Residents could lose their homes after hefty HOA assessment; HOA says out-of-control insurance prices are to blame
Michael Logerwell
COLORADO SPRINGS, Colo. (KRDO) – KRDO13 Investigates was contacted by several residents at the Soaring Eagles townhomes who said they were in danger of losing their homes if they couldn’t afford an up to $20,000 reassessment from their HOA to pay for hail damage.
Letter sent to Soaring Eagles HOA members.
Heather McBroom says she was shocked when she got this letter from the legal team representing the Soaring Eagle HOA, saying that she would have to pay thousands out of pocket to cover hail damage from August 2024.
“My first reaction was shock. This was the first time I’d heard anything about [the hail damage], and it’d been a year.” KRDO13 Investigates spoke to McBroom and a dozen other residents protesting this assessment on their street on Monday morning.
“Our current declarations state we cannot be passed on an assessment of more than $10,000,” McBroom added.
McBroom said many people in the group of 50 units against this assessment have coverage up to $10,000. But this assessment is for $20,752.12, which would require even those with coverage to pay a little more than $10,000 out of pocket.
An excerpt from section 7.3 of the Soaring Eagles HOA Rules.
McBroom and 49 other households say the $20k assessment itself is not allowed due to rules and regulations outlined in the ‘Declaration of Covenants, Conditions and Restrictions of the Soaring Eagles Townhomes.’ In that document, it says that the HOA will subscribe to any insurance policy “greater than the lesser of $10,000 or one percent of the face amount of the policy.”
“Most people feel very confused. There wasn’t a lot of transparency during this process. They don’t know what their rights are. So we have all decided to rally together, and hire an attorney, and try to fight any fines or penalties,” McBroom said.
KRDO13 Investigates brought these concerns to the Soaring Eagles HOA attorney, Anthony Smith. Smith said he agreed that the rules governing the community clearly go against assessing a deductible this big, but says it’s impossible to find this kind of coverage for this price in Colorado.
One of the letters sent to homeowners about their HO6 Insurance.
Smith also says the HOA and the management company, RowCal, have sent out numerous notifications to members about updating their HO6 insurance policy to cover more.
This letter to your right is one example, Smith said, of a notification sent out to homeowners.
He said the letter says homeowners should have HO6 coverage for loss assessment of $30,000. Smith says this letter was given to every member of the Soaring Eagles HOA, and it’s just one example of notifications sent out.
Smith also identified the group fighting back against this assessment as a vocal minority and said that the majority of the HOA members had the right amount of insurance coverage.
KRDO13 Investigates asked why the HOA provision locking the amount hadn’t been updated in almost 20 years; the document was written in 2006. Smith said that it takes 2/3 of homeowners to amend the master document. In the Soaring Eagles community, there are 150 units, meaning it would take 101 units to agree.
In email communication, Smith wrote that the HOA board did not make this decision lightly and said this is not a unique problem in Colorado or the rest of the country.
“This problem is not unique to Soaring Eagles. Rather, it is a statewide problem that affects HOAs across Colorado. The insurance industry continues to increase the cost of property insurance for HOAs while simultaneously increasing the deductibles under those policies. In other words, HOAs are paying more money for less coverage.”
Smith urged people to reach out to their state representatives and ask them to cap wind/hail deductibles for HOA policies, require HO-6 policies with loss assessment coverage for HOA members, and hold insurance companies accountable for offering fair and accessible coverage.