Article Courtesy of Your Hub

By Stan. President of the Colorado HOA Forum

Published August 23, 2020

Nearly 60% of Colorado residents live under HOA governance, and most HOAs are managed by HOA property management companies not HOA Boards.

There is no regulatory or State oversight of HOAs, HOA Boards or property management companies. Disputes between HOA homeowners and property management companies (and their HOA Boards) must be resolved through a costly, litigious and time-consuming process matching the unlimited resources of the HOA/management companies against the limited means of homeowners.

State HOA laws are extensive and comprehensive but provide NO means for enforcement. The State HOA Office and Department of Regulatory Agencies (DORA) have received thousands of complaints over the past five years and most involve management companies directly or indirectly. A well-written property manager licensing law with a dispute resolution process in an out-of-court venue within DORA would bring accountability and mitigate abusive practices to the property management industry and thus provide effective consumer protections.

HOA property managers (aka Community Association Managers, or CAM) were licensed in Colorado until June 2019 when Gov. Jared Polis vetoed a Bill to extend this program. Our organization, Colorado HOA Forum, supported this veto for two standout reasons: 1) the Bill was written by the industry it was supposed to regulate and 2) consumer (HOA homeowners in this case) protections were weak and lacked enforcement and there were simply too many holes in the area of accountability to hold management companies liable for their actions.

HOA property manager licensing did provide a means to add a higher degree of competency to this profession with educational requirements, precluded those with criminal records from entering the profession and provided for an affordable and accessible dispute resolution process to resolve HOA and HOA homeowner disputes with CAMs. The program will again go through a “Sunrise” process in 2020 to evaluate the need to regulate and to ensure any regulation (licensing) provides consumer protections to justify State oversight.

The No. 1 consideration in this upcoming Sunrise Review must be to ensure the industry to be regulated doesn’t have undue influence in writing any Review report or proposed legislation. DORA should choose a non-industry licensing proposal to be the lead in this Review and in developing requirements and not simply copy that which the industry proposed previously.

Other issues to be corrected from the previous program to ensure consumer protections:
 

a) Previously and in an unprecedented legislative action, a private, profit making organization got their educational classes promoted within the CAM licensing Bill implying a “false” sole source to complete educational requirements.
b) The costs to complete educational requirements and licensing fees chased many small CAMs to leave the industry or practice without a license and further discouraged new entries into the profession. Fees and requirements must be adjusted and altered to not burden the very small CAM.
c) The rules of conduct and business behavior must be specific and not allow for CAMs to dodge all accountability for violations of State HOA law by simply saying they only did what the HOA Board instructed
d) there must be requirements to contain excessive, unjustified and undocumented fees levied by CAMs on home sellers that require identifying the work performed to earn the fee and providing the home seller with a detailed invoice. These fees cost HOA homeowners over $15 million a year, require no documentation to the payee, if not paid can hold up a home sale and are not limited to or related to work completed.
e) The law must contain direct statements that CAMs must comply with State HOA laws and HOA governing documets and must act to advise and correct HOA Boards when out of compliance and not simply be able to look the other way
f) limits must exist on the number of HOAs/homes a given CAM can manage to meet licensing requirement responsibilities and to ensure quality service to the community and
g) those who own or hold high level positions in a CAM business must be licensed and accountable for the actions of CAM employees.

Will DORA again pick industry representatives to lead the licensing effort and have history repeat itself? HOA law in Colorado has a tainted history on lack of enforcement with all of the 13 HOA laws lacking any viable means of enforcement. HOA laws are administrative and provide little in the way of consumer protections. State sanctioned studies have repeatedly indicated the weaknesses and needed corrective actions in HOA laws but industry influence has consistently killed reform efforts. A good example of this is the State HOA Office. Sounds good but the Office has NO oversight, investigative or enforcement authority: it is administrative only providing no consumer protections.

Property manager licensing would resolve most HOA homeowner problems with both their HOA Board and management company as CAMs mostly manage HOAs. Making CAMs responsible and accountable in their duties under licensing that includes their ensuring HOA Boards are complying with State laws and HOA governing documents would close the door on most abusive practices and complaint resolution. An effective dispute resolution process and penalties for non-compliance with licensing rules would immediately make HOA laws and HOA governing documents effective from the homeowner’s perspective. We at the Colorado HOA Forum will continue to work for HOA reform and an effective HOA property manager licensing law.