HB 16-1133 was defeated in Committee, February 22, 2016. This Bill was simple, no burden on businesses or taxpayers, and only required HOA property managers (PM), also known as Community Association Managers, to provide a detailed receipt to home owners when fees are paid. The Bill did not preclude any fees from being charged or limit amounts: just provide a detailed receipt of work completed. The Bill was intended to mitigate the practice of HOA PM's duplicate and triplicate billing for services already paid for via HOA dues or HOA Transfer Fees and/or Title Companies: happens all the time. It also was intended to reveal the practice of excessive billing whereby PM fees for the same services ranged from $50 to $1000 and home owners were required to pay without a receipt or a lien could be placed on their property or stop their home sale. Finally, a receipt was to be required to justify that the HOA PM Transfer Fee only represented expenses unique and incurred in the sale of a home which otherwise would make them illegally assessed as defined under State and Federal law. This all proved to much help for home owners in the eyes of the legislators.
The Community Association Institute (CAI) and property managers testified before Committee hearing this Bill. If you weren't in attendance their objections to this Bill will be difficult for you to believe but our legislators absorbed the misinformation to reinforce they NO vote. Testimony contended that providing a receipt would impose an excessive cost and that it was impossible to detail the work done to earn the home sale Transfer Fee. If they can't identify what they did to earn the fee what evidence is there that they did anything and why are they charging it? CAI folks also argued that a one line statement in a PM's contract with the HOA (that home owners never see) and a one liner with amount on a home sales contract was enough disclosure and no need to justify the fee based on work performed or provide a detailed receipt to any home owner. Do you think COMCAST, Xcel Energy, or Master Card can get away with billing you without providing a detailed invoice of work completed? There is no legal basis except with HOA PM fees to demand payment without proving services rendered!
HOA home owners will continue to pay PM fees in an environment of "pay it, shut up, or else". No other business would endorse such a practice but our legislature must be thanked for enabling, protecting, and approving this deceptive and abusive situation with their veto of Colorado HB 16-1133.
Showing posts with label hoa fees. Show all posts
Showing posts with label hoa fees. Show all posts
Monday, February 22, 2016
Monday, November 2, 2015
Questionable HOA Fees Costing Home Owners Millions
If you closed on a home in an HOA you most likely noticed a few line items that are, well, just there. Ask for an explanation of the fee and your Realtor in many cases has no idea what it is for, how the fee was determined, or who is charging and retaining it. Worse yet you get no receipt or detailed invoice but are simply instructed to pay it or the home sale will not be completed. Then there is another fee home owners pay and have no particular details about it: a Document Processing Fee. You might be told it is a cost incurred by the Title company to provide the buyer documents about the HOA. Still no receipt on who "really" receives the fee and what work was completed to earn it. This practice robotically continues on tens of thousands of home sales each year not because it is all legal or mandated but "because it can" and our legislators dodge the issue at the cost of millions to home owners
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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.
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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.
Friday, May 1, 2015
HOA Group Continues to Block HOA Legislative Reform
The name sounds HOA home owner friendly but the organization has nothing to do with representing home owner interests: just the opposite. The Community Association Institute (CAI), the trade group for property managers and HOA legal interests, has thwarted HOA legislative reform for decades. They have obstructed legislative efforts to promote enforcement of HOA home owner’s rights as stated in State law and HOA governing documents while getting legislation passed to promote their financial interests and ensure continuation of abusive, unjustified, and illegal fees on HOA home owners. To say this another way, our legislators have allowed this group to write, modify, and suggest HOA legislation that has been detrimental to home owners.
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.
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.
Monday, December 15, 2014
FHA-HUD Loans and Affordable Housing Problemed by HOA Transfer Fees
The HOA Transfer Fee charged, retained, and amount determined by property management companies (PMC) on home sales in community associations poses an impediment to HUD loan approval. This fee was made illegal on residential home sales in 2011 except in HOAs. Why: 1) legislative influence by interest groups and 2) because the fee is a means to prop up profits for PMCs on the backs of home sellers without having to justify work for the fee (in other words it is charged only because it can with tactic endorsement from Realtors, mortgage companies, HOAs, developers, and home sale closing agents). Note, the fee is not mandatory nor can the home seller shop for a better rate (ranging from $50 to $1,000+) and if not paid the home sale is held up. If you are applying for an FHA/HUD loan and the HOA or condominium charges a transfer fee related to the sale of the home, the loan most likely will not be approved. This third party fee benefiting the PMC and representing redundant charging by the PMC for work already compensated for in the PMCs's contract with the HOA is not allowed under FHA guidelines. Thus, the HOA Transfer Fee, costing home owners millions a year in Colorado, unjustifiably and financially burdens home owners and impedes loan opportunities to low and moderate home buyers. The time to end this fee is now and we at the Colorado HOA Forum ask our legislators to sponsor a Bill to limit/end this abusive, unproductive, and harmful fee.
