01 April 2013

Colorado Supreme Court declares super lien other HOA laws unconstitutional

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 HOAs 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 HOAs 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.