Proposed Transfer Fee Bill Rewritten to Require Transparency
While folks were understandably concerned about an onerous transfer fee bill proposed by Representative Jeanne Labuda (D-Denver), and some even publicly announced that introduction and passage of the bill was a foregone conclusion, CAI’s Colorado Legislative Action Committee (“CLAC”) is pleased to announce that Representative Labuda has completely rewritten her proposed transfer fee bill to instead require managers and management companies to disclose the fees they charge and funds they receive related to their relationship with the HOAs they manage.
HB 14-1254 (“HB 1254”) was introduced today in the Colorado House of Representatives with Representative Labuda as the House Sponsor. Senator David Balmer (R-Centennial), who has been a champion of fair and balanced HOA legislation which also provides important consumer protections, has signed on as the Senate sponsor of the bill.
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 requirements of HB 1254 are inserted into the new manager licensure law. You will notice when reviewing the bill, that it refers to “managers” being required to make the specified disclosures. The term “manager” in the manager licensure statute includes management companies in the definition and defines “manager” as follows: “means any person, firm, partnership, limited liability company, association, or corporation that, in consideration of compensation by fee, commission, salary, or anything else of value or with the intention of receiving or collecting compensation, engages in or offers or attempts to engage in community management in Colorado. . .” Based upon the language of the bill and the definition of manager, there is no question that managers, management companies and the individuals who negotiate these contracts will be required to make the disclosures.
This bill is consistent with the position of the Division of Real Estate which does not support the capping of fees, but is a proponent of transparency and the disclosure of fees. In a meeting CLAC recently had with Marcia Waters, the Director of the Division of Real Estate, members of her staff and representatives of the Colorado Association of Realtors, we were informed of this position and the intention of the Division to include, as part of the upcoming rulemaking on manager licensure, a proposed rule requiring managers and management companies to disclose their fees to the Division.
Since this bill seems to be consistent with the position of the Division of Real Estate, since the vast majority of management companies already ethically and appropriately disclose their fees and since requiring this transparency is entirely appropriate, CLAC supports HB 1254. However, CLAC will also carefully review the bill to determine whether refinement of the language is necessary for clarification purposes.
CLAC will be calling upon CAI members to support HB 1254 when it is taken up in committee for consideration. Please keep an eye out for important Calls to Action which will be sent to members of CAI via email. Also, stay tuned for important updates on this bill when they become available.
Molly Foley-Healy is Chair of CAI’s Colorado Legislative Action Committee.