If you purchased a home in an HOA (single family dwelling, townhome, condominium) over the past two years and your closing documents indicate an HOA Transfer Fee was assessed, please contact the Colorado HOA Forum coloradohoaforum@gmail.com. We will work with home buyers/sellers to request a refund of this fee and apprise the FHA of this improper fee.
If you purchased a home in an HOA (single family dwelling, townhome, condominium) over the past two years and your closing documents indicate an HOA Transfer Fee was assessed, please contact the Colorado HOA Forum coloradohoaforum@gmail.com. We will work with home buyers/sellers to request a refund of this fee and apprise the FHA of this improper fee.
Wednesday, November 5, 2014
Your Voice: HOA Oversight in Colorado Raises Questions: Part II
This is part two of a two part article on HOA governance in Colorado and the role of a government agency in influencing (or not) HOA law.
DORA is also chartered to seek out multiple providers for educational requirements under CAM licensing and to develop testing procedures. To date, and after one year, DORA has not posted on its’ web site the competing educational providers with the CAI remaining the sole source. CAI legislative sponsors promoted the CAI courses and DORA gave tacit approval and to date there has been nothing indicating that DORA has reviewed and certified the courses, that the courses are reflective of current HOA changes in the law, and a process to mandate annual review of such courses will take place. Also, by not early on posting alternative sources for educational classes the CAI can charge what they want and CAMs are left with a sole source of “approved classes?” An unintended (again) promoting of a private company via a government agency.
DORA is now considering allowing the CAI to conduct its’ own testing and grading of exams and granting partial license certification to PMs. This is contradictory to the law that indicates a professional testing company shall complete testing and grading with only DORA granting license certification in part or in full. Furthermore, the oversight, review, and update of CAI class material, testing and grading procedures, and security over such tests have not been reviewed by DORA. We know of no plans to do so. If the CAI request is granted, we will have the same folks (CAI) that have been “leaders” in CAM education and leadership in Colorado for two decades and resulted in the in the need for regulatory oversight be the guiding light in “cleaning-up” the industry. This arrangement (along with CAI involvement in guidelines) is equivalent to allowing a company that is polluting a lake and waterways write their own rules and standards and complete testing of waters for safety, and issue their own licenses. DORA needs to take full control of this program to maintain the integrity of the licensing program.
Then there is the recent event whereby a Bill was proposed to end/limit the unwarranted, unjustified, and illegal (in Colorado) HOA home sale Transfer Fee. Our legislative sources at the Colorado HOA Forum and articles on the CAI legal web site indicate the CAI lobbied hard to defeat this Bill. As a result the Bill was totally diluted into a disclosure law thus ensuring nothing would change and million of dollars would continue into the bank accounts of CAI members. DORA was to address disclosure of all fees and the HOA home sale Transfer Fee in their guidelines for CAM licensing. Not surprisingly, the first release of CAM licensing guidelines included only vague directives on fees disclosure. DORA’s ambiguous and loose disclosure mandates for HOA Transfer Fees don’t require justifying the fee in detail. DORA CAM guidelines don’t mention in disclosure requirements that the HOA Transfer Fee is not mandated by law nor hold up the sale of a home hostage in the event the fee is protested by the seller. Also, with no requirement to justify the fee by cause with an itemized invoice, it will make it difficult for home owners to protest this fee. The opportunity for DORA to protect consumer rights, as their charter indicates, will be missed if fees disclosure of all types are not required to be detailed and justified.
The next test for DORA is coming this legislative session. Our organization will be pursuing legislative sponsors for an out of court binding dispute resolution process for home owner complaints Bill. The CAM licensing program includes a home owner complaint resolution process handled out of court through DORA. Also, a State HOA dispute resolution study completed by DORA endorsed this process. The CAI and legal types, however, oppose this process. DORA will be asked to speak on this issue and if they reject it they are rejecting and invalidating the very work they will be doing under CAM licensing and other licensing programs they administer. DORA should also speak to allegations that this out of court process will result in home owners losing legal rights and the process is as costly as a court appearance: both NOT true.
Citizen trust in our government institutions is at an all time low and HOA home owners need look no further than the examples above to take that trust down another notch. If DORA was fully operating within its’ mission statement (see below) and being an active participant in the legislative and regulatory process there would be no reason for this article:
“DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission.”
DORA is also chartered to seek out multiple providers for educational requirements under CAM licensing and to develop testing procedures. To date, and after one year, DORA has not posted on its’ web site the competing educational providers with the CAI remaining the sole source. CAI legislative sponsors promoted the CAI courses and DORA gave tacit approval and to date there has been nothing indicating that DORA has reviewed and certified the courses, that the courses are reflective of current HOA changes in the law, and a process to mandate annual review of such courses will take place. Also, by not early on posting alternative sources for educational classes the CAI can charge what they want and CAMs are left with a sole source of “approved classes?” An unintended (again) promoting of a private company via a government agency.
