time share estates in Colorado. Should you have any questions pertaining to this process, please contact an attorney at Altitude Community Law P.C.