Charging For Association Documents In Response To Seller Requests
SB 89 amended the disclosures that sellers of residential property located in a common interest community are required to make. These required disclosures are addressed outside of the Colorado Common Interest Ownership Act ("CCIOA") in section 38-35.7-102 of Colorado's statutes. This post addresses what associations may charge for providing association documents to either the seller or, at the seller's authorization, to the buyer in conjunction with the sale of a unit within a common interest community.
Current Law
The law now states that on the request of the buyer, a seller must disclose all of the association's governing and financial documents listed in the most recent available version of the Colorado Real Estate Commission's sales contract. [Click here for a copy of this contract posted on the Colorado Real Estate Commission's website. Association documents are listed beginning on Line 259.] A seller may choose to provide these documents OR may authorize the association to provide them to the buyer.
Charging To Provide Association Documents To Buyer On Seller's Authorization
If authorized by the seller to provide association documents to the buyer, the association has an obligation to do so on payment of its usual fee for copying documents under Section 317 (Owner Inspection & Copying of Records.)
Section 317 provides that an association "may charge a fee, which may be collected in advance but which shall not exceed the association's actual cost per page" for copying association records (emphasis added.) The statute expressly conditions the association's response to the seller's authorization to provide the requested documents to the buyer on payment of the association's usual fee charged pursuant to section 317 ('actual costs'). Therefore, we are of the opinion that the association may charge its actual cost to provide these documents, regardless of whether these documents are included in the annual disclosure that must be made at no cost to owners. (See below for discussion on what 'actual cost' entails.)
Charging To Provide Association Documents Directly To Seller
What if the seller decides to provide the documents to the buyer and requests the association to provide him/her with copies of the required documents for the purpose of doing so? What may the association charge then? The statute only expressly speaks to associations charging when providing documents to the buyer on the seller's authorization. However, since the association would be providing these documents for a purpose other than the required annual disclosure that must be made at no cost, it is our opinion that the association may charge its actual cost (as allowed by the inspection and copying of association records provision) for providing them. (See below for discussion on what 'actual cost' entails.)
What Is An Association's 'Actual Cost?'
The statute does not define 'actual cost.' However, the Colorado Revised Nonprofit Code allows "a reasonable charge, covering the costs of labor and material" for the copying of records. Therefore, we can reasonably interpret "actual costs" to include the time taken to retrieve and copy records, in addition to the cost of the materials used to make the copies such as paper, toner, etc.
Because of the way the statute is worded, associations may not charge more than their 'actual cost' for providing association documents in response to a selling owner's request for them or his or her authorization to provide these documents directly to the buyer. This 'actual cost' fee cap means that associations or management companies that use automated website services (e.g., CondoCerts) to respond to these requests should not utilize these services when providing association documents in relation to the sale of a unit. It is likely that the fees charged by these services exceed the definition of "actual costs." (Associations and managers may charge a higher fee to respond to requests by non-owner parties that fall out of the scope of this section dealing with seller disclosures.)
** Stay tuned for a post in the near future that discusses the practicalities of seller's authorizing associations to provide association documents to a buyer ...
Too much bureaucracy.
Is there a maximum amount an HOA
management committee can charge for
a transfer fee & for a status letter
when HOA units sell? Does the management company have to inform the HOA Board of these increases or can they
just increase the fees at will? Would $205 be considered excessive for changing the names on the Mgt. Co. records?