DORA is now considering allowing the CAI to conduct its’ own testing and grading of exams and granting partial license certification to PMs. This is contradictory to the law that indicates a professional testing company shall complete testing and grading with only DORA granting license certification in part or in full. Furthermore, the oversight, review, and update of CAI class material, testing and grading procedures, and security over such tests have not been reviewed by DORA. We know of no plans to do so. If the CAI request is granted, we will have the same folks (CAI) that have been “leaders” in CAM education and leadership in Colorado for two decades and resulted in the in the need for regulatory oversight be the guiding light in “cleaning-up” the industry. This arrangement (along with CAI involvement in guidelines) is equivalent to allowing a company that is polluting a lake and waterways write their own rules and standards and complete testing of waters for safety, and issue their own licenses. DORA needs to take full control of this program to maintain the integrity of the licensing program.
Then there is the recent event whereby a Bill was proposed to end/limit the unwarranted, unjustified, and illegal (in Colorado) HOA home sale Transfer Fee. Our legislative sources at the Colorado HOA Forum and articles on the CAI legal web site indicate the CAI lobbied hard to defeat this Bill. As a result the Bill was totally diluted into a disclosure law thus ensuring nothing would change and million of dollars would continue into the bank accounts of CAI members. DORA was to address disclosure of all fees and the HOA home sale Transfer Fee in their guidelines for CAM licensing. Not surprisingly, the first release of CAM licensing guidelines included only vague directives on fees disclosure. DORA’s ambiguous and loose disclosure mandates for HOA Transfer Fees don’t require justifying the fee in detail. DORA CAM guidelines don’t mention in disclosure requirements that the HOA Transfer Fee is not mandated by law nor hold up the sale of a home hostage in the event the fee is protested by the seller. Also, with no requirement to justify the fee by cause with an itemized invoice, it will make it difficult for home owners to protest this fee. The opportunity for DORA to protect consumer rights, as their charter indicates, will be missed if fees disclosure of all types are not required to be detailed and justified.
The next test for DORA is coming this legislative session. Our organization will be pursuing legislative sponsors for an out of court binding dispute resolution process for home owner complaints Bill. The CAM licensing program includes a home owner complaint resolution process handled out of court through DORA. Also, a State HOA dispute resolution study completed by DORA endorsed this process. The CAI and legal types, however, oppose this process. DORA will be asked to speak on this issue and if they reject it they are rejecting and invalidating the very work they will be doing under CAM licensing and other licensing programs they administer. DORA should also speak to allegations that this out of court process will result in home owners losing legal rights and the process is as costly as a court appearance: both NOT true.
Citizen trust in our government institutions is at an all time low and HOA home owners need look no further than the examples above to take that trust down another notch. If DORA was fully operating within its’ mission statement (see below) and being an active participant in the legislative and regulatory process there would be no reason for this article:
“DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission.”
Saturday, September 13, 2014
HOA Transfer Fees Still Burden Home Owners
HOA Transfer Fees will continue to financially burden HOA home owners despite new disclosure guidelines in the Colorado HOA property manager (Community Association Manager, CAM) licensing Bill effective July 2015. This is a fee imposed on home sellers to subsidize the CAM industry, is not mandated by law, and funds are retained by the CAM not the HOA. The fee, ranging from $100 to over $1,000 has never been justified by work performed, must be paid or the home sale can't be completed, and is not negotiable in amount (it's whatever the CAM decides, no if's, and's, or but's). The cost to Colorado HOA home owners is over $10 million a year and nationwide the tab runs to several hundred million dollars a year.
Colorado began a road to reform on this fee with the introduction of a Bill in 2014 to limit the fee in amount, require CAMs to justify the reason and amount of fee, and show how they were not already compensated for all Transfer Fee work in their contract with the HOA (which to date they have never done). The Community Association Institute (CAI) effectively killed the Bill and our legislators allowed them to re-write the Bill to preclude any dollar limits, negotiation of fees, or require justification and itemized disclosure of amounts charged. Instead, HOA home owners got the issue pushed to the CAM licensing guidelines in the form of "requesting" the fee be disclosed ensuring nothing will change and it will continue to be a "pay it or you can't sell" situation. The detail of disclosure can be a one liner "Transfer Fee" on a closing statement with no specific explanation or justification. Also tacitly supporting this abusive fee was the Colorado Association of Realtors who refused to take a stand on the fee to help the folks who put bread on their plates: home sellers and buyers.
Our organization, Colorado HOA Forum, will again in 2014-2105 seek legislative sponsors to limit or end this fee. The CAI will also be there to peddle their influence and kill any home owner efforts to end/limit this fee.
