Monday, December 21, 2015
The importance of this Office can be greatly enhanced and justified by granting it enforcement authority through implementing an out of court binding dispute resolution process. This would allow home owner's complaints currently filed with the Office to be acted upon: vetted for referral to an out of court entity that would hear disputes and render an enforceable decision. This process would be accessible to all home owners, affordable, efficient, and not require a lawyer on the most simple HOA issues related to non-compliance with the law. Home owners could still choose to go to court vs using this process. Currently, HOA laws and HOA governing documents lack enforcement provisions from the home owner's perspective other than our costly, time consuming, and litigious court system. This process could be managed by the State HOA Office with no cost to taxpayers: paid for with HOA registration fees and/or complaint filing fees. Note, much of the infrastructure such as staffing, a web site, complaint filing and review are already in place and paid for via HOA registration fees. DORA, the State Agency that would implement this system, already has similar systems in place for HOA property manager complaints and other regulated professions making implementation familiar territory for DORA. A State Study has been completed and supports the implementation of an out of court binding dispute resolution process and only awaits legislative sponsorship of a Bill to implement. Empowering the Office with enforcement authority would immediately make our current HOA laws and HOA governing documents that are ineffective from the home owner's perspective highly effective.
Sunday, December 20, 2015
As always seems to be the case with DORA and HOAs and HOAs and legal enforcement of HOA related law, all that glitters is not gold. Let us bring the home owner up to date on what has and is really happening with the licensing program: serious backlog in processing complaints; known unlicensed PMs to DORA have gone months without any corrective action; although the recent culprit was prevented from practicing there should have been accompanying fines and recommendations for criminal prosecution; DORAs feedback to complainants (home owners) is slow, inadequate, or non-existent; DORA implemented licensing rules that favor the industry it is supposed to regulate thus making PM responsibilities and accountability more difficult to prosecute; the web site makes filing complaints and looking up licenses less than an easy and accurate experience ignoring suggestions for improvement; the law needs to be changed to provide financial and credentials relief to the smallest of PM's that in some cases the cost to acquire a license is more than a year's income; and requirements for full disclosure of HOA Transfer fees charged home owners by PMs involves an insulting definition of full disclosure, a one liner on a home closing statement, that ensures home owners can't challenge the legitimacy of this abusive and illegal fee that cost home owners nearly $10 million a year.
The licensing program to date has been more a fees collection, business cost imposition, and tool for special interests to sell educational classes than one of consumer protection. The licensing law and DORA rules have been unduly influenced by interest groups representing the PM industry, the Community Association Institute (CAI), with home owner input scant. DORA has had well over a year to implement this program and home owners deserve more. The law can and must work and home owners will benefit. Legislation is needed to rectify deficiencies in the law to make this program provide the consumer protections intended. Our organization will continue to work with legislators to have the voice of home owners and small businesses heard.
Wednesday, December 16, 2015
- The rules developed by DORA to ensure CAM compliance with the law and bring accountability to the profession are ambiguous and require change. Specifically, (1) rules need to definitively and comprehensively state CAMs must comply with all State HOA laws and HOAs governing documents; (2) require CAMs to notify HOA Boards if any of their activities are in non-compliance with State HOA laws and/or HOA governing documents and recommend corrective action and if violations continue the CAM must report the event to DORA and the State's HOA Office;
- DORA requirements for full disclosure of CAM fees assessed HOAs and home owners are severely lacking and avoid accountability. In particular, DORA requires nothing more than a one liner in an HOA contract or on home closing documents to represent full disclosure which is simply conceding to CAM industry demands to allow things to remain as is. DORA full-disclosure requires no detailed explanation of a fee or why it is charged, who determines the amount of the fee and retains it, confirming and explaining that any fee doesn't overlap or duplicate any charge already paid for through HOA dues or by a Title Company ( (such as the HOA Transfer Fee), requires no receipt to the payee identifying charges by line item, and no requirement to justify the authority to charge the fee and a statement how any Transfer Fee is in compliance with State law HB 11-234 that defines and restricts this fee.
