Renting Out a Denver Condo or Townhome With an HOA: Rental Caps, Rules and Pitfalls

Why HOA communities need extra homework

Condos and townhomes are a large share of Denver's rental supply, from Capitol Hill high-rises to suburban townhome communities in Aurora, Highlands Ranch and Lakewood. They can make excellent rentals: lower maintenance, amenities renters like and an HOA that handles the exterior.

They also come with a second rulebook. Before you sign a lease, you need to know what your homeowners association allows. This guide covers how HOA rental rules work in Colorado. It's general information; for a specific dispute, have a Colorado HOA attorney review your documents.

Where HOA rental rules come from

Most Colorado HOAs are governed by the Colorado Common Interest Ownership Act (CCIOA) and their own governing documents:

• Declaration (often called the CC&Rs): the recorded covenants. This is where use and occupancy restrictions, including rental limits, must live.
• Bylaws: how the association is run.
• Rules and regulations: day-to-day rules adopted by the board, like pool hours, parking, trash and move-in procedures.

The key point: under C.R.S. 38-33.3-205, restrictions on how units may be used or occupied must be in the declaration. The Colorado Division of Real Estate's HOA Center puts it plainly: without specific authorization in the declaration, an association doesn't have the power to adopt rules that restrict the use or occupancy of individually owned units.

Can my HOA ban or cap rentals?

Yes, if the declaration allows it. Common tools include:

• Rental caps: only a set number or percentage of units may be rented at once, often with a waitlist.
• Minimum lease terms: for example, no leases shorter than six or twelve months.
• Rental registration: owners must register leases and tenant contact information with the association.
• Owner attestations: owners confirm they gave tenants the governing documents.
• Short-term rental bans.

How a new restriction gets added

An HOA can't simply vote at a board meeting to ban rentals. Under C.R.S. 38-33.3-217, amending the declaration to change the uses allowed for units generally requires approval by owners holding at least 67% of the association's votes, or more if the declaration requires it.

Colorado courts have applied the same idea to short-term rentals. In Houston v. Wilson Mesa Ranch HOA (2015), the Colorado Court of Appeals held that banning short-term rentals required a covenant amendment, not just a rule change.

If you're buying to rent

Read the declaration and the current rules before you close, and ask the HOA whether a rental cap is in effect and how long the waitlist is. A condo you can't rent for two years is a very different investment.

Denver short-term rentals: a separate barrier

Even if your HOA allows short-term rentals, Denver may not. Denver only licenses short-term rentals (stays under 30 days) in the owner's primary residence. If the condo isn't your primary residence, it's not eligible for a short-term rental license. Rentals of 30 days or more fall under Denver's residential rental license instead. See our Denver rental license guide.

HOA fines and your tenant

Your tenant must follow the HOA's rules, but the HOA's enforcement runs against you, the owner. Colorado's HB22-1137 (effective August 10, 2022) limits how associations fine owners:

• No daily fines.
• For violations that aren't health or safety threats, the owner gets cure periods before fines can be imposed.
• An HOA can't foreclose over unpaid fines alone.

That helps, but repeated tenant violations can still cost you money and goodwill with neighbors.

Protect yourself in the lease

• Attach the HOA rules to the lease, and have the tenant sign that they received them.
• Make HOA compliance a lease obligation, and say the tenant reimburses fines caused by their violations, consistent with Colorado law.
• Cover move-in logistics: elevator reservations, moving hours, parking permits, pool fobs and storage.
• Register the lease with the HOA if required, and give the HOA manager the tenant's contact information.

Money issues specific to HOA rentals

• Dues stay with you. HOA dues are the owner's obligation. Under Colorado's junk fee law, the advertised rent must include all mandatory recurring charges, so build dues into your rent rather than adding a separate tenant fee. See our junk fee guide.
• Special assessments: budget a reserve. Older buildings with aging roofs, boilers or elevators are the most likely to issue them.
• Insurance: the HOA's master policy covers some things, your unit policy covers others. When the unit becomes a rental, tell your insurer and make sure your policy fits a rented unit. See our landlord insurance guide.
• Utilities: many buildings include water, sewer and trash in dues. Make sure your listing says which utilities are included.

Common HOA rental pitfalls

1. Renting before checking the cap. Some associations fine owners who lease without approval.
2. Leasing too short. A 6-month lease in a 12-month-minimum community is a violation.
3. Ignoring move-in rules. An unscheduled move can mean an elevator or damage fee.
4. No local contact. Boards want someone to call when there's a leak or noise complaint. Give them your manager's contact.
5. Parking surprises. Assigned or permit parking needs to be explained clearly in the listing and lease.

How to get help

If you hire a manager for an HOA unit, look for one who reads the declaration and rules before listing, handles HOA registration and move-in scheduling, gives tenants the rules in writing and acts as the board's point of contact. Ask how many units they manage in HOA communities like yours.

We'll match you with vetted, licensed Denver managers. Free, no obligation. See condo and townhome management or get matched free.