Colorado began a road to reform on this fee with the introduction of a Bill in 2014 to limit the fee in amount, require CAMs to justify the reason and amount of fee, and show how they were not already compensated for all Transfer Fee work in their contract with the HOA (which to date they have never done). The Community Association Institute (CAI) effectively killed the Bill and our legislators allowed them to re-write the Bill to preclude any dollar limits, negotiation of fees, or require justification and itemized disclosure of amounts charged. Instead, HOA home owners got the issue pushed to the CAM licensing guidelines in the form of "requesting" the fee be disclosed ensuring nothing will change and it will continue to be a "pay it or you can't sell" situation. The detail of disclosure can be a one liner "Transfer Fee" on a closing statement with no specific explanation or justification. Also tacitly supporting this abusive fee was the Colorado Association of Realtors who refused to take a stand on the fee to help the folks who put bread on their plates: home sellers and buyers.
Our organization, Colorado HOA Forum, will again in 2014-2105 seek legislative sponsors to limit or end this fee. The CAI will also be there to peddle their influence and kill any home owner efforts to end/limit this fee.
Friday, September 12, 2014
HOA complaint resolution requires HOA homeowner involvement
Silence is not golden! Seems that too many Homeowners Association (HOA) home owners can get long on complaints but short on acting on their concerns. If you have/had an HOA complaint or feel you’ve been wronged by your HOA Board or property management company (PMC) you’re not alone but you must be heard. The State HOA Office and your State representatives have received thousands of HOA complaints over the past two years. This represents but a fraction of HOA complaints.
HOA home owner apathy is no different than in our general population. What drives apathy in HOA disputes is an inability of home owners to successfully exercise their rights. In Colorado we have many HOA laws and nearly two-thirds of our population live under HOA governance. Home owners encountering problems and simply trying to get their HOA to comply with their own governing documents quickly find out that what is in the law and their by-laws is not always enforceable from the home owners perspective. The number one reason for our HOA laws being basically unenforceable is that they all lack a viable, affordable, and accessible means for dispute resolution except our costly, time consuming, litigious, and “pay to play” court system. This dilemma on HOA governance increases home owner apathy and disengagement but doesn’t dampen individual disenchantment with the HOA living concept.
The solution to enforcement of HOA home owner rights rests with implementing an out of court binding dispute resolution process. A process that is affordable and accessible and has a definite beginning (filing a complaint) and end (a decision). Such a process was recently passed into law for HOA home owner complaints with PMCs that will go into law in July 2015. This process is also used when filing complaints against licensed professions in the State via the Department of Regulatory Agencies (DORA). Why not for HOA home owner complaints?
The State of Colorado completed a study that identified out of court binding dispute resolution for home owner complaints. This process would handle 95% of home owner complaints that involved non-compliance with HOA law and HOA governing documents but not be applicable to felony cases or those over a certain dollar limit in damages. Home owners could still opt to go to court vs this process and thus no one’s legal rights to a court case are forfeited. The process levels the playing field by not requiring lawyers and costly court proceedings, decides cases on current HOA law and HOA governing documents not legal maneuvers in court, allows for home owners to have their “day in court”, provides no advantage to those with financial resources, keeps frivolous complaints out of court, saves home owners and HOAs in court costs, and provides finality to complaints. It is the solution to HOA complaints.
Implementation of an out of court binding dispute resolution process only awaits legislator sponsors in the upcoming Colorado legislative session. I can assure you that those opposed to reform such as the Community Association Institute (CAI), property managers, and HOA lawyers are already at work with their lobbyists, lawyers, and financial influence to stop such HOA reform in Colorado.
Our organization, Colorado HOA Forum, knows your State legislators are finally beginning to understand HOA issues from the home owner’s perspective. They know what should be done but to date have no done it. In the past, legislators only listened to well paid lobbyist such as the CAI to craft legislation and pursue HOA issues. Of course this ensures nothing changes. HOA home owners must contact their legislators asking them to support the State HOA study and implement an out of court binding dispute resolution process. This can easily be done by visiting the Colorado HOA Forum’s web site.
HOA home owner apathy is no different than in our general population. What drives apathy in HOA disputes is an inability of home owners to successfully exercise their rights. In Colorado we have many HOA laws and nearly two-thirds of our population live under HOA governance. Home owners encountering problems and simply trying to get their HOA to comply with their own governing documents quickly find out that what is in the law and their by-laws is not always enforceable from the home owners perspective. The number one reason for our HOA laws being basically unenforceable is that they all lack a viable, affordable, and accessible means for dispute resolution except our costly, time consuming, litigious, and “pay to play” court system. This dilemma on HOA governance increases home owner apathy and disengagement but doesn’t dampen individual disenchantment with the HOA living concept.
