On January 24, 2008, the Colorado Court of Appeals affirmed an EL Paso County District Court ruling awarding an association all assessments that were unpaid by the lender who became the owner of a unit after a foreclosure. The Court of Appeals also confirmed that the association was entitled to its costs and reasonable attorney fees associated with the unpaid assessments.
Good case law protecting associations in Colorado is limited, so this case is helpful in:
- Affirming that associations have no obligation to file a notice of lien - lien is perfected by the recording of the declaration pursuant to C.R.S 38-333.3-316.
- Lien priorities are determined by C.R.S. 38-333.3-316, not a declaration.
- A security interest on a unit which has priority over all other security interests in the unit (e.g. a first deed of trust) must be consensual.
- Attorney fees awards aren't discretionary if allowed by statute or under non-discretionary language in a declaration.
- The super lien can never exceed an amount equal to 6 months of assessments, but can be comprised of any "charges" against a unit.
- Be clear when making demands to an owner as to whether you are seeking payment of the super lien or unpaid assessments.
- Lenders are treated like any other owners in associations.
Click here for a complete copy of the BA Mortgage, LLC v. Quail Creek Condominium Association decision.
My comment: In a nutshell the court affirmed the HOA's right to their fees is senior to the lender's first deed of trust.
Homes And People
http://homesandpeople.com/foreclosure.html
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