Activists in Colorado are gearing up to fight one of the most bizarre expenses on your closing papers when you sell your HOA home.
Most people have no idea what that mysterious charge is that appears on your real estate documents. Transfer? From who to whom? It’s a transfer of money from your pocket to the checking account of a ‘mysterious stranger’. The fee can range anywhere from fifty bucks to several thousand. Question the fee and your closing agent will just pack up her briefcase and leave.
Some transfer fees are set up by the neighborhood developer. The fee is mandated as a permanent kickback to him whenever a neighborhood property is bought or sold. Some argue that a perpetual fee paid to the developer effectively lowers the price he charges for developed lots or built-out homes. But it’s simpler than that. It’s a slush fund set up by the developer to benefit the developer. It’s welfare payments to millionaires.
Some activists in Colorado are trying to get the State Legislature to ban transfer fees. There actually was a law passed to ban such fees a few years ago, on all residential real estate… except Homeowners Associations.
Yep, Homeowners Associations. This one’s a little hard to explain. In Colorado the transfer fee goes to the HOA management company. It doesn’t go into the coffers of the HOA to benefit the neighborhood, it just slides into the pockets of the community association manager. Theoretically it pays for research into the status of the homeowner who’s selling his property, such as whether his HOA dues are up to date. But that means the homeowner is paying hundreds to thousands of dollars for the thirty second act of photocopying a piece of paper.
Why would any Legislature ban transfer fees on all properties except Homeowners Associations?
The answer may have to do with the CAI (Community Associations Institute). CAI pretends to be a benign organization set up to protect homeowners. But its actually a 55 billion dollar a year referral organization which lobbies against any legislation meant to protect the property rights of individual homeowners. And CAI is currently staging a massive lobbying effort to defeat any change in Colorado law. Now why would they do that?
Follow the money.