Construction Defects Legislation: Denver Post gets it wrong AGAIN!

Re: Construction - defects bill hits snag, May 6, Denver Post

 

Our letter to the Denver Post concerning their problem of excluding HOA home owner's input into the Construction Defects Legislation issue and including the Community Association Institute (CAI) that represents HOA property managers and lawyers (NOT home owners) into the discussion. No matter how many times the post reporters are apprised of this concern they continue to seek out the CAI to represent home owners.

Letter to the Editor:

Each of the past several years legislation on construction defects litigation is introduced and each year the Denver Post reporters get this wrong.  They continue to identify the Community Association Institute (CAI) as representing those living in home owners association (HOA).  Wrong!  This organization represents HOA property managers and HOA lawyers.  There membership has nothing to do with home owners, HOAs or home owner centric interests.  They oppose empowering home owners to vote on the use of their own funds on litigation and promote court cases vs out of court, accessible, and affordable venues for dispute resolution(the issues in the legislation).  In fact, home owner's organizations have been excluded from input on this legislation.  Maybe the Post can get this right next year. 

 

HOA Home Owners to Continue to Pay Fees with no Justification or Receipt

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.

Proposed Colorado HOA Legislation to have Immediate Benefits to Home Owners and Small Business

The Colorado legislature will consider three home owner's association (HOA) Bills this session.  Two will be mostly administrative and one could serve to be the most impacting HOA legislation of the past 20 years improving upon responsibilities and accountability in the HOA property manager industry and the potential to save HOA home owners millions of dollars annually.

SB 16-082, HOA Whistleblower (intimidation) Protection, and HB 16-1149, Remove Budget Reporting Exemption HOAs Predate Act (CCIOA), have admirable goals and provide great expectations but will accomplish neither (for now).  These Bills have the same ole' problem that characterizes HOA legislation over the past decades: they lack enforcement from the home owner's perspective except through our costly, litigious, time consuming court system matching HOA funds and lawyers against the very limited resources of the home owner.  Lacking an accessible and affordable venue to enforce these Bills home owners will more feel good about the Bills than experience any change.

HB 16-1133, HOA Manager Professional Responsibility and Disclosure, can positively affect home owner's rights and their wallets and provide financial relief to small businesses serving HOAs. This Bill modifies the HOA property manager (PM) licensing law.  The Bill addresses the abusive and costly property manager HOA Transfer Fee that involves duplicate and triplicate billing of home owners for services already paid for with HOA dues, requires home owners to be provided a detailed receipt of charges for Transfer Fees, and requires that all Transfer Fees be in compliance with authority to charge as stated in State and Federal laws.  This fee costs home owners upwards of $10 million a year.  The Bill provides the smallest of HOA property managers financial relief from requirements to obtain a license that can cost them more than a year's income.  Also, the Bill improves upon requirements for property managers to comply with State laws and HOA governing documents.  The reason this Bill will immediately impact home owners is that when non-compliance with this Bill occurs  a home owner can file a complaint with DORA (Dept of Regulatory Agencies) free of charge, have the complaint investigated, violators (HOA property managers in this case) can be fined and/or have their license revoked. and it will directly affect abusive PM Transfer Fee practices by requiring justification and documentation of to payees.

HOA Transfer Fees: the Most Abusive and Unaccountable Billing You Will Ever Receive

No other bill you will receive will be lacking in documentation and accountability as much as the property manager HOA Transfer Fee.  This fee, first known to the HOA home seller at home closing, requires no hard copy receipt, no justification for charges, and no limits on amounts billed and if you don't pay it you can't sell your home.  How do they get away this extortion of fees imposed on home owners?  Read about this illegal fee and efforts to contain the abuse imposed on home owners on the Colorado HOA Forums web site:  www.coloradohoaforum.com

Billing Practices Comparison

HOA Transfer Fee is Triplicate Billing

HOA Transfer Fee and the Community Association Institute (CAI): will not even support requiring property managers to provide a detail billing to home owners

Community Association Institute (CAI) Will Play Whack a Mole in Opposing HOA CAM Accountability in HB 16-1133

HB 16-1133, HOA Manager Professional Responsibility and Disclosure, will be considered in the 2016 legislative session.  It will propose modifications to the HOA Property Manager Licensing Bill and will again surface the obstructive efforts by the Community Association Institute (CAI) in HOA and HOA Community Association Manager (CAMs) Licensing reform: but we hope not.  The Bill will also address problems with DORA administering the law and developing effective CAM operating rules.

