Navigating HOA Special Assessments: What Title Companies Need to Know

When handling real estate transactions in Colorado, title companies often face unexpected challenges related to homeowners’ associations (HOAs). One of the most overlooked—and potentially costly—issues is special assessments. These charges can derail closings if not identified and managed early. Here’s what you need to know to protect your clients and keep transactions on track.

What Are Special Assessments?

Special assessments are one-time charges levied by an HOA to cover expenses beyond the regular budget. Common reasons include:

• Major repairs (roof replacement, structural issues)
• Emergency projects (storm damage)
• Legal costs or litigation settlements
• Capital improvements (new amenities)

Unlike regular dues, special assessments can be substantial and often come with short payment windows.

Why They Matter for Title Companies

Unpaid special assessments can become liens against the property, creating title defects and delaying closings. Even if the seller has paid their regular dues, an outstanding assessment can surprise everyone at the eleventh hour. Title companies must ensure these charges are disclosed and addressed before issuing a commitment.

How to Identify Special Assessments Early

Proactive research is key:

• Review HOA documents: Meeting minutes and budgets often reveal upcoming assessments.
• Ask the right questions: When requesting status letters, specifically inquire about pending or approved assessments.

Best Practices for Managing Risk

• Escrow funds: Hold enough to cover pending assessments if responsibility is unclear.
• Clear disclosures: Include assessment details in the title commitment.
• Collaborate with agents: Ensure contracts specify who pays—buyer or seller.

Legal Considerations in Colorado

Colorado law requires sellers to disclose known assessments. Failure to do so can lead to disputes post-closing. Title insurance typically excludes coverage for unpaid assessments unless specifically addressed, so diligence is critical.

How COCRS Helps

COCRS simplifies the process by:

• Providing accurate HOA contact information
• Delivering timely status letters and document packages
• Offering historical data to identify patterns of assessments

With COCRS, title companies can reduce risk, save time, and ensure smooth closings—even when HOAs throw curveballs.

Final Thoughts

Special assessments don’t have to be a deal-breaker. By identifying them early and leveraging tools like COCRS, title companies can protect all parties and keep transactions moving forward.