Monday, December 21, 2015

State HOA Office Requires Exposure and Enforcement Authority

Colorado has a State HOA Office but you would never know it.  The Office was created over two years ago with little fanfare and notice to the public.  The original efforts in creating the Office were to provide oversight of HOA communities, some enforcement of HOA laws, and to provide a comprehensive repository of State HOA information.  Unfortunately, the Office was never granted any oversight or enforcement authority thus only serving as an administrative entity.  To date the Office has provided a valuable service to home owners (those who know about it) by posting on its' web site a very comprehensive library of HOA laws and guidelines and educational sources;  conducting community HOA informational meetings; collecting, compiling, and reporting on the status of HOA housing in the State; administering an HOA registration program; and developing an HOA complaint filing system that has catalogued thousands of complaints/inquiries and surfaced major problems in HOA governance and in enforcement of HOA home owner's rights.  Note, the Office can't advise home owners on legal rights, provide legal opinions on the validity of any complaint, get involved in problem resolution, or provide any referrals to legal counsel.

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

HOA Property Manager Licensing Nabs First Culprit, but.....

Colorado implemented an HOA Property Manager (PM) Licensing Program July 1, 2015.  The intent is to provide home owner protections against unscrupulous business practices in the HOA property management industry.  DORA, the agency managing the program, nabbed its' first culprit this past week after the program has been functioning for nearly six months.  This is some good news for home owners and a flag waving and press release event for DORA.   The Colorado HOA Forum, Colorado's largest and most recognized HOA home owner's advocacy organization, was a force to promote licensing and applauds this single event.

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

HOA Property Manager Implementation: Problematic

Colorado fully implemented its' Community Association Manager (CAM) Licensing Program (aka HOA Property Manager) July 1, 2015.   DORA, the state Agency responsible for implementation and management of the program, had over one year to analyze, plan, design, develop, test, and implement the program.  The scope and complexity of the program are very similar to other regulated professions in the State thus making implementation neither new territory or requiring a host of new on-line applications.  Our organization, Colorado HOA Forum, offers the following status report on this program and it is not good:
  1.  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;
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
CAM licensing program deficiencies need to be addressed to serve the needs of the public vs catering to the interests of the very industry it is supposed to regulate.