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Partywalls vs. HOAs for Townhome Projects


Savvy developers understand the ongoing liability involved through the statue of repose following construction completion. Many things impact a developer’s risk during this period: the right choice in General Contractor, right choice of professionals, subcontractors, etc. These items are all somewhat straightforward and their impact easily understood. Another important consideration that Developers sometimes overlook is the understanding of the liability and legal requirements that might guide a decision surrounding when to use a Partywall Agreement and when to establish a Homeowners Association (HOA).

Colorado law requires the formation of a Homeowners Association for any project with certain features as determined by the Colorado Common Interest Ownership Act (CIOA). There are restrictions on number of units that may be governed by a Partywall, amounts of annual expenses that can be collected, and various other triggering circumstances that might force you to implement a Homeowner’s Association.

RedT Homes has extensive experience working with developers to provide feedback on Partywall Declarations. Aside from the legal requirements that dictate their contents, you’ll also need to address the demands of title companies, utility companies, the needs of future owners, and many other project specific requirements that prevent a template one-size-fits all approach. While having an attorney to help draft and review a final document is always redT’s recommendation, even real estate attorneys may not have the development understanding and background to understand all the items that may need to be addressed in a partywall. Having an experienced team to review your development and provide specific feedback can help prevent burdensome amendments and changes to the partywall documents post-redecoration.

If you’d like to learn more about partywalls and HOAs and which management structure might be best for your project, contact redT Homes today to see how we can help.

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