The solution to enforcement of HOA home owner rights rests with implementing an out of court binding dispute resolution process. A process that is affordable and accessible and has a definite beginning (filing a complaint) and end (a decision). Such a process was recently passed into law for HOA home owner complaints with PMCs that will go into law in July 2015. This process is also used when filing complaints against licensed professions in the State via the Department of Regulatory Agencies (DORA). Why not for HOA home owner complaints?
The State of Colorado completed a study that identified out of court binding dispute resolution for home owner complaints. This process would handle 95% of home owner complaints that involved non-compliance with HOA law and HOA governing documents but not be applicable to felony cases or those over a certain dollar limit in damages. Home owners could still opt to go to court vs this process and thus no one’s legal rights to a court case are forfeited. The process levels the playing field by not requiring lawyers and costly court proceedings, decides cases on current HOA law and HOA governing documents not legal maneuvers in court, allows for home owners to have their “day in court”, provides no advantage to those with financial resources, keeps frivolous complaints out of court, saves home owners and HOAs in court costs, and provides finality to complaints. It is the solution to HOA complaints.
Implementation of an out of court binding dispute resolution process only awaits legislator sponsors in the upcoming Colorado legislative session. I can assure you that those opposed to reform such as the Community Association Institute (CAI), property managers, and HOA lawyers are already at work with their lobbyists, lawyers, and financial influence to stop such HOA reform in Colorado.
Our organization, Colorado HOA Forum, knows your State legislators are finally beginning to understand HOA issues from the home owner’s perspective. They know what should be done but to date have no done it. In the past, legislators only listened to well paid lobbyist such as the CAI to craft legislation and pursue HOA issues. Of course this ensures nothing changes. HOA home owners must contact their legislators asking them to support the State HOA study and implement an out of court binding dispute resolution process. This can easily be done by visiting the Colorado HOA Forum’s web site.
Your Voice: HOA fees: it’s not the amount but the value and justification
Two thirds of Colorado residents live under Homeowners Association (HOA) governance. All live under covenants, controls, and restrictions and are assessed dues and fees in return for community provided services and amenities. Amounts vary and so do the range and quality of service. Dissatisfaction arises when the value of services for fees is not in line with home owner expectations and/or the justification for fees is poorly supported and can’t be contested. So what causes this misconnect between expectation and delivery.
Problems can occur when HOA home buyers/owners are unaware of what services are to be provided by the HOA. Providing this information to home owners prior to closing on the sale of a home and having buyers certify they read it should be a legal requirement. Problems also occur when HOAs mismanage funds resulting in an inability to provide services at a quality level. This includes not funding HOA reserve funds for planned maintenance, using intended maintenance funds inappropriately on Board special projects or on costly and mostly avoidable law suits, over paying and not competing contract work, and just poor financial planning and management with no oversight or accountability. Then there is the problem of HOA dues being too low for too long to deliver services. Another significant and less discussed problem relates to the lack of oversight and control over the property management companies (PMC). In most HOAs, the PMC runs the community and yes this is the tail wagging the financial dog with little oversight or disclosure to home owners. One more but necessarily the last problem is that HOA Boards have almost zero accountability and unlimited authority in making financial decisions for the community without apprising or with the approval of home owners. This includes raising HOA dues, making special assessments, embarking on high cost law suits, and funding special and high cost projects all without home owner approval or having to justify their actions to home owners.
Then there are fees assessed HOA home owners by PMCs that are not in any HOA documents or approved by HOA Boards. For example, the HOA Transfer Fee. This fee is NOT imposed by, determined by, or retained by the HOA but pocketed by the PMC upon the sale of a home in an HOA. No justification or legal requirement is given, the amount is arbitrary ranging from $100 to over $1,000, can’t be negotiated, must be paid or you can’t sell your home, and worst of all you don’t know about the fee until the closing on your home.
HOA fees and financial accountability are an ongoing problem for HOA home owners. Although Colorado has many HOA laws they all lack an ability to hold the HOA Board and/or PMC accountable for financial mismanagement, reckless behavior, or to provide quality services. The laws lack mandates for home owner involvement and approval on spending HOA funds. Home owners are left paying the fees and assessments unless they choose to challenge the HOA in our costly, litigious, time consuming, “pay to play” court system and most simply can not afford this venue. The good news is that most HOAs and PMCs operate with a good degree of integrity but when bad apples arise the financial consequences can be catastrophic and costly to home owners. Until our State laws are modified to empower home owners with a means (out of court binding dispute resolution process) to hold HOA Boards and PMCs accountable home owners will remain vulnerable to financial abuse and unexpected financial obligations.
