Buying a New Build? Developers May Soon Have to Pre-Fund Your HOA's Savings Account

The Bottom Line

If you live in an HOA, manage one, or build them, the rules just shifted. Developers of new communities must now pay for a 30-year financial study before selling a single home, while fired HOA management companies face steep daily fines if they hold a neighborhood's money and records hostage.

What This Bill Actually Does

Under the old system, developers could build a planned community or condo building, set the HOA dues artificially low to attract buyers, and then eventually hand over a community to the residents that was a ticking financial time bomb. HB26-1099 fundamentally changes this by targeting the declarant—the legislative term for the developer or builder creating the community. Before they can sell a single unit, they must pay an independent professional to conduct a 30-year reserve study. This study estimates exactly what it will cost to maintain, repair, and replace the neighborhood's common elements (like roofs, clubhouses, pools, and private roads) over three decades.

The developer can't just do this study once and forget about it. They have to update it after each phase of building, and do a final update right before handing control over to the unit owners' association. At that hand-off, the developer is also required to write a check. They must pay 1.5% of the amount required to fully fund the reserves straight into the HOA's reserve account. And if you're buying a new build, the developer has to hand you this reserve study at least 24 hours before you close, so you know exactly what kind of financial shape the community is actually in.

The second half of this legislation fixes a notorious headache for established HOAs: the bad breakup with a management company. When an HOA fires a property management company, the old company sometimes drags its feet handing over the bank accounts, vendor invoices, passwords, and keys. This legislation gives the former management company exactly 45 days to hand over all records and funds to the new company or the board, at no charge. If they miss the deadline, they get hit with a $250 per day penalty, plus they are on the hook for any late fees the HOA racks up because they couldn't access their own money. If a court decides the delay was willful, the management company has to pay treble (triple) damages plus the HOA's attorney fees.

What It Means for You

If you are looking to buy a newly built condo or a home in a brand-new planned community, this law changes your closing process for the better. You will no longer be flying blind on what your future HOA dues might look like. At least 24 hours before closing, the developer must hand you a copy of the most recent reserve study. This is your crystal ball. It will show you exactly what it is projected to cost to replace the clubhouse roof or repave the streets in ten years. If the projected costs are massive but the current HOA dues are shockingly low, you will know those dues are going to spike—giving you a chance to walk away or budget accordingly.

For those already living in an established HOA, the most immediate relief comes if your board ever decides to fire an underperforming property management company. Anyone who has served on an HOA board knows that a management transition can be a nightmare if the outgoing company refuses to cooperate and hand over the bank accounts, keys, and vendor contracts. Under this law, your community has massive leverage. If the old company holds your neighborhood's assets hostage past the 45-day deadline, they face steep consequences:

• An automatic fine of $250 per business day paid to the HOA
• Full liability for any late fees the HOA racks up because funds were tied up
• If taken to court and found to be acting willfully, a penalty of triple your actual damages plus attorney fees

This means your community's money is legally protected during messy transitions. If your HOA misses a water bill or landscaping payment because the old management company wouldn't release your funds, the old company is legally responsible for those late fees. You won't be footing the bill for someone else's administrative temper tantrum.

What It Means for Your Business

If you develop planned communities or condominiums in Colorado, this law directly impacts your upfront costs and your project timeline. You are now legally required to commission an independent reserve study before you sell your first unit. You cannot do this in-house; the bill explicitly requires an independent professional with no financial interest in your company. You must also budget for updates to this study at the completion of each building phase, plus a final updated study at the transition of control. Most importantly, you need to bake a new cost into your pro forma: at the time of transition, you must write a check to the HOA for 1.5% of the fully funded reserves. For large developments with extensive amenities, that 1.5% could be a substantial cash outlay that needs to be accounted for early in your financing.

For association management companies, the stakes on client offboarding just got incredibly high. If a community terminates its contract with you, or if you choose not to renew, you have a strict 45-day window to turn over everything at no charge. That legally includes:

• Money and financial accounts
• Account books and financial records
• Insurance policies and vendor contracts
• Invoices, receipts, and subscriptions
• Account passwords and physical keys

You do not have to hand over your proprietary software itself, but you do have to extract and deliver the association's data from it. If your offboarding process is sloppy, the penalties are brutal: $250 per business day, liability for any late fees the HOA incurs because you held up their funds, and the risk of treble damages in court if a judge deems the delay willful. You need to standardize and bulletproof your client offboarding process immediately to avoid these strict liabilities.

There is a clear silver lining here for a specific sector: if your firm conducts reserve studies, expect a massive influx of mandatory business. Because developers must use an independent professional who knows industry standards, certified reserve specialists and specialized engineering firms will be in high demand at the very beginning of the development lifecycle, rather than just consulting for older, established HOAs.

Follow the Money

According to the nonpartisan fiscal note, HB26-1099 doesn't cost Colorado taxpayers a dime. The state's expenditures and revenues both remain at zero. The Division of Real Estate's HOA Information and Resource Center will have a tiny bit of extra work updating their public materials to reflect the new developer requirements and management company penalties, but they can absorb that without needing new state funding.

While the state courts might see a slight bump in civil lawsuits from HOAs suing their former management companies for dragging their feet, the Judicial Department expects this to be minimal and easily handled within existing resources. The real money changing hands here is entirely in the private sector: developers paying reserve analysts and seeding HOA bank accounts, and management companies potentially paying daily fines and triple damages directly to the communities they mismanage.

Where This Bill Stands

HB26-1099 is currently Signed Into Law. The latest official action came on 04/13/2026: Governor Signed.

That means the legislative process is complete and the bill is now law. The remaining questions are about implementation timing and how agencies, businesses, or local governments respond.