The first major legislative issue concerning homeowners associations within the state of Colorado was kicked off today on competing fronts. In a Call to Action sent by CAI’s Legislative Action Committee, community association professionals were alerted of pending legislation geared at capping or eliminating transfer fees collected by management companies when a unit or home within a common interest community is conveyed. This issue was also discussed previously in the Denver Post.
Transfer fees cover the administrative cost incurred by a management company when a unit is conveyed and include a vast number of different tasks. Opponents of the fee believe that the amount of the fee, estimated to be an average of $200.00 per closing, in no way relates to the amount of work involved in updating files. Opponent groups have claimed this fee has never been justified by management companies.
Proponents of the fee, however, believe the fee is justified as updating files requires more than just sending out a status letter. Management companies are required to research the file, the amounts due and provide a statement to the title company. The management companies also work with the title companies to ensure the new owner receives needed information about ownership post-closing. If not collected as a transfer fee, the fee would need to be paid by all owners in the community which, proponents believe, is unfair as it charges all owners in the community for the costs benefitting one owner.
The proposed bill will reportedly be sponsored by Rep. Jeanne Labuda (D-Jefferson County) and Sen. John Kefalas (D- Fort Collins). While the particulars are unknown, it is believed that the bill will be aimed at either eliminating the transfer fee altogether or capping the fee at $50.00. While we believe the legislative session will be light, this topic is sure to be hotly debated.
8 responses to “The Attack on Transfer Fees”
As far as status letters most management companies take care of the financial records for the association that information should be readily available a status letter should take no more than 30 minutes and that’s a generous time assessment.
There is some cost in transferring ownership but the association is already paying the management company to take care of association business and further I have seen few management companies willing to work with a title company.
I will agree that $50 is probably to low depending on what other fees they charge some management companies charge a status letter fee as well as a transfer fee and anything else they can figure out to charge a seller or owner.
My personal opinion is that a fee of under $200.00 is appropriate.
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