As we come to the close of another year for Colorado community associations, it’s clear that HOAs are navigating an increasingly complex landscape. From variable insurance costs to accelerating repair cycles all the while trying to navigate Colorado’s unpredictable weather, the pressures on boards and managers continue to build. These challenges are not isolated — they intersect, amplifying both the financial and operational strain on associations of every size.

Our committee has spent considerable time discussing these trends, and while the picture may seem daunting, we also see opportunity. 

With thoughtful planning, transparent communication, and a proactive mindset, communities can adapt to today’s realities while preparing for tomorrow’s demands. This article is our collective effort to provide perspective, guidance, and a few practical tools that can help board members chart a more confident path forward.

In the following sections, we will explore a key area shaping the future of community management — from reserves and insurance to construction, lending, and overall governance. We’ll highlight what we’re seeing now, what’s likely ahead, and most importantly, what steps boards can take today to be better prepared for what’s coming next.

General Financial Outlook

Although inflation continues to trend upward, the increases we’re seeing are somewhat more palatable than the significant spikes experienced earlier in 2025 and in previous years. Interest rates—both for investments and debt—have remained relatively steady, though experts have projected we can anticipate a continued slow and gradual decrease in late 2025 and early 2026. 

 The most productive action for an HOA board at this time is to focus on positioning the Association as favorably as possible in the financial market by addressing items commonly reviewed by underwriters. In addition to reserve funding, both insurers and lenders evaluate a community’s financial position through delinquencies/bad debt ratios and rental percentages. 

This year we’ve spent a significant amount of time exploring the negative effect of delinquencies on community associations in detail and state legislation has certainly kept this focus as well (although perhaps with a misunderstanding of the detriment uncollectable debts have on the ability for an Association to maintain its physical elements properly). Proactively managing these two areas (as well as committing to the reserve funding plan) can often benefit the Association through improved insurance premium rates and more favorable consideration if a loan is needed in the future. By maintaining a strong financial position, the Association can reduce its exposure to higher rates.

 It is also a good idea to take advantage of current rates by investing in appropriate interest drawing accounts if the projected rate decreases. Availability of higher rates through certificates of deposits (cds) and money market accounts can help an association maximize its reserve funds before the money is needed for future projects. 

Insurance

 The HOA insurance market continues to evolve under mounting pressure from economic, environmental, and regulatory forces. Historically, across Colorado and beyond, communities are experiencing sharp premium increases, limited carrier availability, and stricter underwriting requirements. Understanding these trends — and responding proactively — can help your association remain an attractive risk in the eyes of insurers.

The Current Landscape: Carriers are facing unprecedented losses due to inflation, rising construction costs, and an uptick in severe weather events. Carriers have become more selective, often reducing capacity in high-risk regions or tightening terms for older buildings and communities with deferred maintenance. Property valuations are being closely scrutinized, and policies are being restructured to ensure replacement cost accuracy. Meanwhile, liability and directors & officers (D&O) claims are growing as communities navigate complex governance and vendor relationships.

The Outlook Ahead:Although we are seeing rate decreases after a mild year of relatively few hail storms and a mild wildfire season; forecasts suggest that premium pressures will persist over the next 12–24 months as insurers balance portfolios and rebuild reserves. Communities with poor loss history, inadequate reserve funding, or outdated property maintenance records will face the toughest renewals. However, associations that demonstrate strong risk management practices and financial responsibility will remain top candidates for competitive coverage options.

The Bottom Line: While the HOA insurance market is challenging, preparation is power. Communities that treat insurance as a year-round partnership — not a once-a-year renewal — will not only mitigate premium increases but also stand out as preferred risks in a tightening market.

Reserves

One of the most common inquiries we receive from readers is - when will a Reserve Study law be implemented in Colorado? 

In 2022, a Reserve bill landed on the desk of the governor, but was then vetoed. No new Reserve Study related legislation was presented on the floor in 2023, 2024, or 2025. Will 2026 be the same? We will see. 

However, what is important for boards to understand is they are ultimately responsible for the funding for their community, regardless of the legislation. Even if a bill is not passed, boards and owners need to understand that the responsibility for paying for the ongoing maintenance of the HOA ultimately rests on themselves. 