Up front in this Bill:  Adds no additional regulation or government reporting requirements,  no new taxpayer contributions, no new fees or burdens to business, does not preclude CAMs from charging any justified fee, and doesn’t interfere with CAM or HOA operations.

In this Bill:  1) direct and definitive statements addressing requirements that CAMs comply with State HOA law and HOA governing documents  2) defines requirements for full disclosure of CAM fees and in particular for HOA Transfer Fees and addresses the problems of excessive fees and duplicate (and triplicate) charging for services already paid for with HOA dues  3) requires CAMs to provide a specifically detailed hardcopy receipt to all payees  4) provides financial relief for the smallest HOA CAMs in reduced fees and educational requirements but still requires they be licensed  6) requires DORA to provide improved transparency and functionality on their web site concerning CAM information and violations.

Opposition from the CAI is expected, again, in the form of empty and non-substantive arguments (just statements and declarations) that contend no changes are needed and all the issues in this proposal are already in the Bill (for whom?).

The CAI will oppose requirements to justify the CAM HOA Transfer Fee and other CAM billings.  This Bill doesn’t limit the amount of any fee or preclude charging any fee but requires meaningfully explaining, justifying, and receipting any fee.  It does begin to rein in the abusive Transfer Fee charged to sellers upon the sale of a home.  Specifically, what other business can bill a home owner and not provide justification based on work performed, not provide a detailed receipt, bill any amount with no questions asked, leave the consumer with no means to contest the bill or its’ amount, no requirement to comply with State restrictions of billing under the law, duplicate bill the home owner (and even triplicate) for services already paid for with HOA dues, and if the home owner doesn’t pay can’t close on their home?   The answer is easy: NONE.  The CAM licensing Bill was supposed to specifically define requirements on justification, legality, and documentation and it did a lame job at it ensuring this questionable CAM billing practices would continue.   The transparency and real disclosure in this Bill will not interfere with any collection of a CAM fee as long as justified and legal.

The fight for financial relief for small CAMs in this Bill was not supported by the CAI in the last legislative session. The cost of a license for small CAMs can equal a year’s income: it’s abusive and burdensome.  Previous misinformation spread was that the goal was to exempt small CAMs from being licensed: not true, never in any proposal but believed by too many.  This Bill provides fairness and relief to small business with reduced fees and educational requirements commensurate with knowledge to legally and competently service small HOAs of 30 or less units.  Educational providers are able to offer small HOA CAM courses at a reduced cost.  Costs for DORA to implement should be covered in the same manner as completed when the total licensing law was implemented.

This Bill also contains specifics on actions and requirements to comply with State law and HOA governing documents that are now ambiguous in the law.  Of importance is the requirement for a CAM to notify the HOA Board if they are in non-compliance with the law, suggest a corrective action, and if the Board continues their actions report the event to DORA.  This documents the event for potential home owner action and also protects the CAM from a complaint that they were complicit.  Will the CAI object to clarification on this issue to make accountability better defined?

HB 16-1133 simply makes the licensing law effective for home owners with no new burdens on business.  It defines accountability, transparency, and fairness that are lacking in the law and required for enforcement.  The objections to improvements in CAM licensing through this Bill will become the CAI’s latest whack-a-mole game in which they float  empty and deflective arguments to slam down any initiative that pops up for real HOA reform and CAM accountability.

Note: the CAI is an organization representing CAMs and HOA legal interests which comprise their membership.