- The DORA web site complaint application requires changes to make it easier to use: develop an on-line complaint status process; assign a tracking number upon completion of complaint for users to inquire/determine the status of their complaint; allow users to mail in documentation that is not conducive to e-mailing; immediate on-screen confirmation when completed with complaint that indicates a successful filing; the license lookup system doesn't list provisional/temporary licenses and only lists one licensed CAM for the largest of property management companies; one can't enter an HOA and find the CAM; search results for a CAM license lookup results in display of information from all DORA programs (clutter!); allow for display all HOAs serviced by a licensed CAM; and provide options to classify the type of CAM complaint to make review and justification of complaints easier to complete and review.
- The time frame in which CAM complaints are resolved is extremely slow to non-responsive. There are cases where DORA knows for months a CAM is not licensed and refuses to take action such as a cease and desist order and/or fine. Closing out/decisions on complaints is very slow and too often complaints seem lost in a bureaucratic maze.
- DORA licensing, fees, and educational structure is burdensome to the smallest of CAMs and relief to these small businesses should be implemented similar to relief given small HOAs in registration fees.
- The licensing program to date is more of a fees imposition and collection system and sales promotion tool for educational courses for a private firm (Community Association Institute (CAI) than a program for bringing integrity and accountability to profession.
Saturday, November 28, 2015
Friday, November 20, 2015
Wednesday, November 11, 2015
Monday, November 2, 2015
The first fee is an HOA Transfer fee retained by and amount determined by the HOA Property Manager (Community Association Manager (CAM)). The HOA doesn't require it and in most cases has no idea about this fee. The fee is in actuality a "double" billing for services already paid for by the home owner via their HOA dues to the CAM: issuing a final bill (Status Letter) to the home owner showing any outstanding/delinquent dues or other obligations: providing copies of HOA governing documents (mostly in electronic form); and charges to change names on administrative records. The fee is actually illegal based on State law, SB 11-234. The law states this fee can only be charged to recover unreimbursed expenses by a CAM in the sale of a home. Thus, why are home owners paying on average $300-350 in Transfer Fees when all the "justification" (based on work performed) for the fee has already been paid for by the home owner?
The Document Processing Fee, charged by the Title Company, makes some sense as it is charged to mostly cover the costs of acquiring from the CAM and providing to the home owner the Status Letter and governing documents. Title Companies must register this process and fee with the State. In some cases the CAM charges the Title Company a fee thus hitting the "trifecta" by being paid three times for the same services.
The Colorado legislature, along with the consent of DORA (Dept of Regulatory Agencies), passed a CAM licensing law and HB, 1254 Disclosure of Fees, to rein in this abusive fee. The sponsors of both laws (highly influenced by CAM lobbyist) and DORA in writing licensing rules avoided requiring CAMs to justify the Transfer Fee. No requirement to identify exactly what the unreimbursed costs related to the sale of a home were that justified the fee; did not require CAMs to document their services justifying the fee by other than a one liner on a home closing statement with amount; did not provide home owners a means to dispute the cost; allowed for unlimited amounts in the fee to over $1,000 without any means for home owners to contest; and didn't address the deceptive practice of CAMs duplicate and triplicate billing home owners. In summary, home owners to continue to pay, CAMs continue to be enriched, and our legislators will again be asked to pass legislation to require legal justification of the fee and to limit the amount.
Thursday, October 15, 2015
Friday, October 9, 2015
The HOA Transfer Fee is assessed HOA home owners upon the sale of their home. The fee ranges from under $50 to over $1,000 with no requirement to justify the fee based on work performed. It's pay it or you can't sell your home. Misunderstood is the fact that the fee is not retained by or amount determined by the HOA but by the HOA's property manager. The fee is not negotiable nor can the services it supposedly provides be shopped for in the market place. Worse yet the fee is not legally mandatory like taxes and filing fees but unquestionably entered on closing documents. The fee costs Colorado home owners upwards of $10 million a year.