Problems can occur when HOA home buyers/owners are unaware of what services are to be provided by the HOA. Providing this information to home owners prior to closing on the sale of a home and having buyers certify they read it should be a legal requirement. Problems also occur when HOAs mismanage funds resulting in an inability to provide services at a quality level. This includes not funding HOA reserve funds for planned maintenance, using intended maintenance funds inappropriately on Board special projects or on costly and mostly avoidable law suits, over paying and not competing contract work, and just poor financial planning and management with no oversight or accountability. Then there is the problem of HOA dues being too low for too long to deliver services. Another significant and less discussed problem relates to the lack of oversight and control over the property management companies (PMC). In most HOAs, the PMC runs the community and yes this is the tail wagging the financial dog with little oversight or disclosure to home owners. One more but necessarily the last problem is that HOA Boards have almost zero accountability and unlimited authority in making financial decisions for the community without apprising or with the approval of home owners. This includes raising HOA dues, making special assessments, embarking on high cost law suits, and funding special and high cost projects all without home owner approval or having to justify their actions to home owners.
Then there are fees assessed HOA home owners by PMCs that are not in any HOA documents or approved by HOA Boards. For example, the HOA Transfer Fee. This fee is NOT imposed by, determined by, or retained by the HOA but pocketed by the PMC upon the sale of a home in an HOA. No justification or legal requirement is given, the amount is arbitrary ranging from $100 to over $1,000, can’t be negotiated, must be paid or you can’t sell your home, and worst of all you don’t know about the fee until the closing on your home.
HOA fees and financial accountability are an ongoing problem for HOA home owners. Although Colorado has many HOA laws they all lack an ability to hold the HOA Board and/or PMC accountable for financial mismanagement, reckless behavior, or to provide quality services. The laws lack mandates for home owner involvement and approval on spending HOA funds. Home owners are left paying the fees and assessments unless they choose to challenge the HOA in our costly, litigious, time consuming, “pay to play” court system and most simply can not afford this venue. The good news is that most HOAs and PMCs operate with a good degree of integrity but when bad apples arise the financial consequences can be catastrophic and costly to home owners. Until our State laws are modified to empower home owners with a means (out of court binding dispute resolution process) to hold HOA Boards and PMCs accountable home owners will remain vulnerable to financial abuse and unexpected financial obligations.
Friday, August 22, 2014
Will Colorado HOA Home Owners be Ignored by Legislators, Again?
This past Colorado Legislative session was a loss for home owners with proposed legislation to save HOA home owners millions of dollars in unjustified fees reduced to a meaningless disclosure Bill. Another proposal to preclude HOA Boards from using HOA funds on law suits without home owner approval died. Then there was just a lack of interest by legislators when asked to sponsor Bills to limit the amount of special assessments a Board can levy without home owner approval, limiting fees and administrative charges on HOA debt (not pocketed by the HOA), and follow-up on a State mandated study that would provide for an out of court binding dispute resolution process for most HOA home owner complaints. The big winners with HOA home owner legislative efforts were the Community Association Institute (CAI), lawyers, and property managers who lobbied to ensure HOA Bills and issues were not addressed and/or when introduced as legislative Bills were killed or watered down to retain the status quo.
Our group, Colorado HOA Forum, www.coloradohoaforum.com , will again begin our efforts to gain legislative sponsors to reform HOA governance. This should be a somewhat easy task with over two thirds of Coloradans living under HOA governance, with thousands of complaints received by the State HOA Office, and equal amounts of emails and telephone calls received by legislators about HOA concerns. However, opposition groups are well funded and influential in our State legislature.
This is an election year and HOA home owners need to ask their legislators questions about who they represent in HOA issues. HOA issues for this voting group affect their lives financially, legally, and socially as much if not more than any issue.
Our group, Colorado HOA Forum, www.coloradohoaforum.com , will again begin our efforts to gain legislative sponsors to reform HOA governance. This should be a somewhat easy task with over two thirds of Coloradans living under HOA governance, with thousands of complaints received by the State HOA Office, and equal amounts of emails and telephone calls received by legislators about HOA concerns. However, opposition groups are well funded and influential in our State legislature.
This is an election year and HOA home owners need to ask their legislators questions about who they represent in HOA issues. HOA issues for this voting group affect their lives financially, legally, and socially as much if not more than any issue.
Friday, August 15, 2014
Colorado HOA Forum: Newsletter May - July 2014
The Colorado HOA Forum has just published its' latest newsletter: May - July 2014. The newsletter can be accessed on their web site www.coloradohoaforum.com
CAM Licensing Provides for Out of Court Binding Dispute Resolution, why not same for HOAs ?
We would like to see the Colorado Department of Regulatory Agencies (DORA) speak out in support of our out of court binding dispute resolution proposal Regardless of what they may claim, they do get involved on some level with legislation. This was exhibited when they tacitly endorsed an empty disclosure law to rein in HOA transfer fees vs a direct law to limit this abusive fee. They were quoted by legislators and the CAI as not endorsing a law to limit transfer fees. Furthermore, DORA has directly allowed interest groups to write their regulatory guidelines as is the case with property manager licensing with CAI input.