Triplicate Billing Tolerated With HOA Transfer Fees

Not that one needs another reason to dislike Homeowner’s Associations (HOAs), but try this one: paying for the same services three times.  The abusive and illegal practice of charging HOA Transfer Fees on the sale of a home in an HOA is well known to our legislators, the press, Title Companies, Realtors, property managers, and home owners.  Except for home owners all others ("tacit enablers") turn a blind eye to this deceptive practice that costs home owners upwards of $10 million a year in Colorado.  Here’s how it works and why it is also illegal:

a) HOA home owners pay monthly dues.  The dues cover such community expenses as snow removal, landscaping, and expenses for maintenance of common areas.  They also pay for  administrative costs such as the HOA directory, billings and collections, covenant enforcement, routine legal costs, maintaining a web site, posting HOA governing documents on the web site, administrative staff, and other operational costs.  In most cases the money is well spent contributing to the aesthetics and positive property values.
 
b)  When an HOA home is sold the HOA property management company (PM), charges the buyer a Transfer Fee.  The fee doesn’t benefit the HOA but is pocketed by the PM.  The fee amount is determined by the PM without any justification required or need to provide a receipt to the payee, it ranges from $0 to over $1,000, has little if any relation to “claimed” work performed, and if not paid the home can’t be sold.  The “claimed” justification is that the sale of the home caused the PM extraordinary and uncompensated expenses.  The “claimed” expenses specifically relate to updating administrative and financial records, providing a copy of the HOA governing documents to the buyer, and issuing a Status Letter to the buyer indicating the financial status of the home seller with the HOA on the date of sale (are HOA dues current, any owed special assessments or fines, or other obligations).  Average Transfer Fee in Colorado: $350.  Here's is the problem and why this is a duplicate billing:

     1. Updating administrative records doesn't result in additional charges to the home owner.  Think in terms of divorce, marriage, death, someone moving in or out, changing a bank account for payments, change of contact information, etc.  A home sale is not unique or extraordinary in this respect thus no fee is justified. 
     2. The Status Letter in any other business in referred to as a final billing.  This is no different than what one receives when terminating their TV cable service, utilities, or health club membership: it’s called the final bill, is routine, has all the detail and is official, no charge to the customer, and already paid for with HOA dues.
     3. Providing HOA governing documents to the buyer?  These are mostly available free of charge on the HOA web site.  The PM doesn’t maintain these legal documents nor are they changed upon the sale of a home.  The cost provide these to a home buyer or Title Company via email or compact disc is no cost to nearly unmeasurable and considered routine services paid for via HOA dues.

c)  When a home is sold in an HOA the Title Company is required to provide the buyer with a Status Letter and a copy of the HOA governing documents.  The PM charges the Title Company that passes the charges onto the buyer/seller: average $175.  See items “a” and “b” above.

d) HOA Transfer Fee can only be legally charged if such charges are justified to compensate the PM for uncompensated work in relation to the sale of a home:  SB 11-234. The HOA Transfer Fee fails this test.

Thus the HOA Transfer Fee represents a triplicate fee for services rendered as described in items a, b, and c.  All true and never refuted by the PM industry.  Why does such a deceptive and illegal business practice continue to be met with silence by the “tacit enablers”?  It’s called legislative lobbyists with the prize to the PM industry of $10 million a year. 

Denver Post Article Again in Error on Construction Defects Issues

"Climate for construction-defects reform in Colorado much changed", Jan 12, 2016
They simply refuse to get input from any HOA home owner's organization


The Denver Post again allows those making millions from HOA Construction Defects (CD) litigation to represent the voice and rights of home owners and distort the debate in CD legislative reform. No input from any recognized HOA home owner’s organizations. Their point person again on home owner’s rights is isolated to none other than the Community Association Institute (CAI). The CAI represents the interests of property managers and HOA lawyers, NOT HOME OWNERS.  If CD legislation is ever be explained in a truthful, balanced, and productive manner it must first get by the CAI smoke screen that is all too pervasive in this issue.  