The fee was made illegal via SB 11-234 on all residential home sales except those with community associations such as HOAs, condominiums, mobile home parks, and time shares. The fee can be assessed home owners for unreimbursed costs incurred by property managers related to the sale of a home in an HOA. Thus only extraordinary costs apply. At no time in the debate to allow this fee has anyone from the property management industry and their trade group, Community Association Institute (CAI), offered evidence of what these unreimbursed expenses were to warrant any fee let alone fees averaging $350+. Home owners pay HOA dues to cover updates to administrative and billing records, changing and exchanging security codes and cards, creating monthly billings and home owner financial status documents. The dues also pay for updating and making readily available copies (for a small fee) of HOA governing documents. So why are home owners being charged $350 on average to do what they are already paying for?
There is more. Title/home closing companies charge a document fee averaging $150. This in part/full is to cover costs associated with ensuring the buyer receives copies of the HOA governing documents and a Status Letter (no more than a final billing statement indicating the home owner's financial status with the HOA). The property manager, not the HOA, can bill the Title company a fee in any amount to provide this information. Thus the Title company may or may not use the fee in total to cover their own costs. As mentioned, the HOA official documents can be obtained free by the home owner/Realtor via the HOA's web site and hard copies cost no more than $25 and the home owner has already compensated the property manager to complete these ordinary tasks with their HOA dues.
Then there is the Transfer Fee on home refinancing. Yes, you buy a home then refinance a year later and pay the fee again. The administrative and billing records remain the same and your security codes/cards don’t change. The Status Letter (current billing) and HOA governing documents are emailed to the Title company and this costs you hundred’s of dollars in a Transfer Fee and "for what"?
Legislation to end this abusive, excessive, and illegally applied fee was pursued in Colorado several years ago but was watered down and then killed by HOA property manager interests. The HOA property manager licensing bill was supposed to address the disclosure of the fee but not ending or limiting the amount or ability to challenge the fee: basically allowing things to continue as is. Then the State Agency overseeing licensing endorsed disclosure to be a one-liner on closing documents ("HOA Transfer Fee") with no detail, invoice, limit on amount, or justification required.
The Colorado HOA Forum, a Colorado home owner advocacy organization, will continue to lobby legislators to support a Bill to end or limit this fee.
Friday, September 4, 2015
The fee is assessed illegally! SB 11-234 makes the transfer fee illegal unless it pertains to extraordinary costs incurred by a PM in the sale of the home. The transfer fee is "supposedly" charged to reimburse PM's for costs in producing a final home owner's "status of financial standing" with the HOA. Note, this is mostly no more than a final billing that is computer generated taking all of five minutes i.e. routine work. Any justified status letter/transfer fee charges should not include services already paid via HOA dues including producing a statement as to financial obligations of the home owner with the HOA, researching any liens on the property, inspection of the property's condition, producing copies of official HOA documents (that are normally free upon request or involve only a minor fee by the HOA), or for administrative costs such as changing names in records, issuing new card keys or gate remote controls, or updating billing systems (this is all routine, paid for with HOA dues and no different than work required when residents marry, divorce, upon a death that don't result in additional charges to the home owner). Thus, any transfer fee/status letter charge should be fully documented, involve only extraordinary and unreimbursed costs incurred by the PM, and not involve any charges for work already paid for by the home owner with HOA dues.
The new HOA property manager licensing law also precludes PM's from duplicative billing for services, unreasonable and excessive billing for services, and not fully disclosing and documenting work performed. PM's in non-compliance can have their licenses revoked. Additionally, transfer fees as discussed in this article are not allowed when they involve an FHA/HUD loan.
The Colorado HOA Forum wants to hear from anyone who sold their home in an HOA and paid a transfer fee or status letter charge. Contact them at firstname.lastname@example.org . Home owners may be eligible for a refund in part or in full as part of an individual claim or class action suit.