This Office completed a study on HOA complaint resolution in which our proposal for an out of court binding process was recommended. The proposal awaits a legislative sponsor and surely DORA’s opinion will be sought. We hope DORA points out when questioned by legislators in the next legislative session that they will be providing an out of court dispute resolution for property manager complaints. If it is good enough for property managers (and all others that DORA regulates) it is a valid process for HOA home owner complaints.
FHA Loans, CAI, and Transfer Fees
The CAI is continues to attack home owner wallets in their defense of transfer fees assessed on HOA home sales. If you recall it was the CAI that led the effort to kill the Bill in Colorado that would have limited/ended transfer fees. That cost home owners over $10 million a year and fattened their constituent bank accounts.
The FHA will be issuing new rules to limit or end transfer fees assessed by third parties. Basically, any home sale involved with assessing buyers transfer fees will not be eligible for an FHA loan. This supports what we advocate and maybe our legislators will get it this time around and vote for home owners and not property managers and lawyers with legislation limiting HOA transfer fee.
The National Association of Realtors has come out to oppose transfer fees that developers and others assess home buyers to generate private revenue and profit. They still are not on board with prohibiting or limiting HOA transfer fees assessed by property managers that our group has written extensively on and lobbied our legislators in Colorado. When will the Colorado Association of Realtors (CAR) and our State representatives stand up to the lawyers and the CAI to end transfer fees and defend the folks who put bread on their plate: home owners? Ask CAR? Email: communications@ColoradoREALTORS.com
If the new FHA guidelines limit or prohibit the assessment of transfer fees on their loans this would be a good first step and help in promoting legislation in Colorado to end this abusive and unjustified fee. The new rules will be published later this year.
Colorado HOA Forum's 2014-2015 Legislative Initiative
The Colorado HOA Forum’s legislative Goals and Objectives for 2014-2015. If you support a goal (s) please take time, using our web site, to write your State legislator asking them to sponsor legislation to make it the law.
1. Include an out of court binding dispute resolution process in all Colorado HOA laws (replace courts and mediation).
2. Improve upon Colorado legislation that licenses HOA property managers
3. Limit fees and administrative assessments on HOA debt.
4. Increase the roles, responsibilities, authority, and enforcement capabilities of the Colorado HOA Information Office and Resource Center including involvement in administering an out of court binding dispute resolution process
6. Require realtors and HOA home buyers to be provided with the following information and certify they received and read them: a copy of the HOA's governing documents; information on insurance coverage provided via the HOA; any HOA homeowner debt or HOA liens associated with the home; a current HOA financial statement; the amount of HOA dues; any current and/or planned special assessments; status of the HOA reserve fund; the number of rentals and foreclosures in the HOA; rental restrictions and other items identified in our HOA Home Buyers Guide.
7. Term limits on HOA Board members when others are willing to serve.
8. Include as part of the HOA registration process a certification that HOA Board members read their own HOA governing documents and applicable information posted on the State's HOA Office’s web site concerning State HOA law.
9. Limit the amount of special assessments an HOA Board can levy without approval of home owners.
10. Require HOA Boards to gain home owner approval prior to entering into law suits using HOA funds.
Friday, June 6, 2014
HOA Home Owners Push for Workable Dispute Resolution
Colorado home owners mostly live under Homeowners Association
(HOA) governance. This living environment has many advantages but one trait
currently gives HOAs a deserved bad name. If a home owner has a dispute with
their HOA Board or property management company (PMC) they are mostly left with
our costly, litigious, and time consuming court system which doesn't work for
home owners. The State's HOA Office completed a mandated study on dispute
resolution offering several out of court solutions. One recommendation was an
out of court binding dispute resolution process whereby complaints are filed and
settled in an out of court venue at an affordable cost. Home owners don't want
a costly dispute resolution process (court) or discussion of their complaint
with the hope of a solution that costs them hundreds of dollars without any
guarantee of a decision (mediation). Home owners deserve a process already used
in Colorado for some professions and is planned for HOA PMC complaints: out of
court binding dispute resolution. It's quick, fair, low cost,
non-litigious, doesn't require high cost lawyers, no cost to taxpayers, and
renders finality to a complaint. It's time to provide HOA home owners with a
workable, affordable, and accessible dispute resolution process that promotes vs
hinders problems resolution. www.coloradohoaforum.com
Tuesday, May 20, 2014
HOA Home Owner's Wallets Emptied Over Fees
HOA dues, transfer fees, debt collection fees, special assessments, legal fees (law suits and HOA lawyers) can become overwhelming and home owners have little control over any of these financial obligations. Worse yet, if these fees and assessments aren't paid on time you can be fined without limit and have your home foreclosed for the smallest amount. Add to this the infamous $100 a month debt notification letters from the HOA lawyers that are not contestable. Try to sell your home in an HOA and you can be assessed a transfer fee ranging from $150 to over $1,000 without any justification or explanation. If you don't pay it you can't sell the home. Then you can be stuck for the cost of your HOA Board entering into costly litigation or a capital improvement projects without home owner knowledge or approval resulting in thousands, if not tens of thousands, of dollars in special assessments. If the HOA Board is reckless with finances and drains the reserve funds all home owners can be assessed an amount to replenish the fund and this can be very substantial: don't pay it and the amount owed will compound and also can lead to foreclosure. Your monthly HOA fee can also increase without home owner approval and without limit and it's pay it, pay it on time, or more excessive fees and assessments. One more thought about all these HOA fees if you live in a gated community. Even though you pay county and other state and local taxes for street maintenance and snow removal, the local governmental entity will not provide snow removal or street maintenance and repair in your HOA (you pay through HOA dues).