First, almost all HOAs created in the past 15 years mandate in their Declaration that arbitration vs our court system be used in CD dispute resolution. Of the 8,500+ HOAs in the State most are beyond the statute of limitations to sue over CD. As a percentage or relative number of all HOAs, those that changed their Declaration (at the encouragement of HOA lawyers) is very, very small. Thus precluding HOAs from changing their declaration and infringing upon homeowner’s rights is a weak argument. Furthermore, a recent Colorado court case has ruled HOAs can be prevented from changing their Declaration. The CAI would have the public believe the inability to change the Declaration will have a profound impact on home owner’s rights but the reality is that it would mostly impact the ability of HOA lawyers to promote litigation in our costly court system.

The other issue involves requiring home owners to vote on the approval of the use of their own funds on CD litigation. Currently, any HOA Board at the encouragement of their attorney can spend unlimited HOA funds on litigation without the knowledge or approval of home owners. The CAI opposes this empowerment of home owners as it would effectively reduce litigation.

We at the Colorado HOA Form offer the following CD legislative proposal to mitigate litigation and empower home owners: "HOA home owners are required to be apprised of and vote on the use of HOA funds in all litigation". Why is this so difficult!

Join us for our Colorado Springs HOA Town Hall Meeting, Feb 13, free admission-open to the public

The Colorado HOA Forum will be holding another of its’ HOA Town Hall Meetings, this time in Colorado Springs, CO. The Meeting is open and free to the public and is the only HOA presentation from the home owner’s perspective. The Meeting includes an HOA home buyer’s seminar (9-10 am) followed by an array of HOA topics ending with an extended question and answer session for attendees. Find out about HOA legislation, HOA property manager licensing and responsibilities, HOA Transfer Fees on the sale of homes, and other issues affecting the home owner’s living environment, quality of life, and finances. BROCHURE ON OUR WEB SITE

The Colorado HOA Forum is Colorado’s largest and most effective HOA home owner’s advocacy organization working to improve HOA governance through legislative reform. The Forum is a pro-HOA organization and the only Colorado home owner centric organization with nearly 1,000 members located in 80+ cities/towns throughout the State. It strives to ensure a balance in HOA governance that promotes openness and inclusion in HOA governance, protection of home owner’s rights, and address abusive and costly practices that are costly to HOAs and their home owners.

Questions: contact us at www.coloradohoaforum.com or email coloradohoaforum@gmail.com

Pikes Peak Public Library, Library 21C
1175 Chapel Hills Drive
Room: Venue 21C
Colorado Springs, CO 80920
Saturday, February 13, 2016
9 am—12:45 pm
Plenty of free parking
Free to the public

Invited are all home owners, your legislators, HOA property managers, Realtors, the Community Association Institute (CAI), representatives from the State's HOA Office and DORA, and the media

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.

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.

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.

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.

Colorado HOA Forum's Winter Edition Newsletter Posted on Web Site

The Colorado HOA Forum, www.coloradohoaforum.com, Colorado's largest HOA home owner organization has posted its' Winter 2015 newsletter on its' web site.  This edition focuses on the implementation of the new HOA Property Manager (aka Community Association Manager (CA)) licensing program, HOA Transfer Fees, HOA and CAM dispute resolution and complaint filing with the State, and a host of other HOA issues.  An overview of the Forum's latest HOA Town Hall Meeting from November 12 in Aurora, CO is presented indicating what is of concern to HOA home owner's.  Keep in touch with HOA current events, HOA legislation, and home owner's issues with this easily accessed newsletter.  This is Colorado's only HOA periodical presenting HOA issues from the home owner's perspective.  Those wishing to subscribe to this free newsletter can join on the Forum's web site. 

Colorado HOA Property Manager Licensing: make it effective and not burdensome

The HOA Property Manager Licensing Law HB 15-1343 has now been fully implemented and some obvious weaknesses and flaws exist that should be addressed.  Two issues stand out that need attention: changes to the law and DORA's administration of the law.  This posting addresses changes to the law.

