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Until then, here's a story about how an out-of-state lobby worked to ensure that Colorado home owners will continue to pay $15 million per year in unnecessary and usurious transfer fees.

On the Commons
with Shu Bartholomew and Stan Hrincevich

March 15, 2014

download audio file of this program : 20140315hrincevich.mp3  ( 14 MB )
text of Colorado HB14-1254 :  1254_enr.pdf


    Times they are a changing.  Some of you may remember leaving your house or car unlocked, confident in the knowledge that when you returned, everything would be just as you left it.  In this wonderful, brave new world of controlled living, barricading your doors, windows and vehicles is no guarantee that you won’t be fleeced, especially if you live in one the nation’s 325,000 HOAs where expenses, charges, assessments, fines, fees and dues just keep rolling in.

    One such “expense” is called a transfer fee.  A transfer fee is a fee, usually charged by the management company to “transfer” the sellers name out of their computer system and replace it with the buyers name when a house sells in the development.  This is the same management company that has been hired by the association to manage the affairs of the association, maintain the books and records and oversee the contracts.

    Joining us On The Commons this week is Stan Hrincevich.  Stan lives in Colorado in an HOA and when he ran across something called a  transfer fee, he did some research and what he discovered did not please him in the least so he decided to do something about it.  He spent the last couple of years working on legislation to ban them, or at least cap them in Colorado.  He set up a web site, www.coloradohoaforum.com , found some sympathetic legislators to carry his bill, rallied the homeowners in his State and could almost taste the bubbles in his Champaign glass.   He was so close to victory – or so he thought.  Before you pop the cork on your bottle to help Stan and his fellow Coloradans celebrate, tune to find out what happened.

59 minutes long

# # #

Music:  X-Files theme.

Home Owner # 1:  They want me to get rid of my dog.  Can they do that?

Home Owner # 2:  I’m being fined for leaving my garage door open too long.

Home Owner # 3:  What are covenants?  Do I have any rights?

Home Owner # 4:  Help.  I feel like I’ve left the American Zone.

Shu Bartholomew:  If you want the answers to those questions, join me — Shu Bartholomew — and my guests “On the Commons”, every Saturday from 2:00 to 3:00 right here on WEBR Fairfax (Virginia) radio.  We’ll ask the experts, and untangle the truth about what’s left of our property rights.


Shu Bartholomew [ 00:30 ]:   “On the Commons” is a weekly radio show dedicated to discussing the many issues surrounding mandatory membership home owners associations [ H.O.A.s ].   Join us as we explore this relatively new world of controlled living, which includes condominiums, cooperatives, and both attached and detached single-family homes.   Living in a common ownership development [ C.I.D. ] means giving up the American Dream.  It means giving up your Constitutional rights, and control over your most valuable asset — your home.  Living in a home owners association means “Leaving the American Zone”.   This is “On the Commons”, and I am Shu Bartholomew.


Shu Bartholomew [ 01:10 ]:  Radio Fairfax.  Joining us today on “On the Commons” we have Stan Hrincevich.  Stan has been working very very hard in Colorado to make try and make things right in H.O.A.s, particularly with transfer fees.   For those of you who don’t know what that is, when you have a management company sitting there, being paid to manage the association, and somebody sells their house, they like to charge, sometimes hundreds and I’ve even heard of thousands of dollars, just to take the seller’s name out of their computer and put the buyer’s name in there, with all their information.  Am I right about that, Stan?


Stan Hrincevich [ 01:57 ]:  Yes.  And we have worked to challenge this transfer fee this year, 2014.  On researching this, it’s quite interesting that back in 2011 in Colorado, transfer fees were made illegal on all residential home sales except H.O.A.s, mobile home parks, and time share communities that have memberships — like an H.O.A. has membership dues.  Going into this, we started collecting information.  You referred to the excessive fees.  We found them as low as zero and $50, and got documents showing transfer fees of over $1,000 and $1,100.  Pursuing this, and you summarized it well, most of this work, if not all of the work involved in a transfer fee, is very clerical routine, and is already paid for via the property management company’s relationship or contract with the H.O.A.  This is an opportunity fee, or assessment.  We like to call it an exit tax, just to get out of the H.O.A.