Sunday, July 26, 2015
The Forum understands this Guide is an ongoing process to develop additional legal references to support a laundry list of home owner complaints. It has submitted a list of changes to DORA concerning changes to the on-line complaint process and to add additional features such as allowing complaints and documentation to be submitted via email and U.S. mail and a process to track and give feedback to home owners about filed complaints.
The Colorado HOA Forum also is available to help home owners on filing their complaints by filling a contact form on their web site: www.coloradohoaforum.com .
Friday, July 24, 2015
Possibly one HOA issue can gain success in our legislature with support from home owner's groups and the CAI: HOA foreclosure reform. The abusive and not uncommon practice of HOA's foreclosing on properties for pennies on the dollar is financially devastating to home owners and financial institutions. Too often HOA's foreclose on a property and questionably, but legally, sell the home to speculators, investors, and sometimes privileged parties for a fraction of the home's value to gain payment of HOA debt. The buyer pays off all liens and obligations encumbered on the property, gains title to the property free and clear, and can then proceed to sell the home for fair market value. No requirement to for the HOA to pursue or accept fair market value offers. No net proceeds on the sale go to the bank to mitigate the loss on the defaulted loan nor will any proceeds be used to pay down the home owner's mortgage balance. Too often these foreclosures turn into absentee landlord rentals to the detriment of the community. All this courtesy of Colorado's HOA "super lien" law.
Nevada has recently addressed this problem with legislation. Basically, when an HOA sells, for example, a $400,000 home for $25,000, the mortgage company will have a 60 day period after the sale to intervene and pay off all previous liens, reimburse the purchaser of the property for the sales price plus identified costs incurred. Home ownership would be reverted back to the mortgage company and placed on the market for sale at or near its' fair market value. The net proceeds from the sale would reduce the outstanding mortgage balanced owed by the home owner, reduce the banks losses, and most likely result in a full-time home owner in the community. Thus the practice and incentive of foreclosing/selling HOA homes for pennies on the dollar is mitigated.
Colorado has an HOA "super lien" law promoting this predatory practice. In general, the law allows HOA's to foreclose on homes ahead of first-mortgage providers, giving HOA assessments “super-lien” status that extinguishes first deeds of trust upon foreclosure. Thus if the HOA lien is not paid and HOA foreclosure is completed the buyer is free and clear of any mortgage obligation. HOA legislative reform similar to the Nevada law would address this abusive practice. The Colorado HOA Forum, www.coloradohoaforum.com, will be asking our legislators to sponsor a Bill similar to the Nevada legislation to mitigate this abusive and destructive foreclosure practice
Thursday, July 9, 2015
The authority of an HOA to assess and collect dues and special assessments are defined in HOA governing documents and State Law and are legal financial obligations of the home owner and should be disclosed to home buyers.
Fees assessed HOA home owners by a third party (PM) but not authorized in an HOA's governing documents/declaration or defined in an HOA contract are illegal. Thus, PMs are not legally justified to assess home owner fees simply because the home owner's dwelling is in the HOA they service. The new licensing law requires all HOA fees collected and retained by the PM (including the HOA Transfer Fee) to be documented with the HOA. State HOA law does allow PM's to bill home owners for unreimbursed expenses related to the sale of a home if such action is authorized in HOA documents. The key point is reimbursement of only additional and extraordinary expenses incurred by the PM from the sale of a home and such expenses must be justified by work performed and not otherwise paid to the PM in its' contract with the HOA .
