“Tip of the iceberg”: Green Valley Ranch foreclosures spotlight Colorado’s lack of HOA regulation

A rug on the back patio.

Cracked blinds.

A grease stain on the driveway.

These are some of the things that led the Master Homeowners Association for Green Valley Ranch to fine Terry and Dwayne Meeks, a couple who bought their home in the far northeast Denver subdivision in 2008.

The Meeks would fix the problem and pay the fine. Then they’d receive notice of another violation. It went on for years.

Then, in November, the Meeks learned the Master Homeowners Association put a lien on their home and was moving to foreclose.

The couple thought they owed about $2,000. Instead, the debt had ballooned to $17,000 because the HOA wanted them to pay attorneys’ fees associated with the lien.

“We’re expected to pay their lawyers to take our home from us,” Terry Meeks said. “Unbelievable. It’s organized crime.”

In March, a rash of foreclosures filed over the past 15 months by the Master Homeowners Association for Green Valley Ranch shocked residents and triggered swift condemnation from elected officials and Denver housing advocates. Those involved with Colorado’s housing industry say it’s the perfect storm: an aggressive association operating in a field with no regulation. And critics say the foreclosures are predatory in their targeting of Black, Latino and Asian residents.

“Homeowners associations are the last aspect of real estate that are not regulated,” said Muriel Williams-Thompson, president of the Denver chapter of the National Real Estate Brokers Association. “They have a lot of power and no accountability and no one watching and no one regulating them.”

In Colorado, homeowners associations operate without oversight from any state regulatory agency, including the Colorado Department of Regulatory Agencies, whose real estate division oversees agents, brokers, developers, mortgage lenders and appraisers. More than 2.3 million Coloradans — about 40% of the population and about 61% of homeowners — live in communities with HOAs.

Homeowners associations have so much power in Colorado that they possess the capability to place liens on people’s homes that supersede even the banks that hold their mortgages. That means an HOA could sell a property to collect the money it’s owed and the owner still would be left with mortgage debt and none of the equity they had built.

Prior legislative attempts to alter the balance of power between HOAs and their members have failed, been weakened or lack enforcement mechanisms, advocates say. But people who are watching the Green Valley Ranch foreclosures say the same situation could happen with any HOA in the state — and it’s time to change.

“All we want is HOA communities to be regulated like all the other professionals who deal with real estate,” said Milford Adams, president of the Denver Metro Association of Realtors.

The Master Homeowners Association filed 50 foreclosures in 2021, accounting for 13% of all filings in Denver last year and nearly half of all HOA-initiated foreclosures, according to data from the Denver Clerk and Recorder’s Office. The Green Valley Ranch HOA has filed nine so far this year, as of March 16.

HOAs initiated a total of 119 foreclosures citywide in 2021, though most filed no more than five, according to a March 10 email to the City Council from Denver’s Housing Stability Office.

In a new statement sent to the media on Thursday, the Master Homeowners Association’s board of directors noted that it is one of the largest HOAs in the city and that its foreclosure filings represent less than 1% of all homes in the community. The board said that’s similar to or below other HOAs in Colorado.

It is unclear how many Green Valley Ranch property owners have lost homes because of the HOA’s recent foreclosures. The HOA board said in a statement that fewer than half of the homes under foreclosure are going through court proceedings. Foreclosed homes can be sold at auction by the Denver Sheriff Department if the owners ultimately can’t resolve their debt and a judge orders the property sold.

The Denver Sheriff Department’s website lists 17 upcoming foreclosure auctions, with eight of the homes located within the Master Homeowners Association’s boundaries. Only one other HOA in the city has more than one home being sold at foreclosure auction — Parkfield North Community Association, which also is located in northeast Denver, has two on the list.

The Master Homeowners Association board said in a statement that it did not foreclose on any residents during the pandemic, matching a federal moratorium on bank foreclosures and preventing people from losing their homes during the public health crisis.

“The reported increase in foreclosures is nothing more than resumption of normal actions which were halted in 2020, along with more recent enforcement actions,” the statement said. “The board has always and continues to remain open to resolution of these cases in an amicable manner.”

Still, politicians and housing advocates are concerned about what is happening in Green Valley Ranch.