And we challenged it, found a legislative sponsor.  In summary, after sending out to our members thousands - literally thousands — of e-mails, meeting with legislators, telephone calls, we were on a roll, a positive note of getting this through.  Then our friends from the C.A.I. [ Community Associations Institute ]; and how we know this, they were passing out business cards, C.A.I. actually flew people out from Virginia.  A state senator said “Stan, you are going to hit a road block soon.”  We were not being challenged on the content we were arguing.  They said, “They have lobbyists.  They’re here from Virginia.  Here’s a card.”  And he said, “I’m showing this to you, because this is what’s going on”.

So the C.A.I. from Virginia in Denver, in Colorado, lobbied and in one week turned around everything we did over the past two months, two to three months, of our citizen efforts, and gutted the bill entirely.  We were trying to limit these fees and have them justified.  They were being used illegally, we even proved that.  And all of that was taken out of the bill, and replaced with  — I hate this word in any law — a “disclosure” law which now simply means “You can continue to be abusive, but please document it someplace”.   It will go unabated, unchallenged, and that’s where the bill is today.  It’s quite sad.

And unlike a bill you had in Virginia, recently, with allowing more independent — let’s call it —  unchallenged assessments on home owners for violations of any sorts, you had a collective effort — at least in the part I’ve been reading about — between Democrats and Tea Party folks, let’s call them more conservative folks, who indicate they’re against taxes and fees and assessments that aren’t justified.  In Colorado, the support we had vanished overnight, even from those folks who are traditionally against taxes and unwarranted fees.

So we look at it as being defeated.  It’ll be up next year, we’re not going away with it.  But it’s quite sad, the outside influence and money spent in our legislature by the C.A.I.  And they’re very proud of it.  They put it on their web site, that they kicked us in the butt and got everything we advocated removed.


Shu Bartholomew [ 06:13 ]:  They actually put that on their web site?


Stan Hrincevich [ 06:16 ]:  They were posting, on their web site, initially that this bill — it’s posted on our web site, the article — that this bill looked like it was gaining support, and they were going to be working with the legislature, in some type of cute words, to “modify” it, meaning gut it.  And that’s what exactly happened.   By the way, they did that — the timing, and we have it — before the bill was gutted, their plans on attacking this.

They also, and we find this reprehensible — you probably have the equivalent of what we call DORA, the Department of Regulatory Agencies, in Virginia — they even indicated, almost came out and said it, that this plan for disclosure, instead of providing something concrete and defined, like limiting the fee to $50 or $100, which we objected to but was our compromise position, indicated that DORA, the government agency, and also the other one that can be condemned in this, the Colorado Association of Realtors, advocated not limiting the fee but doing it through disclosure.  Even though disclosure means you can’t challenge it, you still have to pay it.

We went after DORA directly, asking how a government agency could get involved, or allow for this group — the C.A.I. — to openly indicate that this was an acceptable solution to transfer fees, when in fact we believed they just pumped it up and dreamed it up.  Or, in fact, got their advocacy or approval.  So we have a government agency here that we’re fighting.  They say that never happened.  We have comments that indicate — and was floating around the state capitol from senators and state representatives — that the DORA solution was going to be the thing to replace our transfer fee bill.   And there’s no need to limit anything, because disclosure would do it.  And DORA said they could do it.  And the Colorado Association of Realtors was in favor of this.

And when we approached these folks, they all deny it.  But that’s what we’re up against.   It was a campaign of flat out, no other word, lies, misinformation.  They listened to the C.A.I. and threw out all the home owner concerns.   It’s quite tragic for home owners.  It costs home owners $15 million a year in these fees.


Shu Bartholomew [ 09:14 ]:  This is all deja vu, Stan.  Because we had the exact same thing here [ in Virginia ].   And we have the equivalent of DORA.