We want to encourage boards that they have the ability to cast the vision for their association. They can change course for the better. It is not easy, but it can be done. What are some things to remind our board members?

• Your Community is Worth It
• • A well funded community, on average, funds their Reserve account for $3-$5 per day, per unit. This is about the cost of a small cup of coffee. Your community, your home’s equity is worth more than a cup of coffee any day. Remind the owners that lenders, insurers, and homebuyers are looking for a Reserve Study. A well funded Reserve account benefits the owners. 
• It Will Help the Resale Value
• • In 2025, we received reports from community managers that units in their condos were not selling or having issues with refinancing due to the inability to meet the standards of the new Fannie/Freddie lending guidelines. A well funded, or a community that is updating the Reserve Study will be better positioned to help their owners sell or refinance their units without any holdups. 
• Everyone Pays a Fair Share
• • Some owners feel entitled to not pay their fair share of the ongoing deterioration of the community’s assets while they live at the property, and expect that a future owner will just happily pay for a special assessment. This is not true, and we need to remind owners that they agreed to live in the HOA and therefore, they have an obligation to pay for their usage of the community’s assets while they live in the community. 
• Costs are Increasing
• • Each year a major project is deferred, the costs will continue to increase. Per the Mortenson Cost Index, construction costs in Denver, costs rose 5.3% over the last twelve months. ​The longer a project is deferred the more expensive it will be for the owners. 

Roofing and Building Components

Problems occur with roofing and exterior components when deferred maintenance is left unchecked and there is a lack of annual inspections. With the weather we get in Colorado, annual roof inspections should be expected. 

It is a common occurrence when a roofing company is requested to inspect a community’s roof only to find that previous hail damage is causing an issue, and to make matters worse, the damage can no longer be used to pursue a claim due to filing timeline restrictions. Additionally, many old and aging communities have inadequate reserves or have no funding plans to address deferred maintenance. Annual inspections, preventive maintenance, and proper future planning is key. 

Another issue is that homeowners may not have proper HO-6 loss assessment insurance coverage to pay for their assessment/portion of the deductible for an insurance claim. This requires some homeowners to pay large portions out of pocket when they could have had the right coverage. 

Another issue is when a board elects to not have the building inspected after the building has experienced substantial hail and wind storm. Neglecting an inspection could affect future insurability, as well as lead to future leaks and maintenance issues. If the owners eventually discover an issue due to the prior storm, the replacement cost could be 100% out of pocket for the homeowners. The board has a fiduciary responsibility to take care of their community, and that includes annual inspections.

The Editorial Committee has spent a considerable amount of time this year exploring complex issues affecting community associations and different ways to present tools and multiple perspectives that can help the leadership in every community association address these complex issues and strategize ways to stay ahead of what might being coming next.  It is our hope that through education, communication and proper planning we can all use these lessons to make our communities stronger.

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Call Out Box: 

Recommended Actions:

• Work with the Association’s legal counsel to review and update the collection policy, and ensure there is an effective plan in place for collecting debt and addressing bad debt.
• Consider adopting a rental cap amendment or formal rental policy to the governing documents.
• Update Reserve Studies annually and schedule an Onsite Visit Update every 3 years. If no Reserve Study is on file, have one completed in 2026.
• Ensure property replacement cost valuations reflect today’s construction and material pricing. Accurate data helps prevent underinsurance and demonstrates fiscal responsibility — two key underwriting factors for insurance carriers.
• Adopt and Communicate a Risk Management Plan. Implement policies for vendor contracts, maintenance schedules, and claims reporting. Educate board members and residents on risk-reduction practices (such as grill, smoking, and water intrusion policies). Written plans signal to carriers that your community takes loss prevention seriously.
• Review the Fannie Lending Status of your HOA https://condostatus.fanniemae.com/
• Initiate annual roof/exterior inspections and maintenance (Spring and Fall are best times for this).
• Begin budgeting and planning for future capital projects (seek professional advice)
• Continually remind homeowners to have proper loss assessment coverage (amount based on the max out of pocket homeowner liability due to the HOA deductible).