Call Your Representative Today to Protect Your HOA's Right to Notice of Redemption!
Last year’s comprehensive foreclosure reform bill, discussed here and taking effect on July 1, 2007, modernized and simplified Colorado’s foreclosure process. Unfortunately, though the law retained homeowner association’s redemption rights, it failed to provide for HOAs to receive notice of these redemption rights unless the HOA has a recorded lien.
CCIOA gives HOAs a continuing revolving statutory lien on recording of the declaration. CCIOA specifically states that this lien does not require any further recordation for perfection. Despite this, the foreclosure statute will require notice of redemption to be given ONLY if the HOA has recorded a lien or other document after the lender’s deed of trust. Since many HOAs do not – as CCIOA allows – record notice of their lien, they are in danger of losing their redemption rights due to lack of notice.
Not receiving notice of their redemption rights will detrimentally affect HOAs:
- HOAs, unaware that the property has been foreclosed, will not have the opportunity to exercise their redemption right, losing money for the HOA and its members.
- At the end of a bank’s first lien foreclosure, “any interest” the HOA has in delinquent assessments will be extinguished, which will result in increasing the obligations of the remaining owners.
- Management costs and attorney fees for HOAs will increase due to the need of HOAs to record additional notices of assessment liens.
- Recording assessment liens will increase the amounts that delinquent owners owe the HOA, making it more difficult for an owner to come current.
This problem has been addressed by adding an amendment to SB 06-85, Concerning Additional Consumer Protections Relation to Real Estate Transactions, which ensures that the HOA receives notice of their right to redeem.
Please help to insure that this amendment remains in the bill. The House Business Affairs and Labor Committee passed SB 85 with this amendment to the House Appropriations Committee this afternoon unanimously. (The members of the House Appropriations Committee are as follows: Reps. Buescher, Chair, Pommer, Vice-Chair, Butcher, Garcia, Judd, Kerr J., Massey, McGihon, McNulty, Riesberg, Vaad, Weissman, and White.)
Please contact your Representative (www.votesmart.org) and ask them to vote for this bill along with the amendment that requires notice of foreclosure to owner associations.