Tuesday, February 4, 2014

Open Letter to Colorado Legislators Considering HOA Transfer Fee Reform

Our group was instrumental in surfacing the need to reform and re-write SB 11-234 that made it illegal to assess an HOA transfer fee on residential home sales except for those in HOAs, timeshares, and mobile home parks.  At that time (and now) no reason was given for continuing the fee other than to recover expenses in relation to a home sale (but no specifics, amount limits, rules, regulations, or guidelines for its' use were provided).  HB 14-1254 was intended to place limits on this fee that is forced upon home sellers by a property management company ranging from $50 to over $1,000 with no relation to expenses incurred: no negotiation, justification, or limit to the fee, pay it or you can't sell.  The Bill was also intended to end the illegal use of and uncompetitive practices by large property management firms that hurts small businesses.  Specifically, the fee is used to allow for underbidding on HOA maintenance contracts with the anticipation of subsequent high transfer fee income: not what SB 11-234 authorized.  
This Bill was completely rewritten as directed by and to the elation of the lobbyist group CAI whose members pocket the transfer fee (this boasting is on their web site).  The CAI's directed solution to monitoring transfer fees is to have DORA include benign requirements in their property manager licensing program through HB 13-1277.  This amounts to requesting that the property manager simply document the amount of the excessive fee (not justify or limit it).  Note, DORA has no authority to limit the amount of this fee, control the use of the fee, or define specific rules on what the fee is comprised of, NONE!  In fact, this issue was not even considered by DORA in HB 13-1277.  DORA's involvement in intervening in this issue at the behest of the CAI is highly questionable.
The CAI was adamantly opposed to the original bill that would have saved Colorado home sellers $15 million a year, stopped the illegal use of this fee, and placed limits of the amount of this fee.  Opposition was so strong that lobbyist from their Virginia Office were flown in to help the opposition.  The CAI is now a strong proponent of this Bill as it will ensure nothing changes in the use of the fee and the unjustified amounts home sellers must pay. 
This Bill in its' current form doesn't address any problems mentioned above as originally intended.  I would appreciate a brief meeting with you at your convenience to explain the history and use of the transfer fee and how this Bill is meant to successfully ensure home owners will continue to be assessed a fee for no other reason than "it can continue".  Our fact sheet on this fee is attached and I hope you will consider what we present as it is supported by documents and interviews from property managers. Thank you.

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