HUD homes with an HOA: who owes the old dues, Colorado’s super lien, and FHA condo approval

A lot of Colorado HUD inventory is condos and townhomes, and nearly all of it sits in an HOA. The foreclosure that turned the home into a HUD home also changed who owes what to that HOA. Here is the map.

Past dues: who pays

• Dues from before HUD took the home: mostly wiped out by the foreclosure. Colorado gives HOAs a “super lien” for up to six months of regular assessments that survives a first-mortgage foreclosure. That six months was paid to the HOA out of the foreclosure or by the lender before the home was conveyed to HUD. The HOA cannot collect the rest from you.
• Dues while HUD owned it: HUD pays them through closing. They show as a proration on your settlement statement.
• Dues after closing: yours, starting the day you own it.

What the HOA will still charge at closing

Expect a status letter fee (often $150 to $400), a transfer fee, and sometimes a working capital contribution equal to one or two months of dues. HUD does not pay these. Ask your agent to request the HOA documents the week your bid is accepted so nothing surprises you on the settlement statement.

FHA approval on condos

If the home is a condo (not a townhome with its own lot) and you are using FHA, the project has to be on FHA’s approved list, or your lender has to get a single-unit approval. HUD lists condos as insured only when the project is approved, so a condo marked IN or IE is a good sign. A condo marked UI often means the project lost its FHA approval, and you will need conventional, VA (VA has its own list) or cash. More on FHA condo approval.

Read the HOA before you bid

1. Reserve study and the last budget. A project with 5% reserves and a 30-year-old roof is planning a special assessment.
2. Rental cap. If you are an investor, the cap may make the unit unrentable.
3. Litigation. An HOA suing its builder makes FHA and many conventional lenders walk.
4. Insurance. Colorado HOA insurance premiums have jumped; some master policies now carry per-unit wind and hail deductibles that your lender will want you to cover.

A plain-English example

A buyer bid on an Aurora HUD condo listed IN at $245,000. The status letter showed $3,900 in dues from the prior owner. Because the foreclosure cut off everything beyond the six-month super lien, and the lender had paid that, the HOA had to write off the balance. The buyer paid a $250 status letter fee and a $490 working capital contribution at closing. HUD paid the dues for the four months it owned the unit.

Not sure which rule applies to the house you are looking at? Call or text 303-955-4220. A live person answers, and the answer is free.

Written and reviewed by

Brian Lee Burke, Colorado HUD home specialist and team leader

Licensed Colorado real estate professional since 2002 · REALTOR® · Team leader and licensed broker of the Kenna Real Estate Group at Keller Williams DTC, a HUD-registered group that regularly bids on HUD homes · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.

Last reviewed: September 11, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna Real Estate Group’s own HUD transaction files.

Contact: call or text 303-955-4220 or homes@kennarealestate.com. During office hours you reach a live local Kenna real estate professional, not a robot or a national call center. Brokerage: Kenna Real Estate Group at Keller Williams Realty DTC, LLC, 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna Real Estate Group is an independent real estate team and is not affiliated with or endorsed by HUD or any government agency; official property information comes from HUD Home Store. Equal Housing Opportunity.

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