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
Showing posts with label hoa transfer fee. Show all posts
Showing posts with label hoa transfer fee. Show all posts
Sunday, January 31, 2016
Sunday, January 17, 2016
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.
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.
Friday, September 4, 2015
If you paid an HOA Transfer Fee the Colorado HOA Forum wants to know
If you recently sold your home in an HOA and paid an HOA Transfer Fee or Status Letter charge the Colorado HOA Forum wants to know. The fee is charged to HOA home owners, condominium and time share owners, and mobile home park residents on the sale of their homes. The fee is NOT assessed, retained, or amount determined by the HOA but by the property management company (PM). Home owners are normally first apprised of the fee at home closing, provided no receipt or justification, amounts range from zero to over $1,000 with no relationship to work performed, and if you don't pay the fee your home sale will be stalled. The fee is not required by law or to be part of the home closing. These fees cost Colorado HOA home owners upwards of $10 million a year.
The fee is assessed illegally! SB 11-234 makes the transfer fee illegal unless it pertains to extraordinary costs incurred by a PM in the sale of the home. The transfer fee is "supposedly" charged to reimburse PM's for costs in producing a final home owner's "status of financial standing" with the HOA. Note, this is mostly no more than a final billing that is computer generated taking all of five minutes i.e. routine work. Any justified status letter/transfer fee charges should not include services already paid via HOA dues including producing a statement as to financial obligations of the home owner with the HOA, researching any liens on the property, inspection of the property's condition, producing copies of official HOA documents (that are normally free upon request or involve only a minor fee by the HOA), or for administrative costs such as changing names in records, issuing new card keys or gate remote controls, or updating billing systems (this is all routine, paid for with HOA dues and no different than work required when residents marry, divorce, upon a death that don't result in additional charges to the home owner). Thus, any transfer fee/status letter charge should be fully documented, involve only extraordinary and unreimbursed costs incurred by the PM, and not involve any charges for work already paid for by the home owner with HOA dues.
The new HOA property manager licensing law also precludes PM's from duplicative billing for services, unreasonable and excessive billing for services, and not fully disclosing and documenting work performed. PM's in non-compliance can have their licenses revoked. Additionally, transfer fees as discussed in this article are not allowed when they involve an FHA/HUD loan.
The Colorado HOA Forum wants to hear from anyone who sold their home in an HOA and paid a transfer fee or status letter charge. Contact them at coloradohoaforum@gmail.com . Home owners may be eligible for a refund in part or in full as part of an individual claim or class action suit.
The fee is assessed illegally! SB 11-234 makes the transfer fee illegal unless it pertains to extraordinary costs incurred by a PM in the sale of the home. The transfer fee is "supposedly" charged to reimburse PM's for costs in producing a final home owner's "status of financial standing" with the HOA. Note, this is mostly no more than a final billing that is computer generated taking all of five minutes i.e. routine work. Any justified status letter/transfer fee charges should not include services already paid via HOA dues including producing a statement as to financial obligations of the home owner with the HOA, researching any liens on the property, inspection of the property's condition, producing copies of official HOA documents (that are normally free upon request or involve only a minor fee by the HOA), or for administrative costs such as changing names in records, issuing new card keys or gate remote controls, or updating billing systems (this is all routine, paid for with HOA dues and no different than work required when residents marry, divorce, upon a death that don't result in additional charges to the home owner). Thus, any transfer fee/status letter charge should be fully documented, involve only extraordinary and unreimbursed costs incurred by the PM, and not involve any charges for work already paid for by the home owner with HOA dues.
The new HOA property manager licensing law also precludes PM's from duplicative billing for services, unreasonable and excessive billing for services, and not fully disclosing and documenting work performed. PM's in non-compliance can have their licenses revoked. Additionally, transfer fees as discussed in this article are not allowed when they involve an FHA/HUD loan.
The Colorado HOA Forum wants to hear from anyone who sold their home in an HOA and paid a transfer fee or status letter charge. Contact them at coloradohoaforum@gmail.com . Home owners may be eligible for a refund in part or in full as part of an individual claim or class action suit.
Tuesday, January 13, 2015
HOA Property Manager Licensing: Fees Transparency is a License to Abuse
The Community Association Institute (CAI), HOA lawyers, and large property management companies know one thing is certain: laws on transparency and disclosure will not inhibit abusive practices in the HOA property management industry. In 2014 these groups combined their legislative, political, and financial efforts to kill a Bill (HB 14-1254) that would have ended or limited the dollar amount of the illegal and unjustified HOA home sale transfer fee. They legislatively completed this by changing the Bill to address the transfer fee as a "disclosure item" in the upcoming property manager licensing law. This was completed to avoid any direct oversight, scrutiny, or rules to ensure no change took affect. Even the idea of real disclosure and accountability on justifying the legality/use of the transfer fee were so feared in the watered down Bill that ALL definitive language was removed: no requirements to disclose why the fee was charged, who determined the amount and pocketed the fee, who benefited from the fee, what work was performed that was extraordinary/unique due to the sale of a home that was not already paid for by HOA dues, that the HOA did not mandate the fee and it was neither a mandatory or legal requirement, and that if not paid could hold up the sale of a home. The modified Bill also avoided stating that that any excessive and unjustified fee COULD NOT be challenged by the home seller/buyer and if found to be inappropriate by the State property manager licensing authority COULD NOT be directed for refund or reduced in amount . Thus the crafted disclosure Bill had nothing to do with justifying the fee or reining in abuse but only to ensure its' unabated continuance.
So the lesson in Disclosure and Transparency Legislation 101: A Bill portrayed to rein in abuse and misuse through disclosure will present the illusion of change, enforcement and consumer protection but change nothing with the most significant impact being that the abused be informed (and only minimally) of how they are to be abused.
The Colorado HOA Forum will continue its' efforts to educate the public and legislators on HOA issues and to legislatively end/limit the HOA Transfer Fee to save Coloradans millions each year.
So the lesson in Disclosure and Transparency Legislation 101: A Bill portrayed to rein in abuse and misuse through disclosure will present the illusion of change, enforcement and consumer protection but change nothing with the most significant impact being that the abused be informed (and only minimally) of how they are to be abused.
The Colorado HOA Forum will continue its' efforts to educate the public and legislators on HOA issues and to legislatively end/limit the HOA Transfer Fee to save Coloradans millions each year.
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.
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