The Denver Metro Fair Housing Center launched an investigation. The Denver City Council president called on the governor and attorney general’s office to look into the issue. And Green Valley Ranch homeowners protested outside the HOA’s office on Friday.

Enforcing covenants

One of several HOAs in Green Valley Ranch, the Master Homeowners Association represents about 4,600 homes, all located south of 48th Avenue. The neighborhood also is part of the GVR Metropolitan District, a governmental agency that collects taxes to maintain common areas. The two entities share duties for managing and maintaining that part of the neighborhood.

Homeowners associations were created to enforce covenants and rules that keep a neighborhood looking uniform and well-maintained. If every property owner keeps grass trimmed, garbage hidden and paint fresh, then home values increase.

Residents who live within the Master Homeowners Association and the GVR Metropolitan District’s boundaries do not pay dues to the HOA. Instead, the metro district collects taxes and performs duties on behalf of the HOA. The metro district employs a manager and inspectors who respond to complaints, roam the neighborhood to look for violations and mail out notices to the residents.

“That means that the HOA has essentially hired the metro district to be its property manager,” said Eric Gravenson, an elected member of the GVR Metropolitan District board and a delegate to the Master Homeowners Association board.

But once a resident disputes a violation or ignores it, the conflict falls to the HOA’s seven-member board of directors. It’s that board that controls fines and late penalties, and ultimately decides to take steps toward foreclosure, Gravenson said.

The neighborhood is divided into 26 districts, and neighbors in each district elect a delegate. Right now, there only are nine delegates, according to the HOA website. Those delegates elect the board of directors and represent their neighborhoods in communicating with the board, Gravenson said.

A person is not allowed to serve on the metro district board and the HOA board at the same time, he said.

“We have a process,” Gravenson said. “You have a violation notice, you have a hearing and then you have an appeal to the full board of the HOA. If none of those are resolved, typically, a lien might be prepared to be placed against the property that’s in violation.”

The Denver Post contacted all seven board members and the nine people serving as neighborhood delegates, but Gravenson was the only one who responded.

The HOA board’s statement said all owners are given written notice of violations and time to fix them. A second notice that offers a hearing with the board to explain extenuating circumstances is sent before any fines are levied. Those fines are liens that can be subject to collection and foreclosure. Repeated notices are sent before legal intervention is required.

“Enforcement is not a surprise,” the statement said.

Fines pile up

The Meeks family disagrees.

Receiving letters from the HOA about a violation is hit-or-miss, Terry Meeks said. Sometimes, they did not know they were in violation until they got a letter saying they missed their deadline to fix the problem and owed a fine.

“It’s a tactic they’re doing,” Terry Meeks said.

The Meeks are not the only ones. The Post spoke to five other residents who said they didn’t receive notices about violations or fines and didn’t know about them until they had racked up thousands of dollars in debt.

Stan Hrincevich, president of the Colorado HOA Forum, an advocacy group for homeowners, said some residents told him they never received explanations about the compounding fees they were being assessed — with fines below $100 ballooning into the thousands of dollars — until foreclosure. The notification process, from the fines to foreclosure action, was short, and the residents didn’t have a venue to dispute the fees before that happened.

Even some people who set up payment plans to avoid foreclosure were assessed late fees, causing even more financial distress, Hrincevich said. He called the tactics unethical and an “absolute sin.”

An HOA in Colorado can place what’s called a “super lien” on a home and if the debt is not settled, the Denver Sheriff Department sells the property at an auction for far below market value to pay off the fines. The person who owned the home still owes the rest of the mortgage, but their equity is gone. Twenty-one other states allow HOA liens to take priority over every other entity, Adams said.

Michael Washington was among a small group protesting outside the HOA office on Friday. He’s lived in the Green Valley Ranch neighborhood since 1996 and rents the first home he purchased in the neighborhood to his in-laws.

In the summer of 2020, Washington, a retiree, said he received a letter at the rental property from the HOA saying he would be fined for damaged blinds and weeds growing between some rocks. Within three days, he fixed the problems, called the HOA office and left a message, and paid his fine, he said. No one called him back.

Two years later, the HOA is trying to foreclose on the rental property because additional fees he didn’t know about continued to add up. The first fine was about $200, Washington said. Now he owes about $9,000.

