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Court of appeals rules that HOA lien is not spurious, despite claim that annexation was invalid

Thursday, December 13, 2018 @ 10:12 PM
Author: Jesse Witt

Today, the Colorado Court of appeals reversed a order that had deemed a homeowner association’s lien to be spurious.

The case arose after a developer approved a property owner’s application to annex additional real estate to a community in 1999. Several years later, the developer repurchased the property through a foreclosure sale. Despite its prior approval of the annexation, the developer refused to pay community maintenance assessments, which prompted the association to record a lien under its covenants and a statutory provision of the Colorado Common Interest Ownership Act (CCIOA).

The parties remained in a standoff until 2016, when the Colorado Supreme Court announced two decisions that adopted a stricter standard for annexing property into communities subject to CCIOA. Relying on this new authority, the developer at Stroh Ranch argued that the 1999 annexation was no longer valid. The district court agreed and declared the association’s lien to be spurious. 

The court of appeals reversed and awarded attorney fees to the association. The court held that the association’s lien was not a spurious lien because it was both provided-for by CCIOA statutes and had been agreed-to by the property owner under the terms of the 1999 annexation form. The court held that the annexation form was not a spurious document because, even if it did not technically comply with the 2016 caselaw, this alleged invalidity was not “readily open to notice or observation.”

The court’s opinion was unpublished and therefore does not create binding precedent, but it may nevertheless serve as a caution for property owners seeking to attack liens under Colorado’s spurious lien and document statute.

Attorney Jesse Witt represented the association in the appeal, Stroh Ranch Development, LLC v. Stroh Ranch Business Circle, Inc., Case No. 2017CA1481 (Colo. App. Dec. 13, 2018)(unpublished).

For an expanded discussion of this issue, please see Mr. Witt’s full summary here.

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