The HOA Transfer Fee is rarely if ever defined, justified, or authorized in any HOA governing document or contract between the HOA and PM or disclosed to home buyers. The new licensing law makes this fee illegal if not fully disclosed in HOA official documents. The issue of a legal Transfer Fee based on unreimbursed expenses is also a basis for contesting this fee. PM's argue the legitimacy of the fee relates to: 1) expenses incurred to provide a copy of the HOA governing documents and a "status letter" (indicating the home owner's financial status on obligations to the HOA such as dues, special assessments, fines) to the buyer and 2) updating HOA records to reflect the change of ownership and issuing credentials to the new owners such as security keys, entrance gate remote controllers, etc.). PM's charge between zero to over $1,000 for these "extraordinary" services without having to justify, explain, or document charges. The fact is that these services are not extraordinary and are base line services the PM is already compensated for in their contract with the HOA. Further, HOA governing documents are free to home owners/Realtors on HOA web sites or for only a small service charge. The "status" letter is no more than producing a final routine billing to the home owner. Finally, updates to administrative records are routine and no more labor intensive than when a divorce, death, rental, or marriage occurs and are considered baseline services in the HOA contract with the PM.
Thus the legitimacy of the HOA Transfer Fee can fail on several counts: 1) if the fee is not for extraordinary and unreimbursed expenses 2) if authority to assess the fee is not documented in HOA official records 3) if the home owner doesn't receive full and detailed documentation of work performed and 4) the fee can't include charges for work already compensated for in the PM contract with the HOA. Home owners should protest this fee to the Colorado Department of Regulatory Services (DORA) if any of these conditions exist. The State complaint form can be obtained from the DORA and the Colorado HOA Forum (www.coloradohoaforum.com) web sites.
Monday, June 29, 2015
The HOA Manager licensing law goes into effect July 1. Expect little reform for HOA home owners. Property managers (PM) will be greeted with
new fees, higher operating costs, and costly licensing requirements. This Law illustrates what happens when the
industry trade group for PMs (Community Association Institute (CAI)) writes the
law and uses it to promote its’ financial interests.
Sunday, May 17, 2015
Friday, May 1, 2015
Recently the CAI led efforts to kill legislation that would have saved home owners nearly $10 million in abusive and unjustified HOA Transfer Fees; this legislative session successfully blocked legislation that would require home owner approval on the use of HOA funds in litigation; don’t support an out of court, affordable and accessible binding dispute resolution process for most HOA complaints; got legislation passed to promote the sale of their costly educational courses and gained exemptions from State testing mandates for those that purchased and completed their courses; didn’t support reduced financial and educational requirements for the smallest of HOAs (20 or less units) to relieve them of costly licensing requirements; and opposed requiring full disclosure and justification of fees assessed home owners by property managers in the licensing rules.
Until our legislators place a priority on and listen to HOA home owners who make up over half of Colorado’s population vs the CAI financial interests the complaints to the State’s HOA Office will continue and home owners will be vulnerable to abusive and costly practices.
Friday, April 24, 2015
Arrive the special interests. The same special interests (Community Association Institute (CAI)) that represent the industry to be regulated. This interest group basically wrote the licensing law and rules and even got legislators to insert verbiage into the law to promote their lucrative business of selling property manager classes. It appears they have even influenced DORA to avoid a legislative directive to make licensing rules that include full disclosure of all property manager fees and assessments levied against home owners.
Now the CAI working with legislators and DORA manages to get this Bill proposed as a "streamline and fix" to the licensing law based upon no experience with the program and no reported problems and even before the program is fully implemented. They further convinced legislators and DORA to again promote the selling of specific CAI courses in this Bill and to allow anyone who pays for and takes CAI courses to avoid State testing mandates.
This Bill should be downright embarrassing to the sponsors of the Bill and any legislator who votes for it. To date the licensing program is heavy on fees and mandates on businesses and lite on the intended purpose of the law which is to address abusive industry practices and consumer protections. Is it any wonder why citizens don't trust or participate in government.
Sunday, April 12, 2015
The HOA Manager Licensing Bill, well intentioned and having the potential to clean up abusive practices and fees, has turned into a fees and license collection entity within State, a marketing tool for the CAI to sell its’ educational courses, a law to support the continuation of the HOA Transfer Fees, and a financial burden on small HOA CAMs that has resulted in many quitting the business. Little can be seen in this Bill to complete the intention of the law: consumer protection. If all this wasn’t enough in supporting the status quo, a few legislators and DORA working with the CAI have proposed a Bill (even before the law is fully implemented) to change licensing rules to further promote CAI educational courses and membership, allowing the CAI to partner with and complete DORA responsibilities of credentialing, testing, and grading CAM applicants, and gaining exclusions selected CAI members.