 

Community Association Manager (CAM aks HOA Property Manager) law:

The law requires small HOA CAMs to pay and complete the same requirements as mega-CAMs.  This has caused CAMs serving small HOAs (in particular in rural communities) to end their services: the financial burden was too much.  Relief should provided in the law, similar to small HOA registration requirements, to reduce educational and other fees requirements but NOT eliminate them for those CAMs serving less than a total of 25 units.

 

This law, similar to HB 14-1254, Disclosure of Fees, was supposed to require full disclosure of any fees assessed and/or collected by a CAM (from the HOA or home owner).  DORA has allowed this to be defined as a one-liner in a contract or on home closing documents with no detail, no receipt to the home owner, no justification of the fee, and no mention that the CAM, not the HOA, determines the amount of the fee and retains it.  Disclosure is particularly important when CAMs assess HOA Transfer Fees that average $350 on the sale of an HOA home and provide no legal basis, receipt, or work justification.  Disclosure must be not only required in detail but clearly defined what detailed disclosure means.  Any fee assessed home owners, in particular the Transfer Fee, must be in compliance with State law SB 11-234 that authorizes and limits this fee. Note this law can't limit the amount of, refund, or adjust a fee but it is a first step in reining in this abusive fee.

 

The CAM law needs to be more clearly defined and strengthened to include requirements that CAMs must comply with State laws and the HOAs own governing documents.  DORA has refused to include explicit rules and the law should be updated to clearly include:

 

        CAMs must comply with all State HOA laws and with the governing documents of the HOA they serve and knowingly violating or being aware of such violations is subject to fines and/or revocation of license.

 

       If a CAM is aware of an HOA Board being in non-compliance with State HOA law or their own governing documents they must immediately advise the Board and their legal representation of such non-compliance and suggested corrective action;  if the corrective is not taken the CAM must apprise both Board and the HOA's legal representation in writing of such violation and recommended corrective action;  if corrective action is not taken within seven days after CAM notification, the CAM will notify DORA and the HOA's legal representation.

HOA Foreclosures Allow for Selling Your Home for Pennies on the Dollar

Homeowner's Association (HOA) legislative reform has proven to be extremely difficult in Colorado. Whether the recent HOA manager licensing law, HOA debt collection policy, limiting HOA Transfer Fees, or requiring the justification of HOA fees the result has been watered downed or "killed" Bills by interest groups such as the Community Association Institute (CAI) to the detriment of home owners.


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

HOA Home Sellers/Buyers Improperly Paying HOA Transfer Fees

The HOA Manager Licensing Law effective July 1, 2015 provides HOA home buyers/sellers the opportunity to challenge their payment of the HOA Transfer Fee.  The Law is very weak on home owner consumer protections and purposely avoided requiring HOA property management (PM) companies to provide justification and documentation of fees assessed home owners.  The law does, however, require all fees, charges, and assessments imposed and collected between a PM and an HOA and its' home owners to be authorized and fully disclosed in their contract with the HOA and/or in the HOA's governing documents else the fee is illegal.  Yes, this is a big deal as HOA home owners shell out upwards of $10 million a year with this erroneous fee.

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.

HOA Manager Licensing: Heavy on Fees Lite on Consumer Protections

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.

The law increases PM business insurance costs, requires recurring license renewal and educational costs, imposes new background check and testing fees and for those who want to avoid State educational requirements and testing they will incur CAI membership, educational, testing and seminar costs. These costs have already resulted in PMs that serve smaller (less than 25 homes) HOAs to go out of business.