Most HOA dues and assessments are legitimate and support the operations and maintenance of the community. It is also true that what one home owner doesn't pay in dues others must make up for so reasonable penalties are appropriate. However, the abusive and reckless authority of some HOA Boards in (mis)managing a community are weakly constrained by HOA governing documents or State law. These ruling documents mostly require home owners to contest HOA Board behavior and burdensome assessments in our costly, litigious, and time consuming court system. Thus HOA law enforcement from the home owners perspective involves the limited financial resources of a home owner against the unlimited bank account of the HOA: a pay to play legal system favoring HOA Boards.
The HOA living environment can provide home owners with a rewarding life style. Most communities involve some form of HOA governance and it is mostly impossible to buy a home in a new development without an HOA. Understanding HOA governance and home owner's rights and financial responsibilities prior to moving into an HOA is incumbent upon the home buyer and will mitigate post purchase problems.
Most HOA dues and assessments are legitimate and support the operations and maintenance of the community. It is also true that what one home owner doesn't pay in dues others must make up for so reasonable penalties are appropriate. However, the abusive and reckless authority of some HOA Boards in (mis)managing a community are weakly constrained by HOA governing documents or State law. These ruling documents mostly require home owners to contest HOA Board behavior and burdensome assessments in our costly, litigious, and time consuming court system. Thus HOA law enforcement from the home owners perspective involves the limited financial resources of a home owner against the unlimited bank account of the HOA: a pay to play legal system favoring HOA Boards.
The HOA living environment can provide home owners with a rewarding life style. Most communities involve some form of HOA governance and it is mostly impossible to buy a home in a new development without an HOA. Understanding HOA governance and home owner's rights and financial responsibilities prior to moving into an HOA is incumbent upon the home buyer and will mitigate post purchase problems.
Wednesday, May 7, 2014
CAI Chalks Up Wins in HOA Reform Off Wallets of Home Owners
The defeat of Colorado SB 14-220, Construction Defects, joins HB 14-1254, the HOA Transfer Fees Limitation Bill that morphed into a token and ineffective "Disclosure" Bill, delivers a double blow to HOA home owners. SB 14-220 would have saved home owners millions of dollars by moving litigation from the court room to out of binding arbitration and protected home owners from HOA lawyers raiding reserve funds with frivolous law suits and pursuing costly court cases without home owner approval. HB 14-1254 was addressing the $15 million a year in unjustified and non-contestable fees on HOA home sales. It was changed to a Bill to require that home owners be notified of the fee without any specific details on charges, the fee amount (ranging from $50- to $1,150) was left to be determined without question by the property management company and let stand the practice that if the fee wasn't paid the home couldn't be sold. Both Bills were heavily lobbied for change/defeat by the Community Association Institute (CAI) whose members and the legal industry stood to lose tens of millions of dollars in fees income off the backs of HOA home owners. The success of the CAI in stifling any meaningful HOA legislative reform and controlling information and votes in the legislature must change or home owners will lose.
Friday, April 25, 2014
CAI Again is Anti Home Owner in Construction Defects Bill
Pending final version of
the Bill we offer the following for your consideration:
An HOA construction
defects Bill is anticipated to be introduced to the Colorado legislature. It would allow home owners to litigate
construction defects damages in an out of court venue and to limit
the powers of HOA Boards in using HOA funds in construction defects
litigation. Guess who objects to this Bill?
This Bill can provide
home owners with a previously inaccessible and affordable out of court venue
for dispute resolution (arbitration), save home owners and HOAs on legal costs,
and empower home owners by having a say in how their HOA funds are spent. The final version of this Bill is yet to be
known but you can bet when the CAI comes out against a Bill it surely is not in
the interests of home owners.
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