Governments at all levels can legally levy taxes, fees, and assessments on citizens, services, and things. All such actions must be defined legislatively as to application and purpose and how the levy is computed. Taxes and fees must be applied without bias, consistently, and their use well defined. Penalties for non-compliance are defined. This powerful tool of government must be selectively, cautiously, and judiciously used and periodically reviewed for relevance, need and continuance. This authority over commerce and citizens should be limited to government entities and not extended to private companies.
NOW CONSIDER THE HOA TRANSFER FEE (TF). IT EXTENDS THIS TAXING POWER OF THE GOVERNMENT TO HOA PROPERTY MANAGEMENT COMPANIES AND MAKES TAXATION LOOK BENIGN. AN OUTRAGEOUS STATEMENT BUT PLEASE READ ON.
SB 11-234 makes it legal for a property management company (also known as a Community Association Manager (CAM)) with a contract with a Homeowners Association (HOA) to charge the home seller a TF upon the sale of their home. It doesn't make the TF a legal requirement nor does it extend a legal right for the CAM to force this fee upon a home seller without their acceptance and to impose penalties upon the seller if the amount is not paid (by precluding sale of the home).
The real estate home closing environment, however, enables a CAM to act as a tax agent exercising a self-assigned authority to compute and collect a TF with mandated payment and penalties for non-payment and with no ability for the home owner to challenge the assessment. This is done by the CAM with: 1) no oversight, rules, limits on amounts assessed, or consistency in levying the fee, 2) no statutory/legal authority to impose a TF without acceptance by the consumer and 3) no authority to impose a penalty on the seller if they object to the TF (if they don't pay the sale is suspended).
Why does a CAM essentially have taxing authority over HOA home sales? The legislature found this de facto taxing authority illegal on all residential home sales in SBF 11-234 except for community association properties (HOAs). This exceptional and questionable power extended to CAMs is and has been open to abuse and misuse. Mandatory TFs range from $50 to over $1,000 with charges having little if anything to do with the described use of the TF in the law and work completed.
It is time to limit the ability of CAMs to act in the capacity of taxing agents and rein in the use and abuse of TF's. If I had to choose between a tax and a transfer fee, give me the tax as at least I know the rules to play and can understand the why's, what's, and amounts involved in the financial obligation: NOT SO WITH TRANSFER FEES.
I urge you to support limits on HOA TFs (that also includes mobile home and timeshare sales) to save Colorado home sellers/buyers $15 million a year in unwarranted fees and assessments.