In Colorado there seems to be a pervasive theory that the entire state should focus on a few outliers even if it means higher taxes and costs for everyone else and there is no longer a pragmatic approach to anything in Colorado. A recent example is a Colorado Supreme court case that could radically alter precedent in Colorado and increase your taxes substantially because of one person not paying their bills. Furthermore, lending on affordable housing could be eliminated in Colorado. What is the case and why is it so groundbreaking?
A foreclosure in Green Valley Ranch radically alters priority of liens
The case on the surface seems straightforward but there is a major twist that will have far reaching consequences. Here is a quick timeline:
- A homeowner doesn’t pay HOA dues and accumulates fines, etc…
- HOA eventually forecloses on the lien
- An investor buys the property at foreclosure auction for 23k
On the surface the above sounds like nothing special, someone doesn’t pay their bills and eventually they get foreclosed on. But there is a huge twist:
- Denver sues the investor who bought the property because he should not have been allowed to buy the property as it was part of Denver County’s inclusionary zoning ordinance that caps the price of the house along with income restrictions on buyers and who is able to buy the house.
- A judge sided with Denver and the case has now been appealed to the Colorado Supreme court
Colorado Foreclosure case could have been easily resolved with current processes
The whole premise of the case is dumb. The way deed restrictions typically work is that they go with the property. So even though the property was bought by an investor, they would still have to abide by the deed restrictions so in this case the investor would have to sell the property to someone who meets the criteria set out in the deed restriction. Also note, many deed restrictions I have seen in the mountains don’t prohibit an investor from buying a property it merely says who can occupy and at what price rents can be set or the property can be sold.
There is also another solution. If Denver was so concerned about losing the property, they could have easily bought the priority lien to preserve their inclusionary zoning.
Colorado Supreme Court case will determine the priority of liens
This is where the case gets very interesting. On the surface, it looks like this case is just about a run of the mill foreclosure but the reality is far different. What Denver county is trying to do is eliminate super priority liens. How this case is decided will have far reaching consequences and answer the question if water and fire districts have priority liens to enforce collections. Since the 70’s water, fire, and special districts have been afforded priority status to ensure they can provide critical services like water or fire protection. The Special District association has taken note of the importance of this case:
The Special District Association of Colorado filed a brief in support of Welcome to Realty, saying special districts — including those that levy taxes to fund libraries, fire departments and water — rely on fees to provide public services. And liens are a tool for making sure those districts are paid by those who live in them.
“Almost none of the services provided by special districts can happen without significant future planning, and without dependable sources of revenue, that planning is nearly impossible,” the association’s brief argues.
Colorado Property taxes will increase substantially on all property owners
Let’s assume that the supreme court rules in Denver’s favor and changes the status quo on special districts. The implications for every property owner will be huge. Fire, water, and other special districts (library, schools, etc..) would no longer have priority status on collections which means that other lienholders could wipe them out. So let’s say a homeowner is behind on property taxes and also their mortgage, under the prospective ruling the property taxes could be eliminated by the mortgage or other lienholders leaving a huge hole in special districts budgets. Furthermore, special districts have the ability to finance projects and get great rates as the money to pay for the bonds is guaranteed. This would also change. As a result, property taxes would go up on every single property in the district to account for loss of collections and higher borrowing rates due to the loss of the super priority lien.
Already ample HOA protections in the current Colorado law
The crazy part is that the media is making this case out to be about the big bad HOA. Unfortunately Colorado has some of the strictest laws in the country on HOA collections which has made it difficult for HOA’s to place liens on properties except in extremely egregious situations.
Supreme Court ruling could eliminate financing on affordable housing
Another twist from this case is that Denver county is so adamant about this one singular property that they could eliminate future financing for most prospective buyers of affordable housing. If only an approved buyer can purchase the property, what happens in a foreclosure.
I doubt there are many low income/deed restricted buyers that have 350k in cash to buy a property at an auction, if they did, they wouldn’t need affordable housing. So, the buying pool is basically zero which means that the lender would 100% of the time end up with the property. Depending on the court ruling, the lender would also not be deemed a qualified buyer and have a problem as they technically could not own the house!
Long and short, the court case on one singular foreclosure could radically alter the ability of others to get affordable housing loans and if they can get them the costs will be higher.
Dumb case that is indicative of Colorado’s current policies
The suit that Denver county is bringing is dumb. It continues to show the ineptitude of our local leaders that focus on the outliers without seeing the repercussions to everyone else. In this case, one person who didn’t maintain their house and pay their bills will lead to considerably higher bills for every single person in the state as every single county/city I have ever seen has at least one special district for water, fire, library, etc…
Along with raising taxes, affordable housing loans will become more expensive due to increased risk for lenders.
The whole lawsuit is extremely sad as it could have easily been eliminated by Denver buying the lien, by Denver buying the property back from the investor, or by Denver allowing the investor to sell/lease the property as long as it meets the inclusionary zoning requirements. All these solutions would have been considerably cheaper than the current path which will raise expenses on everyone for one singular person who decided not to pay their bills.
When Denver and others wonder why residents are leaving, this case is a prime example. It also further highlights why businesses are also leaving as all pragmatism seems to evade Colorado government officials.
Additional Reading/Resources:
- https://www.denverpost.com/2026/08/05/denver-hoa-foreclosure-green-valley-ranch-affordable-housing/
- https://coloradohardmoney.com/is-affordable-housing-worth-2-million-a-unit/
- https://coloradohardmoney.com/colorado-joins-tax-increase-line/
- https://coloradohardmoney.com/socialist-wins-in-colorado-impact-on-colorado-real-estate-remote-workers/
- https://coloradohardmoney.com/colorado-snubbed-in-best-places-to-live-report/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Glen resides in Colorado, lends in Colorado, owns property in Colorado, and services loans in Colorado which provides a unique real estate prospective of what is actually happening on the ground both in Denver and throughout Colorado. My goal of this real estate blog is to provide an honest assessment of what I see happening in Colorado real estate and how it will impact real estate owners, buyers, realtors, mortgage professionals, etc…
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