Tuesday, January 5, 2016

HOA Issues Misunderstood by Legislators

Knowledge of home owner's association (HOA) issues acquired by State legislators continues to be dominated by special interest influence.  HOA laws, recent modifications to such laws, and attempts to legislatively improve upon HOA governance have been primarily written by or killed by special interest groups such as the Community Association Institute (CAI), large property management firms, and/or HOA lawyer groups for decades in Colorado.  None of these groups represents home owner's interests or has any particularly measurable membership from home owners or HOAs.  Thus, the misunderstanding and misinformation on HOA issues in our legislature is problem number one from the home owner's perspective.

Recent HOA issues exemplify the misinformation in our legislature making HOA reform a difficult task.  1) Implementing an out of court binding dispute resolution process for HOA complaints to provide an accessible and affordable venue to resolve most HOA disputes.  This process has been endorsed in a State study, would relieve our court system of case loads, instantly make our State HOA laws effective, and not require costly litigation for very simple HOA problems.  The "big lie" promoted is that the system would cost too much to implement and deny home owners the right to a court case, WRONG.  The process is mostly in place (and paid for) in the State's HOA Office, staffing and related costs would be paid for with HOA registration fees amounting to no more than pennies a "year" per home owner, complaint filing fees would also contribute to cost recovery, and home owners could choose either a court case or the State process.  Our court system would reduce case load and thus taxpayer costs and home owners and HOAs would save on legal costs far exceeding any minor increase in HOA registration fees.  A similar system has been implement for HOA Property Manager (PM) complaints.  2) HOA Transfer Fees cost home owners millions of dollars each year and are not only applied illegally based on State law and FHA/HUD rules but represent duplicate and triplicate charges to home owners and Title companies for services already paid for with HOA dues.  The "big lie" and defense of this fee: kill any effort or open discussion to limit or end the fee without defending it.  3) The HOA PM manager licensing Bill was to address full disclosure of fees charged by property managers: never happened and abuse continues.  Full disclosure has been defined by our legislature, DORA, and special interest to be a one liner in an HOA contract or on home closing documents.  No requirement to provide home owners a detailed receipt of charges or any explanation to justify charges, no need to ensure charges are lawful (just collected), no means to question any fee, and if such fees are not paid by a home owner they can be precluded from selling their home and liens can be placed on their homes.   4)  HOA PM licensing was implemented but look closer and one discovers the rules of conduct are weak and reflect the wants of the very industry to be regulated, the law was used to promote the sales of educational courses for a specific private company (CAI), it lacked specifics requiring compliance with State HOA law, exclusions were placed in the law to benefit large property management firms, time share property managers were excluded, etc.  5)  Legislators have been requested to provide financial and educational requirements relief to the smallest HOA property managers as the cost to get a license for many can be nearly equal to or greater than the annual income from their services.  Such reduced fees are provided to small HOAs in registering.  The "big lie" is that this type of proposal exempts small HOA property managers from licensing and such misinformation has stopped efforts to help small businesses and 6) All State HOA legislation, although comprehensive and mostly clearly definitive, lacks any meaningful process for enforcement other than our costly, litigious, and time consuming court system making enforcement of the most simple home owner's rights a "pay-to-play" legal system.  Thus legislators can brag about their efforts on passing HOA Bills but most are simply ornamental and feel good and will remain so until enforcement is included in such laws.

Legislative apathy and misinformation continues towards HOA Colorado home owners who make up nearly 60% (and growing) of the State's population living in nearly 9,000.  The thousands of complaints and inquiries received by the State's HOA Office and by DORA in the recently implemented HOA PM licensing program exemplify a problem and a problem ignored.  Until our legislators make an attempt to listen to and understand the facts on HOA issues and the flaws in the laws they created (with special interests) the road to HOA reform will be lean for home owners and lucrative for those that have been allowed to write and/or influence laws.

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