CAI Guts Colorado Transfer Fee Bill

The Community Associations Institute has once again demonstrated its raw power over State Legislators, this time in Colorado. But that’s what 55 billion dollars a year buys you.

A couple of years ago, Colorado outlawed transfer fees for all home sales, except those in Homeowners Associations! Why? The CAI waived its magic cash wand over the Legislature and argued that HOA management companies have exceptionally high costs when a home changes hands.

High Costs? A single photocopy of an already existing document generates a high cost? A photocopy, an envelope and a stamp should cost anywhere from 300 to 4000 bucks? Keep in mind this money doesn’t go to Homeowners Associations, it just slides into a private pocket at the HOA management company. It’s raw profit. In Colorado alone it’s an annual transfer of 15 million dollars from homeowners to CAI affiliated management companies.

Last year, homeowners rights advocates proposed a bill eliminating or limiting this cash transfer (which is illegal in the vast majority of home sales). But all of a sudden the bill has changed and now, in effect, legalizes, approves and even mandates these transfers.

As this blog is being written, the email below is being sent to Colorado State Legislators:
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Six reasons to vote against HB 14-254, HOA Transfer Fees, in its current form:

1.  The Bill has been gutted of all original homeowner input and intentions. It has been rewritten with the guidance of a national HOA lobbying group and appears to resolve a problem. However, it only ensures that NOTHING will change.  If this Bill is meant to resolve a recognized problem then it should be settled in this Bill and not pushed off to another state agency. At best this is feel-good legislation which is empty on substance.

2.  The Bill suggests the Department of Regulatory Agencies (DORA) can resolve the transfer fee problem through licensing property managers. This is totally FALSE, deceptive, and will change nothing.  DORA has not supported or confirmed this solution or indicated that its office can limit the fee, direct an adjustment or refund the fee,  require justification of the fee, end the unauthorized use of this fee, or provide a venue to resolve home owner complaints.  This is a FALSE solution.

3.  The Bill suggests the solution of having property managers merely document the excessive fee. But in effect it allows the fee to continue at any arbitrary amount. It doesn’t prevent the unauthorized use, and allows charges at the discretion of the property manager. The homeowner has no ability to dispute the charges.  The fee must be paid or the home can’t be sold.  

4.  The unauthorized and main use of the transfer fee is to supplement income, increase profits, and allow for low bidding on HOA contracts.  None of this is addressed in this Bill.  These anti-competitive practices harm small businesses and financially burden home sellers. 

5.  This Bill, as did SB 11-234 that made transfer fees illegal on all residential home sales except HOAs, mobile homes, and timeshares, has never been justified based on actual work performed.  NEVER!  Our group has provided evidence of excessive fees and misuse that to date has not been refuted.
6.  If this Bill is passed it will ensure that transfer fees continue. The special interest groups who wrote this bill will insist it resolves problems surrounding transfer fees and will ensure that the issue will not be revisted. This bill resolves nothing.

We ask legislators on this Committee to challenge us during the public hearings about our findings, contentions, and attached fact sheets AND TO VOTE NO ON THIS BILL if it is not revised to be of substance..
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Stan Hrincevich
Colorado HOA Forum
www.coloradohoaforum.com