“It’s ridiculous,” Washington said. “I worked all my life to get what I have and these people are trying to take it for nine grand for some blinds and some weeds. Some blinds and some weeds, that’s it.”

A large part of the problem is most HOAs are run by management companies and there is little oversight of their conduct, Hrincevich said.

When the Meeks family moved into Green Valley Ranch in 2008, Dwayne and Terry Meeks became the first homeowners in their families. She is a nurse and he is a social worker. They previously lived in Park Hill, but they wanted to move their children away from the influences of gangs in the neighborhood, and Green Valley Ranch was safe and affordable, Terry Meeks said.

Many Green Valley Ranch residents are Black or Latino, and Terry Meeks said she believes her family and other homeowners of different ethnicities are being targeted as property values increase.

“These are generations and generations of people who have worked hard to become homeowners and now you guys are just taking stuff from us?” she said. “First it was Five Points and then Park Hill and now it’s Green Valley. What else do you want?”

About 41% of the residents living in Green Valley Ranch identified as Latino, 28% as Black and 4.28% as Asian or Pacific Islander, according to 2017 census data.

The Meeks said they had no idea a lien was placed on their home until late November when they got calls from two mortgage lenders, who were concerned about the lien.

“It was so frightening,” she said.

The couple said they never received notice from the HOA about plans to seek foreclosure and never were served paperwork by anyone from the court system.

After calling the HOA’s office multiple times, someone left paperwork on their front porch.

They’ve been to court once and a judgment was served against the Meeks. Now, Terry Meeks said the HOA is garnishing wages from her paycheck to pay down the $17,000 debt.

More hearings are set for May and June, and they have no idea what they will do if their home is sold at a foreclosure auction.

And they don’t know how to get out of the debt.

“The fines just keep going and going and going,” she said.

Begging for relief

Advocates are asking the Master Homeowners Association to place a moratorium on the foreclosures to give residents time to solve their debts.

During a recent HOA board meeting, Williams-Thompson, Adams and other real estate brokers begged the board to pause the foreclosures. The NAACP of Colorado also joined the meeting to call for an end to the foreclosures.

Micaela Duffy, executive director of the GVR Metropolitan District, said the board is considering it.

Advocates see the foreclosures as the HOA pushing out minority families for the benefit of lawyers and real estate investors. Many of the homeowners don’t have deep savings accounts or wealthy family members to call when they need a financial bailout.

“We can’t allow families to lose their wealth for an oil stain in their driveway,” Adams said. “It’s a call to action for our organization and for me personally. Let’s find a solution to get all these people out of foreclosure.”

A big concern for the real estate brokers is where the homeowners will go if they lose their houses. They are taking the foreclosures personally because agents live in the neighborhood and many residents are their former clients, multiple brokers said.

“We’re sensitive and passionate to the fact that we already have a housing shortage,” said Angela Hutton-Hall, a Green Valley Ranch resident, real estate agent and former president of the Master Homeowners Association board. “We don’t want to get inventory like that. That’s not right. Our job is to get people in homes and to build generational wealth.”

Hutton-Hall said the board did not foreclose on residents when she was president from 1998 to 2001. Instead, the board worked with homeowners to fix problems.

“We shouldn’t be an HOA that is owning property,” she said.

Years ago, Fesehaye Abrhaley learned there was a lien on his Green Valley Ranch home when he applied to refinance his bank loan. The lien had been sitting on the property, unbeknownst to him, for some time after the HOA had placed it when he failed to pay a fine.

He wrote a letter to the HOA, talked with a manager, negotiated a reduced fine and paid it. Then he got his refinance loan approved.

In 2018, Abrhaley bought a larger house five blocks from the first home he bought 22 years ago. But he kept the original house as a rental property.

Last year, Abrhaley, who is a space engineer at Lockheed Martin, received paperwork from the Denver courts because the first house was under foreclosure.

He was unaware of a $4,000 lien that was levied on the home, nor did he know that the Master Homeowners Association was charging him an additional $12,000 for the attorney’s fees it incurred for placing the lien.

“They claim they have sent me a violation notice but I haven’t seen any of that,” Abrhaley said. “They hired a lawyer and the lawyer is just piling up fee after fee.”

