The 2017 legislative session opens today in Colorado! For those of you who are political junkies, following the recent elections, here is what you need to know about the makeup of the Colorado House and Senate:
As we’ve discussed earlier this year, Congress recently passed the Housing Opportunity Through Modernization Act (HOTMA), which was signed into law by President Obama on July 29, 2016. While the act addresses many aspects of housing and federal housing assistance, of particular interest to us and some of our clients is one part of the act that addresses FHA Mortgage Insurance for Condominiums. The act requires that the Secretary of HUD streamline the project certification requirements that are applicable to insurance for condominium mortgages to that recertification is substantially less burdensome than certifications. In addition, the act requires that the Secretary of HUD also consider and modify other factors and practices in FHA project approvals for condominiums, including the amount of commercial space in a mixed-use project, transfer fees, and owner-occupancy requirements.
At a time when our two major political parties can seem to agree on nothing, in an astounding turn of events, both the House and the Senate approved legislation that has been signed by President Obama, that, in part, revises how the Federal Housing Administration is required to evaluate condominium projects for FHA insurance.
HOA transfer fees are getting some attention in the news again this week. In particular, news coverage has focused on demands that HOA property management companies provide invoices for the transfer fees charged to buyers or sellers of properties within HOAs. There is good news for buyers and sellers in HOAs: access to transfer fee information is already available.
What exactly are transfer fees? Colorado statutes address transfer fees in the three following ways that are relevant to HOAs and their members:
- The Colorado Revised Nonprofit Corporation Act expressly authorizes nonprofit corporations to impose transfer fees upon their members unless the articles of incorporation provide otherwise. Most HOAs are formed as nonprofit corporations and have this right to impose transfer fees.
- The real property statutes prohibit certain transfer fee covenants, such as those intended to benefit a person or entity who does not hold an interest in the property burdened by the covenant. But transfer fee covenants for fees payable to homeowner associations are not prohibited and are recognized by statute as valid fees.
- Community association management companies typically contract with the HOAs they manage to charge transfer fees to the buyers or sellers of properties within those communities. The community association manager statutes and licensing rules impose explicit requirements on managers concerning these transfer fees. Those statutes and rules are the good news for buyers and sellers, and all owners, who want to know what transfer fees apply in their HOAs.
So what rights do owners, buyers, and sellers have to access transfer fee information?
Along with Matt Green from CAI National and Eric Turner from the Colorado Division of Real Estate, yesterday I participated in CAI’s Legislative Update Lunch & Learn in Fort Collins. While Matt did an outstanding job, I suspect the information which Eric Turner shared relating to manager licensure was particularly interesting to the managers in attendance. Here are highlights of the information which Eric shared on licensure:
Number of Licensees: As of the end of January, there are 1,093 folks licensed in Colorado. This is pretty close to the 1,200 licensees which CAI’s Colorado Legislative Action Committee had estimated for the Division of Real Estate. Of those managers, 578 are either individual community association managers or work under a designated manager, 449 are designated managers and 66 currently hold an apprentice license. There are also 439 management companies which are currently licensed in Colorado.
License Renewal for 2016: As a reminder, community association managers (including designated managers) must renew their licenses by July 1, 2016. The Division of Real Estate is recognizing the pre-licensure education these managers took as sufficient to cover the continuing education requirement for their first license renewal. In other words, to renew their licenses in 2016, managers will not need to take continuing education classes. Managers can begin renewing their licenses in May. If a designated manager fails to renew his or her license, the licenses of managers who work under them will become inactive. The cost to renew a license will be $190.
Continuing Education for 2017 License Renewals: For managers to renew their licenses in 2017, and every subsequent year after that, they will need to prove they have taken 8 hours of continuing education approved by the Colorado Division of Real Estate. However, for the 2017 renewal period, the Division will only count those approved classes taken from July 1, 2016 through July 1, 2017. As a result, any continuing education classes which managers take prior to July 1st will not count toward the hours needed for their 2017 license renewal.
Management Company Renewals: Unlike community association managers and designated managers who are required to renew their licenses on a yearly basis, management companies are not required to renew. However, management companies will be required to provide updated information on their companies to the Division of Real Estate on a yearly basis.
Tomorrow I will provide you with interesting tidbits which Eric Turner shared on complaints made against managers to the Division of Real Estate.