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.
- 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.