The Colorado Supreme Court ruled today that the statutes
allowing homeowner associations (HOA’s) to charge their members monthly
assessments and collect them by means of a “superlien” violate the state
constitution. The ruling may have a dramatic effect on communities throughout
the state.
The Colorado Common Interest Ownership Act (CCIOA) was
enacted in 1990 after the state legislature determined that “the continuation
of the economic prosperity of Colorado is dependent upon the strengthening of
homeowner associations in common interest communities financially through . . .
the creation of statutory assessment liens the granting of six months’ lien
priority . . . and through enhancing the financial stability of associations by
increasing the association’s powers to collect delinquent assessments.” Since
then HOA’s have
relied on CCIOA to collect monthly assessments from their members. If a member
refused to pay the HOA could foreclose a lien on the property that took
precedence over the homeowner’s mortgage. The court’s opinion in Fairview
Orchards Owners League v. Pesci, 2013 CO 20A invalidates these laws as
unconstitutional.
The case arose after the Fairview Orchards Owners League obtained a
county court judgment against a homeowner who had stopped paying her monthly
assessments. The district court affirmed but the homeowner appealed the ruling
to the supreme court. She argued that HOA’s serve no rational purpose and that
the laws supporting HOA’s should therefore be struck down. Surprisingly, the
court agreed.
In its briefing, the HOA had argued that monthly assessments were necessary to fund community activities such as common area maintenance landscaping and snowplowing, but the justices disagreed. Writing for a unanimous court Justice Nancy Rice cited a 2010 Colorado State University study suggesting that the importance of these tasks had been overrated. “Most modern construction materials need little or no maintenance” she noted. “An HOA cannot therefore justify collection of dues based on the performance of unnecessary jobs such as painting or replacement of building components.”
Justice Rice likewise rejected
the HOA’s argument
that its assessments were necessary to pay for landscaping. “The CSU study shows that
most species of turf grass will naturally reach a height of two inches and then
spread laterally to choke out invasive weeds so long as meddlesome HOA’s and
vendors do not interfere with the grasses’ natural growth patterns.” She noted
that the study had also found that these grasses had evolved the ability to
retain extra chlorophyll during drought conditions which causes them to appear
lush and green even when left unwatered. The HOA’s claim that it needed to
charge its members for snowplowing also failed to persuade the court. Justice
Rice again quoted from the CSU study which concluded “that the electromagnetic
properties of asphalt are such that it will repel the ions that exist in the
tiny ice crystals that make up snow. So long as the resulting electromagnetic field
is not discharged by contact with snowplows or other metal objects the snow
will quickly move away from the surfaces of roads.” Because of this Justice
Rice concluded that snowplowing costs were not a valid purpose for collecting
HOA assessments. “Contrary
to popular belief” she stated “it
seems that streets really do plow themselves.”
The court announced its opinion on Monday, 1 April 2013. Court rules allow the parties fourteen days to petition for rehearing.