The Legislative Roundup: HOA Collection Laws that May Be Impacting You

HOA Law Updates

From Colorado to Virginia, new laws are shaping the way associations manage collections, communications, and legal actions – and when running a management company, managing all of these changes can be overwhelming. Each state’s legislation brings specific compliance requirements, ranging from extended payment plans to caps on attorney fees. Staying informed about these updates is crucial for associations looking to maintain compliance and ensure fair treatment for homeowners. 

Here’s a roundup of some of the most recent HOA/COA collection bills that have passed, or are in negotiation, in various states across the country:

Colorado: HB22-1137

Colorado-based HOA boards and community association management companies have been grappling with new legislation that went into effect in August 2024 that drastically changes communication capabilities regarding past-due assessments. Under the new law, all associations must offer an 18-month payment plan rather than the previously stated 6-month plan. In addition, Colorado has specified very specific communication workflows towards delinquent homeowners, including:

  • Certified mail with return receipt
  • Physical posting at the unit
  • Only one of the following: regular mail, email, or text

In addition to these strict communication protocols, boards of directors must vote to foreclosure against a delinquent homeowner, interest against debt cannot exceed eight percent, payments must be first assigned to unpaid assessments to keep interest rates low, monthly invoices must be sent to delinquent homeowners, and the homeowner has the right to specify their language preference and designated contact for such communication. 

What does this mean to you? Community managers should already be working with their boards of directors to adjust association bylaws to include said language. It will also be more important than ever for all communications to be documented, including dates, communication methods, and any other detailed information that can be provided. In addition, standard communication workflows need to be updated when reaching out to delinquent homeowners. Luckily for TechCollect users, their AI-based solution can be modified to adjust to this new legislation and ensure compliance. If you’re unsure of how to update your TechCollect communications, please reach out us so that we can assist you promptly. 

Colorado: HB24-1337

Again in the state of Colorado, the state legislature passed a bill in May 2024 that greatly impacts recovery of attorney fees by homeowners and condominium associations. Under HB24-1337, attorney fees recoverable by the association cannot exceed $5,000 or 50 percent of what is owed – whichever is the lesser amount. Courts are, however, permitted to exceed this cap for willful non-compliance. The bill also requires HOAs to notify owners of their right to mediation before foreclosure.

What does this mean for you? Not only is it beneficial for associations to avoid attorney intervention because of egregious time and labor needed to conduct such processes, but utilizing an attorney may be financially detrimental to the association. Boards in Colorado should be instructed to carefully follow the communication methods outlined by HB22-1137 as described previously, and should proactively communicate with their homeowners the changes to the laws so that they will be prepared to receive said communications should they miss a payment. 

Georgia: House Bill 220 (Act 388)

An $80,000 fine for a mailbox has transformed HOA legislation in Georgia. When this costly fine was handed down to a homeowner residing in the Deerlake Homeowners Association in 2021, legislation was enacted to restrict homeowners and condominium associations in Georgia from pursuing injunctive relief for covenant violations unless they had first exhausted all self-help remedies. This decision limited associations’ ability to immediately seek court intervention for rule enforcement, requiring them to try internal measures before turning to legal action. 

As of April 2024, House Bill 220 countered the Deerlake decision by allowing associations to bypass self-help in some cases and directly pursue injunctive relief. In addition, HB220 impacts collections and foreclosures by requiring associations to notify owners about their right to mediation before initiating foreclosure. These changes offer more structured and transparent procedures for associations when dealing with delinquent owners while ensuring fair processes are followed.

What does this mean for you? While debt collection processes in Georgia may now be easier thanks to this amendment, it is vital that HOA/COA boards update their communications accordingly. In addition, communication regarding a homeowner’s right to mediation needs to be included in anything provided to the homeowner prior to moving into foreclosure. 

North Carolina: House Bill 959

In May 2024, during negotiations of the contentious House Bill 542 from fall 2023, House Bill 959 was introduced – and it is one that would dramatically impact collections and foreclosures. The bill restricts the ability of HOAs to file liens for unpaid assessments and introduces new procedures for nonjudicial foreclosures. It also mandates that homeowners have greater access to HOA records, subject to reasonable costs, enhancing accountability and fairness in HOA operations.

What does this mean for you? If you are running an association management company in North Carolina, it is imperative for you to stay up-to-date as negotiations surrounding HB 959 continue, as it will certainly impact the way you can manage lien filings in the future. For now, focusing on discovering new ways to reduce the number of past due debts that move into legal intervention will be most ideal. 

Texas: House Bill 886

Similar to Colorado’s HB22 law, HB886 was passed by the Texas legislature in September 2023 and went into effect earlier in the year. The bill mandates that HOAs must provide three monthly delinquency notices before filing a lien for unpaid assessments, which include:

  • A first notice sent via first class or email;
  • A second notice sent via certified mail 30 days later, and; 
  • A third notice sent 90 days after the initial notice

HOAs in Texas are required to update their collection policies accordingly and involve legal counsel to ensure compliance.

What does this mean to you? Similar to what we’ve been discussing with other passed legislation, CC & Rs and any other area where written regulations are present need to be updated. In addition, boards need to review their communication workflows with past due accounts to ensure proper compliance. 

Virginia: HB880 & SB341

As of May 2024, the state of Virginia approved amendments to the Virginia Condominium Act, 55.1-1833 of the Virginia Property Owners Act, and 8.01-463 of the Virginia Code related to debt collection. In these amendments, an association is not permitted to proceed with foreclosure against a homeowner until it has secured $5,000.00 in liens against a property. Liens can, however, now be enforced for up to ten years after being put on record. 

What does this mean to you? Any attempt at foreclosing on a home for debt under $5,000.00 will no longer be allowed. That said, debt under $5,000.00 can still go into collections. HOAs and COAs should remain focused on recouping debt through collections processes, and use communications preferential to the homeowner to collect debt prior to a more formalized process as well. 

Stay Up-to-Date and Connected

Management company owners face multiple challenges and fires to put out every day; having to keep up with trending legislation is the last thing they wish to do. We suggest that all management companies stay attuned to upcoming legislation impacting their collections processes by staying active in their local CAI or CACM chapters. Furthermore, changing legislation makes services like Equity Experts and TechCollect more critical than ever. Our solutions offer expert guidance, ensuring that associations can address these challenges without incurring upfront legal fees. Our AI-fueled technology through TechCollect also makes it easier than ever to recover debt prior to attorney involvement. Reach out to us to learn more about what we can offer you.

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