HIGHLANDS RANCH, Colo. (CBS4) – Colorado lawmakers are working on a bill that would require property management companies to disclose the fees they charge at the closing of a home sale. In many cases, the fees are hundreds of dollars and some say they’re getting out of hand.
They’re called HOA transfer fees. They cover the cost of clearing the home title for sale. The property management company prepares a status letter that lets the new owner know if there are any delinquencies in Homeowners Association dues or fines.
“It’s almost, in my opinion, extortion. There’s nothing that you can do about it. You either pay it or you don’t get the house at all,” said Leslie Stevens, a real estate investor.
Stevens paid about $900 in transfer fees in her last home purchase. They show up as line items in the mountain of paperwork at closing. Many people don’t even know they exist.
“Even a reasonable, attentive person would find this as a big surprise at the end of the process?” asked CBS4’s Jim Benemann.
“Absolutely. In fact, of the investments that I’ve purchased, I only recently learned that I was paying for all these transfer fees,” Stevens responded.
CBS4 talked to one Douglas County home seller who paid $1,180 in transfer fees because their house was under four separate homeowners associations and each charged a fee at closing.
“They’re charging too much,” said Stan Hrincevich, the president of Colorado HOA Forum, an advocacy group for HOA homeowners.
Hrincevich was leading an effort to eliminate or cap transfer fees to $50. Colorado lawmakers are considering some change. There is a bill that would require property management companies to disclose these fees before they charge them at closing. Hrincevich would like the legislation to go farther.
“I don’t even know what they are. They’re opportunities to add on fees to raise revenue and that’s not the intended purpose of a transfer fee,” Hrincevich told CBS4.
“Those governing documents mandate those fees. It’s not something that someone has come up with … another idea for another revenue source,” said Brandon Helm with the Rocky Mountain chapter of the Community Associations Institute, an organization of homeowners associations and property management companies.
Helm said transfer fees pay for a necessary service. They cover the cost of clearing a home’s title for sale. He says capping these fees comes with consequences.
“So you rob Peter to pay Paul in a sense that if you cap them or mandate that they can’t be charged up to a certain amount here, then the association has to find another way of coming up with those funds,” Helm told CBS4.
Helm said assessments could go up for all homeowners if property management companies are not allowed to set and collect these fees.
The legislation is currently in committee in the Colorado House of Representatives and is scheduled for a hearing on Thursday, Feb. 20 at 1:30 p.m.
–Written for cbsdenver. com by Special Projects Producer Libby Smith