Abrhaley hired a lawyer himself to fight the HOA. At a court hearing in late March, Abrhaley said he joked to the judge, “I cannot move my house from this homeowners association, but I am building a spacecraft that is going to go to Mars. I’ll have to move my home to Mars to get away from this homeowners association.”

Legislative reforms ongoing

While the community calls for a moratorium on the HOA foreclosures, legislation is pending in the Colorado General Assembly that would put some limits on HOAs’ power.

HB22-1137, a bipartisan bill, aims to limit assessments, fines and fees, and it would require certain notifications be delivered via certified mail. The bill hasn’t been voted on. Lawmakers say they are working with opponents to narrow the scope of the bill while still ensuring they have protections for homeowners like those in Green Valley Ranch.

State Rep. Naquetta Ricks, a Democrat from Aurora and one of the bill’s sponsors, said that while many of the fines and fees levied on homeowners are legal, they’re “egregious and excessive.” They’re not just happening in Green Valley Ranch but in neighborhoods across the state. The bill wouldn’t apply to monthly association dues, but, rather, fines and fees assessed because of covenant violations.

“It’s all over the place, and I think it’s just the tip of the iceberg,” Ricks said.

The issue is wreaking havoc on families, from ruining credit to forcing them to lose homes and hundreds of thousands of dollars in equity, she added.

“We want to make sure that we can keep people in their homes, especially at a time like this when we have a housing crisis in Colorado,” Ricks said. “We want to make sure that HOAs are not abusing the power that they have because, basically, they have the heavy hand.”

Sen. James Coleman, a Denver Democrat and another bill sponsor, has lived in Green Valley Ranch with his family for nearly 20 years, but he’s never seen this many foreclosures at one time, especially because of HOA fees. He urged residents across the state to share their stories with lawmakers.

Although the bill wouldn’t apply retroactively, Coleman said he’s been talking to state agencies and housing advocates to see what support they can provide Green Valley Ranch families who are going through foreclosure because of fines and fees.

Lawmakers seeking to change the power structure of HOAs have an uphill battle. Rep. Brianna Titone, an Arvada Democrat, has sponsored HOA legislation with mixed results, saying that the lobbying efforts against these bills have been so strong that even the ones that passed were watered down.

In 2019, she sponsored a bill to recreate a HOA Community Manager Licensing program. The bill passed out of the legislature, but was vetoed by Gov. Jared Polis, who said most cases involving licensure haven’t protected consumers. Instead, he directed DORA to look at HOA regulations more broadly.

In 2020, Titone sponsored another bill that passed to continue operations for the state Division of Real Estate’s HOA Information and Resource Center, but without a proposed ombudsman that would have helped resolve disputes. The center, which registers HOAs and compiles complaints, lacks the power or authority to mediate disputes between boards and their residents, said Gary Kujawski, a real estate division spokesman.

A bill to require more disclosure and transparency by HOAs was cut short by the pandemic in 2020.

In 2021, Titone helped pass another HOA bill, but her attempt to include an alternate dispute resolution was stripped because she couldn’t get enough votes with that measure included. She chalked up those failures to pressure from lobbyists and HOA management companies that would lose money if the changes were made.

Groups opposing HOA reforms have spent thousands of dollars working against their passage, according to Colorado Secretary of State’s Office records.

“If you ask anybody about what the biggest problem is, it’s that the HOA boards have a lot of control,” said Titone, who is a former HOA board president herself. “There’s very little punitive things that make them want to comply. They often win in court. They like to go to court because the management companies and the attorneys know that they’re going to win, and they know that they’re going to collect the legal fees if they win.”

This year, Titone’s bill HB22-1239, which would have licensed management companies, also died in committee. She wanted to ensure that HOA managers, who often are employed by private companies, were not only qualified but understood applicable state laws.

Looking to other states

Few states have enforcement powers over HOAs.

Virginia and Nevada have ombudsmen to handle disputes between HOAs and their members. Florida has an ombudsman to mediate disputes between condominium homeowners associations and their residents but not anything for neighborhood HOAs, said Patrick Fargason, a Florida Department of Business and Professional Regulation spokesman said.