Initially, C.A.I. decided that it would be kind of a neat thing to have, to know how many H.O.A.s we have.  So the law was, you had to register.  And there was a $25 annual registration fee.  And this was, allegedly, to allow the state to keep track of the H.O.A.s.    Local municipalities issue the approvals for these things.  They should be able to go through their records and find out how many there are.   But no, no no.   We had to have this.  All of the sudden you had this little pot of money that was growing down there.

And then we had C.A.I. come up with a state employee who was going to manage this.  And ironically, it came out of, the same guy who managing H.O.A.s and all of that was also managing funeral homes.  We thought it was an apt coincidence — it wasn’t such a coincidence.   But that’s what his job was.  He was supposed to regulate both H.O.A.s and funeral homes.

Every time I saw him, and I tried to talk to him to find out what he was up to and what he was doing, he was surrounded by C.A.I.  Because the guy was a gutless, just really a nothing guy.  He didn’t know what he was doing.  He was the puppet.  The strings were being pulled.  He was a state employee.   And when I talked to him, he got all flustered, so C.A.I. literally came and surrounded him whenever I was in the room, so I could not talk to him.


Stan Hrincevich [ 11:21 ]:  What did the other — have you had any legislative…


Shu Bartholomew [ 11:26 ]:  So what happened was that this was the interim, the foot-in-the-door solution.  Then they came up with the C.I.C.B., the Common Interest Community Board, which is what they have now.  They have, supposedly, an ombudswoman, who is only allowed to explain the law, not the governing documents, but the law.  She is an attorney.  So if you contact her — and from I understand, people who have contacted her have told me that just filling out the paperwork, you need a law degree.  It is so convoluted, so complex, so complicated.  Everything is designed to frustrate the home owner.  But when you finally get there, she says, “Oops, I’m allowed to do is explain the law to you.”  I don’t want to pay extra for that.

But you know what, it looks like we have someone looking out for the home owners.  This Common Interest Community Board is made up of every member of the industry that’s out there.  You’ve got attorneys.  You’ve got managers.  You’ve got time-share people.  You’ve got realtors.  You’ve got developers.  Everybody.  They did have three home owners on the board when they introduced this massive re-write of the H.O.A. law.  And we fought to get at least two of them, to have to live in an H.O.A.  And they didn’t want that.   They didn’t want anyone from an H.O.A. on there.  So the ones they have now are more C.A.I. then C.A.I. ever dreamed of being.   It is so strongly titled away from the home owner.

But it looks good.  “Hey, Virginia, good for you.  You’ve got this”.  No, it’s just another lopsided — it’s not a good deal.  It’s not a good deal for home owners at all. [ 13:43 ]


The entire program is about 1 hour long.  Listen to the whole thing:  20140315hrincevich.mp3  ( 14 MB )

http://www.coloradocapitolwatch.com/search5/bill_detail.php?ca=1&bnn=HB14-1254

To add insult to injury, HB14-1254 does not require that the fees be disclosed to the home owners, but "to the executive board" of the H.O.A. corporation.  You mean to tell me that for all of these years the boards of directors of H.O.A. corporations were so unaware of the fees being charged by property management companies that this had to be legislated?!  And why did our elected representatives not want to disclose these fees to the home owners themsevles?

Section 1.  In Colorado Revised Statutes, add 12-61-1004.5 as follows:

12-61-1004.5 Fees and charges for contracted services and home sales - disclosure required.  (1)  Every manager, and every agent or other person who represents or negotiates on behalf of a manager, shall disclose to the executive board of each HOA for which it provides or offers to provide services, during contract negotiations and thereafter on an annual basis, all fees and other amounts that the manager charges or will charge to the common interest community, unit owners, and purchasers of units in the common interest community for or as a result of any service, product, transaction, or item of value provided by the manager, any employee or contractor of the manager, or other individual or entity with whom the manager associates in the performance of community association management services.