Govenment Affairs: State

June 7, 2019

Governor Vetoes HOA Management License Bill

On Friday, May 31 Governor Polis vetoed HB-1212 “Recreate Homeowners’ Association Community Manager Licensing.” According to the Colorado Sun, an administration spokeswoman said the governor’s background as an entrepreneur makes him “acutely aware that there is more that we can do to cut red tape and streamline regulation.” And a major concern are costs paid by professionals that are passed along to consumers. “Adding extra costs to HOA fees … is not the best path forward as the costs do not outweigh the benefits,” she said.

Democratic legislators who sponsored HB-1212 to extend licensing for 1,617 managers of homeowner associations, or HOAs, for one year were critical of the veto. “The governor’s veto has reduced protection for consumers who live in managed communities and I plan on working to restore that protection,” said Sen. Rhonda Fields, an Aurora Democrat and bill sponsor in a statement.

The veto defied the 2017 sunset report from the Division of Real Estate that recommended extending the regulations with changes to help make sure the people who manage HOAs are competent. The legislation was designed to continue the program while interested parties discussed the issue before the 2020 session.

In his announcement, Polis said the regulations helped protect consumers in “very few instances.” But the sunset report found in fiscal year 2017 that regulators issued 12 cease-and-desist orders, eight letters of admonishment and censured two individuals. One license was denied, and one other was revoked. The state also issued seven fines totaling $5,750.
According to the Division of Real Estate, 44 percent of Colorado residents live in communities governed by HOAs. The Governor has issued an executive order to require the state to study HOA regulations before the 2020 legislative session.

The Division of Real Estate issued a statement on June 4, “The CAM licensing program will end at the Division of Real Estate (Division) on June 30, 2019, and the Division will no longer have any jurisdiction over community association managers and related management companies. The Division will cease to enforce any licensing, investigations, insurance, and continuing education requirements regarding this program, effective immediately.”

Governor Polis released a letter explaining his rationale for vetoing HB-1212, saying” Before any unregulated occupation is to be regulated, or any regulated occupation is to be continued, the state should complete its due diligence to ensure that regulation will, in fact, ensure consumer safety in a cost-efficient manner. This bill does not meet that threshold.” The letter also expressed concerns related to DORA’s sunset report saying none of the recommendations from that report were included in the bill, including allowing the division to establish renewal fees, changing definitions and repealing references to private or professional credential requirements.

Note: CAR supported HB -1212.

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