Colorado Court Holds HOA Liable for Mold and Water Damage Caused by Common Elements
A recent Colorado district court decision provides a stark reminder that homeowners associations cannot ignore serious building problems involving common elements without facing significant legal consequences. In a detailed ruling, the court held a condominium association responsible for years of water intrusion and widespread mold growth that rendered a homeowner’s residence partially uninhabitable. The result was a judgment exceeding $1.25 million in damages.
The homeowner purchased her townhome with no evidence of water damage or mold. Over time, however, she began experiencing repeated water intrusion throughout the property. Water entered through the foundation, exterior walls, and roof, eventually affecting the basement, living spaces, attic, and mechanical systems. Mold developed in nearly every area of the home, including inside the furnace system, creating serious health and habitability concerns.
The governing declaration made clear that the roof, exterior walls, foundation, and other structural components were common elements. Under both the declaration and Colorado law, the HOA was responsible for maintaining and repairing those components.
Years of Water Intrusion and Widespread Mold Growth
The evidence showed that water entered the residence through multiple common-element failures, including defective grading, foundation conditions, exterior wall openings, roof penetrations, and an uncapped flue pipe. These conditions allowed groundwater and rainwater to repeatedly enter the home over several years.
As a result, water damage appeared throughout all levels of the residence. Mold contamination became extensive and persistent. Experts testified that mold concentrations inside the home were dramatically higher than outdoor levels and required full professional remediation. Portions of the home became uninhabitable, and the homeowner lost the ability to safely occupy and use significant parts of her residence.
The HOA’s Failure to Act Made the Damage Worse
Despite years of notice from the homeowner, the HOA failed to meaningfully investigate or repair the underlying causes of the water intrusion. While the association took isolated actions addressing unrelated issues, it did not implement repairs aimed at stopping water from entering through common elements.
In some instances, the HOA’s limited intervention worsened the problem. Portions of the exterior were removed and left exposed for extended periods, allowing additional moisture intrusion and accelerating mold growth. The court found that the association did not begin a serious investigation or remediation effort until after litigation was underway.
Why the Business Judgment Rule Did Not Protect the HOA
The HOA argued that its decisions were protected by the business judgment rule, which generally shields board members from liability when they act in good faith and in the best interests of the association. The court rejected that defense.
The court concluded that prolonged inaction in the face of known and continuing water intrusion is not a protected exercise of business judgment. Failing to gather information, investigate the problem, or take corrective action for years does not constitute an informed or reasonable decision. Post-lawsuit efforts could not retroactively excuse years of neglect.
Significant Damages for Property Loss and Personal Injury
The damage caused by the HOA’s failure was extensive. The court awarded compensation for structural remediation and rebuilding, loss of personal property, temporary housing, and loss of use of the residence. The homeowner also presented evidence of serious health consequences associated with prolonged mold exposure, which required ongoing medical treatment.
The total damages exceeded $1.25 million, reflecting both the physical destruction of the home and the long-term personal impact on the homeowner’s health and quality of life.
What This Ruling Means for Colorado Homeowners
This decision underscores that HOAs in Colorado have enforceable duties to maintain and repair common elements. When water intrusion and mold originate from those elements, associations cannot simply blame homeowners for the resulting damage. Courts will look closely at whether an HOA acted promptly, reasonably, and in good faith when problems were reported.
For homeowners facing unresolved water intrusion, mold, or structural defects in a condominium or townhome community, this case illustrates that legal remedies may be available when an HOA fails to act.
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