The Attack on Transfer Fees

David A. Firmin | Tuesday, January 14, 2014 | State Legislation

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.

Comments

Where do we go to protest the amount of money lawmakers are paid to meddle in everyone elses business. I am tired of people who have no knowledge of my business telling me what I am worth. Just once I would like to see what research these knee-jerk jerks go to before proposing to screw up others livelihhood.

Forget the protest. Can we please set up a meddling fee per lawmaker for meddling in others peoples' business, i.e. not representing their people overall? Cut our taxes big time.

I would like to correct a couple of things you said. As a real estate broker who deals mostly in properties with some type of association, fees can range anywhere from nothing to $500 and above with most large management companies charging between $300 - $500. Association documents which owners are required to provide are often difficult to obtain or excessively costly as an example one management company charges over $200. for these documents and the owner or one of the brokers must go to the management company website and print them yourself how much does this cost them they are already charging the homeowner association for the website and upkeep. 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. Thank you Curtis

Since the associations are already paying their property management company to maintain these financial records records and to provide the governing documents to new owners, it seems to be the associations, and not the property management company, should receive the transfer fees. The property management company has already been compensated to maintain and provide these records.

Everyone reading this posting needs to click on the link to the Denver Post article David provided and read it and the comments. Stan Hrincevich has been the driving force behind this initiative and has spread a number of inaccuracies, one of which is his statement that status letters "usually involve nothing more than a form letter". If any manager is doing their job properly there is much more to preparing a status letter as David correctly notes. I am becoming increasingly concerned that Stan seems to have many representative's ears, including Rep. Carroll and presents himself as an expert in our industry even though he has never worked in it. He is also frequently quoted in The Denver Post with misinformation. While I am sure there are some bad actors in the management industry who will charge as much as they can an provide little work, there are many more people who put a lot of effort in ensuring that they do their due diligence and can be harmed by this. It is important that everyone writes the representatives and correct the misconceptions that are hurting the responsible companies and managers.

I prefer the state not make laws regulating the price of anything. As long as the transfer fees are clearly stated in the contract between the HOA and management company, I do not have a problem with it. Its clear that a certain amount of administrative work is involved and its reasonable that a management company would charge for it. Let the HOA and management company haggle over what is reasonable. As for the comment above that says it should be part of the base management fee, it depends on what the contract says. Management companies that charge the fee will clearly state that handling the transfers are not included in the base fee. Any HOA shopping around for management companies needs to carefully analyze what the base fees include and what is extra. It does seem fair that an individual owner would bear the cost instead of the entire HOA (you can believe that the HOA is paying for it if its included in the base fee, no such thing as a "free" lunch).

Our declaration provides for including 2 months of assessments to fund a Working Capital Fund. That fee is added on top of the transfer fee. I wonder if the legislature will look into that?

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