What’s the difference between a condo and a townhome in Denver — and why does it matter for HOA, hail, and special assessments?

By LaDawn Sperling | June 5, 2026

Here’s a conversation I have more often than you’d think with buyers shopping condos and townhomes in Lakewood, Arvada, and Wheat Ridge.

They’ve found a place they love. The price fits. The finishes are great. They’re already picturing the furniture arrangement. And then, a few months after they close, a letter arrives from the HOA.

The roof needs replacing. Insurance covered most of it — but not the deductible. Each unit owner owes $9,500. Due within 60 days.

This is a special assessment. In Colorado, it’s becoming far more common than buyers expect. And it’s almost entirely avoidable — if you know what to look for before you’re under contract.

What You Actually Own: Condo vs. Townhome

The biggest difference between condos and townhomes isn’t the floor plan or the HOA monthly fee. It’s what’s on the deed.

When you buy a condo, you typically own the interior air space of your unit. Everything from the drywall outward — the building’s exterior walls, the roof, the hallways, the parking lot, the elevator — is a “common element” owned collectively by all unit owners and maintained by the HOA. Your insurance product is an HO-6 policy, which covers your personal belongings and interior finishes. The building structure itself is the HOA’s problem to insure.

When you buy a townhome, you usually own both the interior and the exterior — including the walls and, in most cases, the land beneath your unit. That means you carry a full homeowner’s HO-3 policy covering the structure yourself. Your HOA typically handles shared outdoor spaces, landscaping, and community amenities, but the building is your responsibility.

Why does this matter? Because in Colorado, hail can hit an entire attached community at once. Whether your individual policy covers the damage or the HOA’s master policy does depends entirely on which type of property you own — and that distinction has major financial consequences when a storm rolls through.

In a condo, the HOA files the claim. In a townhome, the answer depends on the specific community’s governing documents, which vary widely. This is the first thing to clarify before you make an offer, and it’s something a good buyer’s agent will pull up before you’re under contract.

If you’re also weighing whether to go the new construction route instead of buying an existing condo or townhome, take a look at my breakdown of new construction vs. resale in the Denver metro — there are tradeoffs in both directions that aren’t obvious at first glance.

How HOA Insurance Works in Colorado — and How It’s Changed

Condo HOAs are required under Colorado law to maintain a master property insurance policy covering common elements and the building structure. Townhome HOAs are also commonly required to carry coverage, though the scope varies based on each community’s declaration.

Here’s where things have gotten complicated over the past few years.

For a long time, HOA master policies carried flat deductibles — say, $5,000 or $25,000. Predictable. Manageable. If hail hit and caused $200,000 in roof damage, the HOA paid $25,000 out of reserves and insurance covered the rest.

That model is largely gone now. Colorado HOA insurance premiums increased 35–60% between 2023 and 2025, driven by hail and wildfire risk. In response, insurance carriers stopped offering flat deductibles and shifted to percentage-of-insured-value deductibles. For a mid-sized condo community insured for $10 million, a 2% hail deductible means the HOA owes $200,000 before insurance pays a cent.

Most HOAs don’t have $200,000 sitting in reserves.

When that gap exists, the HOA has two options: take out a loan (which gets paid back through higher monthly dues over time) or levy a special assessment to every unit owner immediately. In practice, many do both.

This shift is happening across the Denver metro right now — not as a future risk, but as a present one.

Special Assessments: What They Are and How Much They Can Be

A special assessment is a one-time charge the HOA passes to every unit owner to cover an unexpected or unbudgeted expense. Most commonly: a large insurance deductible after a storm event, a capital repair the reserve fund doesn’t fully cover, or a legal cost from litigation.

Colorado law allows HOAs to levy special assessments when regular dues income isn’t enough. How large an assessment can be levied without a member vote depends on the HOA’s specific governing documents — often something like 5–20% of the annual budget. Larger amounts typically require a vote of the membership.

In 2025, special assessments hit Denver-metro condo owners at nearly twice the national average rate. Real-world amounts have ranged from $2,500 to well over $17,000 per unit — for roof work alone. When hail damages siding, windows, gutters, and parking structures in the same event, the number climbs higher.

A $9,500 assessment on a $350,000 condo isn’t just surprising — it can be a genuine financial hardship for someone who didn’t budget for it and doesn’t have liquid savings ready. The good news: you can identify high-risk HOAs before you buy. You just have to know what to read.

What to Review Before You Make an Offer

Under Colorado’s Common Interest Ownership Act (CCIOA), sellers are required to provide buyers with a full set of HOA documents before closing. As a buyer, you have a statutory review period — and the right to terminate the contract if you don’t like what you find.

Most buyers receive the HOA document packet, scan the cover page for the monthly fee, and sign off. That’s a mistake that can cost thousands.

Here’s what to actually read — and what to look for:

1. Last 12 months of meeting minutes. This is the single most revealing document in the package. Meeting minutes tell you everything the HOA has been discussing: pending or past special assessments, insurance claim history, reserve shortfalls, deferred maintenance, and owner disputes. If a roof replacement has been “under discussion” for three consecutive meetings, that’s a red flag. If an active insurance claim is unresolved, that matters too.

2. The reserve study and reserve funding level. A reserve study is a long-term capital planning document that estimates the cost of future major expenses (roofs, elevators, parking lots, common area systems) and how much the HOA should have saved to cover them. Healthy communities target 70% or higher funding. Below 50% means high risk of a special assessment or dues increase. Ask for the most recent study — not one from 2021.

3. The master insurance policy — specifically the deductible structure. Is it a flat dollar amount or a percentage of insured property value? If it’s a percentage, ask your agent to calculate the maximum assessment exposure based on the community’s insured value and the deductible percentage. That’s the number you’d potentially owe if a major claim hits.

4. The current budget and financial statements. Is the HOA operating in the black? Are dues collection rates above 95%? A financially stressed HOA is more likely to defer maintenance and more likely to need an emergency assessment when deferred maintenance becomes a crisis.

5. Any disclosed pending or threatened litigation. Construction defect lawsuits, unresolved insurance disputes, or neighbor conflicts can affect your resale value and — in some cases — your ability to finance the property at all.

If any of these documents raise concerns, talk to your agent before your HOA review deadline expires. That deadline exists precisely for this reason. Walking away from a high-risk community during the review period costs you nothing except time. Closing on one can cost you thousands — without warning.

For a full picture of what you’ll owe annually once you close, my guide to property taxes in Jefferson County covers the carrying costs that often surprise buyers — separately from HOA dues and assessments.

Your HO-6 Loss Assessment Coverage Probably Isn’t Enough

If you’re buying a condo, your lender will require an HO-6 insurance policy. Most standard policies include somewhere between $1,000 and $2,000 in loss assessment coverage — the amount your policy pays if the HOA passes through a special assessment to unit owners after a covered event.

That’s not enough for Colorado.

Insurance professionals in the Denver area routinely recommend bumping loss assessment coverage to $25,000–$50,000 minimum. The additional annual premium is usually modest — often $30–$80 more per year for substantially more protection.

There’s a second issue worth flagging: a 2026 investigation by KRDO13 found that some HO-6 policies contain a “special limit” clause that caps loss assessment payouts at $2,000 even if you purchased higher coverage. The clause isn’t prominently disclosed, and many policyholders only discover it after they’ve filed a claim.

Ask your insurance agent directly: Does this policy contain any special limit clause that would cap my loss assessment payout below my stated coverage amount? Get the answer in writing.