HB16-1133 was introduced into the House today by Representative Windholz. The Bill is geared at even more regulation of Community Association Managers.
New Detailed Receipt Requirements
In addition to requiring managers to annually disclose a certified copy of their license, regardless of whether it is required to be renewed, to the HOAs they represent, HB16-1133 requires managers to provide a receipt containing an exhaustive amount of information as follows:
- Detailed information and documentation to the HOA, Unit Owners, or third parties (such as title companies) regarding every fee, assessment, or collection received by the manager as a result of or in relation to the manager’s contract;
- Reference to the portion of the manager’s contract that authorizes the fee; and
- Specific justification for the fee, including the specific amounts of any charges for separate or periodic transactions that are not considered in the baseline services provided to the HOA.
In addition to the general receipt requirements discussed above, for each unit owner or other party who is individually billed for any amount, the receipt must contain:
- A summary of the work performed;
- A detailed description of each task and individual charge included in the total; and
- The legal authority for holding the unit owner or other party individually responsible for payment
New Disclosure and Certification Requirements for Fees against the HOA or Any Buyer or Seller
Under current law, managers are already required to disclose in the management contract (or addendum) any fee or charge, including transfer fees, against the HOA or any buyer or seller of property served by the HOA. If passed, HB16-1133 will also require the manager to disclose the justification for such fee.
Also, the manager must certify that the fee or charge is not for work that is ordinarily performed under the manager’s contract, already paid for by HOA dues, or already paid by another party. And, in the case of a transfer fee, the manager must certify that:
- The fee has not been charged to or paid, in whole or in part, by a title company or other party in the home closing process;
- The purchase of the unit is not financed, wholly or partially, by a FHA or HUD loan under whose terms the transfer fee is not authorized;
- The fee complies with, and is enforceable under, C.R.S. 38-35-127; and
- At least three days prior to payment of the transfer fee, the party responsible for the fee is provided with written documentation that complies with paragraph (b) of subsection (1) of this section of the Bill.
Furthermore:
- All fees charged by a manager must be reasonable and not exceed the amounts necessary to recover costs plus a “reasonable” profit margin.
- Transfer fees must be for costs incurred by the manager due to the sale of a unit in the HOA. And, such charges assessed to a unit owner must be justified as being not otherwise paid for via HOA dues or by any third party (such as title company or mortgage company), and must not include any discretionary, unnecessary, or special charges that are not ordinarily required to complete the property ownership transfer.
And while you may think the above is a lot already, there’s more:
Publication of Manager Information on the Division’s Website
HB16-1133 requires the Director of the Division of Real Estate (“Director”) to publish the following information about each licensed community association manager on the Division’s website, in searchable form, either by the name of the manager or the name of an HOA the manager serves:
- The manager’s name and business address,
- The name of each HOA the manager serves,
- The type of license held by the manager, including status,
- The expiration date of the license, and
- A report, updated, daily, listing all pending complaints and disciplinary proceedings.
The Director may also publish other licensing information that the Director deems useful to the public.
And, the Director shall make available to the public the name and address of record of each manager who has had his or her license revoked or has been assessed penalties or fines.
More Grounds for Disciplinary Actions
Finally, this Bill creates even more grounds for disciplinary actions against a manager as follows:
- Failing to give written notice and recommendation for corrective action to a Board member if, in the manager’s opinion, the member’s actions violate CCIOA or the governing documents;
- Failure of a manager, within 10 days, to report to the Director a Board member’s failure to take correction action within seven days of receipt of the manager’s notice discussed above;
- Knowingly violating or directing others to violate the governing documents of an HOA; and
- Failing to make any disclosure required by Section 12-61-1004.5(a), which would include all the new disclosure requirements in this Bill.
Small HOA Community Association Manager Carve Out
Last, but certainly not least, HB16-1133 attempts to carve out an exception for managers who manage a combined total of 30 or fewer units in one or more associations. In doing this, the Director would be required to create an additional testing procedure for “Small HOA Community Association Managers”, which is less stringent than community association managers, and which would further complicate manager licensure.
This Bill was assigned to the House Committee on Veterans & Military Affairs where we can only hope it sits and dies.
As predicted, once the flood gates were opened, there would be no end to governmental regulation of our industry. It spreads like a disease. And, of course, the ones doing the regulating know little or nothing about the industry they are regulating, but their egos tell them they know everything about everything, and have all the solutions to solve every problem.
This is beyond ridiculous. This could drive out good managers because of the outrageous regulations.
This is particular bad for small HOAs
At first glance, I thought a lot of these steps were probably already being taken by managers, such as listing what extra fees are for. But in examining the details and reading portions of the actual bill, it looks like gross overkill. This would drive up the cost of management and that cost will ultimately be paid by homeowners.
The wording about transfer fees makes me think the sponsor has swallowed verbatim the opinions of the Colorado HOA Forum on that subject.
Personally, I don’t think the bill has a chance of being passed. Way too much regulation.
I agree with ALL of the above comments. Indeed, tampering with the structure of this once simple requirement is now going to outlandish proportions. As an exclusive manager (contracted employee) to a self-managed community of 86 townhomes, I find the burden here lies in too many details, many of which do not apply to my particular situation. For instance, our Association has a standard fee for transfers. There is no additional “management fee” when I process the
paperwork.While that is rare, I understand that some management companies do have individual charges for doing the same, but the monitoring of the implied “stipulations” can only lead to higher service charges across the board for all parties concerned.
With all of the checks and balances plugged-in to this bill, these details will also [eventually, in my case] get in the middle of what was a very simple and straightforward job. As far as the “publication” of manager information goes, I must say that if the information is already available to the public of one’s management licensing status posted on the State’s website should be good enough. Whether you run one place, or twenty, DORA’s website should already have enough base information to initiate contact with any specific licensed individual. That was the whole point of the licensing to begin with, right? If your contacts with your respective HOA’s and managers/management companies don’t already specify a lot of the above concerning accountability and disclosures, then what was the point of instituting a licensing process again? Redundancy at it’s best.