Management Company Disclosure Bill Clears Senate Local Government Committee!
House Bill 14-1254 (“HB 1254”), sponsored by Senator David Balmer (R-Centennial) in the Senate, was taken up this afternoon by the Senate Local Government Committee. With a slight amendment, the bill was passed with a favorable recommendation to the full Senate on a 6 to 1 vote. Senator Vicki Marble (R-Fort Collins) was the only Senator to vote against the bill in Committee.
HB 1254 requires managers and management companies to disclose during negotiations on management contracts, and thereafter on a yearly basis, the fees and charges imposed as part of their management of associations and any other remuneration received as a result of the relationship which managers and management companies have with their associations. In other words, managers and management companies would be required to disclose any funds they receive from third parties that are in any way related to the associations they manage. Managers and management companies who fail to make these disclosures would be subject to investigation and discipline by the Division of Real Estate.
The amendment to HB 1254 was clearly inferred in the bill and the concepts are already a part of the proposed rulemaking on manager licensure which is slated to be publicly released in a couple of weeks. The amendment provides that a management company cannot enforce payment of a fee or charge, including a transfer fee, which is not explicitly disclosed in the management contract with the HOA or documented by a “clearly identified line item” which would presumably be located in the settlement statements which title companies prepare when closing on the sale of a home in an HOA. Obviously, the “clearly identified line item” on closing statements would only apply to transfer fees which management companies charge related to the conveyance of a unit.
While there may be opposition to the bill by a few Republicans who are against any type of regulation, we expect the bill to make it through the full Senate with no problems and then go back to the House for concurrence.
Stay tuned for more important updates on HB 1254 as it continues to proceed through the legislative process.
Molly Foley-Healy is Chair of CAI’s Colorado Legislative Action Committee