The fees, business costs and government involvement would be more tolerable if the law accomplished its’ intended goal of consumer protection.  However, the law is vague on the most simple demands and accountability for property managers: 1) there are no direct statements mandating PMs comply with all State laws and an HOA’s governing documents 2) no direct statements that require PMs to advise an HOA when they observe non-compliance with the law or to report to DORA when such advice has been ignored and violations continue  3)  no direct statements that hold PMs accountable when they carry out requested actions of a Board that are in non-compliance with the law or an HOAs governing documents  4) no mandates for PMs to provide home owners with a detailed explanation or legal justification of fees and assessments (such as the HOA Transfer Fee) they independently impose and retain and 5) no requirement to explain and justify in detail all PM fees in their contracts with the HOA.  Repeated requests to DORA (Department of Regulatory Services) and legislators from Colorado’s largest HOA home owner’s group, Colorado HOA Forum, to include these simple specifics have been rejected making reform and enforcement for home owners very difficult.  Legislators also refused to include in the Law assistance to smaller HOA PMs by reducing their licensing costs and requirements.     

Licensing also witnessed an unprecedented and disturbing legislative act.  The Law contains language directly promoting a private entity’s (CAI) sales products and educational courses.  It also allows the industry that is to be regulated (CAI) to develop and complete State educational, testing, and credentialing requirements none of which have been officially reviewed or approved by the State.

Then there is the missing legislative mandate in licensing rules to address meaningful “full disclosure” of all fees and assessments on home owners by PMs.  Specifically, the HOA Transfer Fee that cost HOA home owners millions each year will continue without any limits or justification.  DORA decided a one-liner on home closing documents with no receipt and/or detail of charges is “full disclosure” of this fee. 

Legislation/licensing that is crafted by the interest group to be regulated should be disconcerting to home owners and businesses.  The CAI has dominated the PM industry and HOA legislation in Colorado for decades.  Their influence and leadership has led to the need for licensing and reform.  July 1, 2015 was to be a good beginning on reforming the abuses in the PM industry but HOA home owners will sadly see little change.

Colorado HOA Form: an HOA Home Owner Advocacy Organization

 

Colorado HOA Manager Licensing Program Flawed

"HOA Exams Prove Tough", Denver Post May 17

HOA Exam Difficulty Related to DORA Incompetence

Exams based on educational requirements would not have this failure rate.  The educational courses promoted on the DORA web site and in State licensing legislation, HB 1277, have never been reviewed for content and relevance to the State exam. In fact the courses offered by the Community Association Institute (CAI), that represents the property management industry and makes a lucrative business by selling educational courses, got DORA and State legislatures to promote their courses (highly inappropriate) even before the final rules of conduct, requirements, and test exams were completed.  Property manager candidates believe endorsement indicated the proper study material.  Further, DORA has never completed an official review of CAI courses (that most candidates purchase to fulfill their educational requirements and acquire exam related knowledge) to ensure new HOA laws are even included in CAI material.

 

In our most recent legislative session a few legislators put together a successful Bill, HB 1343, to supposedly "streamline" and fix" the licensing process even though no known problems have been reported and no experience officially existed in the program (it is not effective until July 1, 2015).  The Bill was created with direct involvement of the CAI and DORA and once again it promoted only CAI courses that have never been officially approved for Colorado State testing relevance, it included licensing exemptions for executive types that surely need the training, and didn't "streamline or fix" any known problems officially reported by DORA with the educational courses or testing program. 

The actions by DORA and our legislators have resulted in property managers spending their time and money taking courses that doom them to failure in the exam and will drive many out of business.  The program has turned more into a fees collection and test taking initiative than a law about consumer protection and promoting competency and accountability in the industry.  Until DORA completes an official review and approval of course material that ensures educational material is relevant to testing the licensing program should be put on hold.   

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.  

HOA Bill Should be Downright Embarrassing to Colorado Legislators

HB 15-1343 was crafted to "fix and streamline" the HOA property manager licensing law" that will begin full implementation July 1, 2015.  To date, the Department of Regulatory Agencies (DORA) that is responsible for implementing the law has reported no problems to be fixed, no problems with available financial resources to support the program, no lack educational course providers, no problems with their ability to develop exams and conduct testing and grading, nor has DORA reported that the program is too burdensome on business.  DORA has not completed one status report on the results of implementing the licensing law.  DORA's responsibility is to get the program up and running and comply with the law (not  make the law). 
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.