Licensing of CAMs in Colorado is truly the fox watching over the henhouse and exemplifies why it is so difficult to bring trust and participation from citizens in our government.
Thursday, April 9, 2015
Footnote: even before the licensing law was fully implemented the Community Association Institute (CAI), whose members are the impetus for licensing, had private meetings with leadership in DORA and with legislators to craft a Bill to revise the licensing requirements. Not one thing in this proposed Bill addresses the deficiencies in ethics and rules, operating standards, disclosure of fees, or helping small HOA managers. It does include special exclusions for property manager licensing in some supervisory and executive positions (the very folks at the epicenter of industry abuse will now be immune from even the little accountability in the licensing law).
Thursday, March 5, 2015
Sunday, March 1, 2015
Thursday, February 26, 2015
Thursday, February 19, 2015
Tuesday, February 17, 2015
CAI Threatened Over Empowering HOA Home Owners on the Use of Their Own Funds in Litigation: SB 15-177
Too often HOA lawyers raid HOA bank accounts for legal fees and costly legal cases that should not have been litigated leaving home owners with depleted reserve funds, special assessments to pay legal costs, and/or increases in HOA dues to replenish reserve funds. HOA Boards can currently enter into litigation without apprising home owners of their intent, the cost and consequences of litigation or how they intend to finance legal fees. Boards can incur unlimited legal expenses and even take out debt instruments to pay legal fees. Home owners in too many cases only know of the financial consequences after the case has been litigated and they are stuck with the bill. This Bill simply reins in the authority of an HOA Board (that is highly influenced by HOA lawyers and property managers) in making decisions on litigation that can have significant if not catastrophic financial impact.
SB 15-177 would not preclude legal action but require a majority of home owners to approve litigation. This would mitigate the number of law suits and the abusive practice of an HOA Board suing in behalf of a very few (as few as two) vs the community at large. More cases would be handled in the less expensive legal venue of arbitration thus saving HOA’s significant sums of money. Home owners could still pursue individual actions using their own funds.
The CAI is fabricating a tall tale in contending that any legal fees paid to an HOA lawyer related to routine advice and counsel would take a majority vote of home owners. This Bill doesn’t get involved in regulating or interfering with the operations and daily functions of the HOA. Legal counsel on enforcing covenants, controls, restrictions, and debt collection or other issues involving common and routine HOA issues would not require a majority vote of home owners. It’s just not in this Bill. Payment of routine legal counsel doesn’t require a law suit today nor would it under this Bill. This Bill is directed at legal cases filed in a court of law that are specific, unique, non-recurring and financially impacting. The CAI is attempting in what should be an embarrassing statement to say that any payment to an HOA lawyer would have to be voted upon: this is called desperation.
The winner in this Bill will be home owners in HOA community associations (not the Community Association Institute) who will now be empowered with more control over the assets of the HOA and still retain the right to litigate construction defects. This Bill does not impair the ability of any HOA Board to govern but contributes to open governance.
Monday, January 26, 2015
Yes, this fee is a big deal. It is costly, abusive, unjustified, and amounts to an unwarranted tax on HOA home sellers. It should be easy to end/limit through HOA legislative reform but is viewed less important than identifying the State pet which passed without objection. The Colorado HOA Forum will continue to fight to end this fee.
Monday, January 19, 2015
Tuesday, January 13, 2015
So the lesson in Disclosure and Transparency Legislation 101: A Bill portrayed to rein in abuse and misuse through disclosure will present the illusion of change, enforcement and consumer protection but change nothing with the most significant impact being that the abused be informed (and only minimally) of how they are to be abused.
The Colorado HOA Forum will continue its' efforts to educate the public and legislators on HOA issues and to legislatively end/limit the HOA Transfer Fee to save Coloradans millions each year.