Colorado Legislation – Transfer Fees

>>Colorado Legislation – Transfer Fees

Colorado Legislation – Transfer Fees

A week into the 2014 legislative session in Colorado and there’s already noise being made on the HOA front. Representative Jeanne Labuda (D-Denver) has informed CAI’s Colorado Legislative Action Committee that she has decided to proceed with the introduction of a bill that would regulate the transfer fees which management companies and managers may charge in conjunction with the conveyance of a home in an HOA.

Since Rep. Lubuda is still in the process of determining exactly how she plans to regulate these fees, there have been no exact details on this legislation. However, CAI has learned she is currently leaning toward a cap of $50 on the transfer fees that management companies may charge.

The fees cover the administrative cost incurred by a management company for the transfer of a unit’s information and a status letter detailing whether the seller is current on HOA obligations. Transfer fees are currently estimated to be around $200 per closing.

Proponents of the bill believe the current amount charged doesn’t reflect the amount of work involved.

Here is a list of tasks that our management company performs prior to the closing of a home:

  • Audit status of assessment fees
  • Audit lien status
  • Audit status of fines for violation and subsequent payment
  • Audit status of any Special Assessment payments
  • Audit balance of bankruptcy
  • Audit balance on foreclosures
  • Hold the proper insurance liability coverage
  • Audit and verify payment balance is accurate for accounts in collections
  • Review current status to determine status of any escrow monies (violations, landscape, and other improvements)
  • Audit status of any working capital monies
  • Audit county records against Association records
  • Verifying the closing took place and updating all Association records

The management company then sends out a status letter with this information. This information requires research, gathering data, and correctly updating account information, which is completed by employees who get paid. The current fees cover these expenses for the management company.

If this fee is not collected as a transfer fee, the fee would need to be paid by all owners in the community, which would be unfair to charge all owners in the community for one owner’s closing cost.

There are a couple of factors that come into play here. First of all, 2014 is an election year so there is no question that many bills will be introduced as legislators position themselves for re-election. Secondly, the Colorado Division of Real Estate is expected to take up the issue early on in this legislative session in its rulemaking under the new manager-licensure law, which would make any transfer fee legislation unnecessary.

2014-01-14T17:39:59+00:00