Posted:
Yeah, looks like you owe it, Capital Contribution Fee doesnt need to be at a closing although its helpful. When buying real estate you must do due diligence, it looks like you didnt. Sorry, good luck. (good article below)
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Buying a Condo or Townhome? Beware
of Unexpected Homeowners Association Fees
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In preparing for a condo or townhome purchase, most buyers realize they'll need to be financially primed to cover the following expenses at the closing: the purchase price, closing costs and prorated property taxes.
However, in my years of experience as a Realtor, I've discovered that many buyers don't always understand the the full extent of additional Homeowners Association (HOA) fees that can be incurred at the closing and throughout ownership.
Anyone thinking about buying a condo or townhome needs to ask their real estate agent or the property's management company about the following HOA fees to avoid any unwelcome surprises.
Capital Contribution/Initiation Fee
Many condos and townhomes -- both new construction and existing properties -- impose a capital contribution (sometimes called an initiation fee) on new owners. This is a one-time, nonrefundable fee paid by the buyer at closing. Once collected, the capital contribution is deposited into the HOA's reserve fund, which serves as a savings account for the property. The capital contribution rate is set by the HOA, but it is typically equal to two months of HOA dues. So if the monthly HOA fee is $250, the buyer would need to bring an additional $500 to the closing to cover the capital contribution fee.
Move-In Fee
Prior to moving in, new residents of a condo or townhome may be required to pay a move-in fee. Move-in fees can range anywhere from $100 to $300 and up. Most commonly found in hi-rise condos, move-in fees typically cover the cost to install protective padding in elevators and carpet runners in hallways. Additionally, this fee enables the HOA to recover any repair expenses from damages done to the building during the move-in process. In some cases, after the move-in is complete, the HOA will refund all or a portion of the move-in fee if no damages are found.
Transfer Fee
A transfer fee encompasses all of the HOA's costs for administrative tasks carried out when ownership is transferred on a condo or townhome. For example, updating office records with the new owner's information and adding them to the building's registry and call box. Additionally, the transfer fee may include the cost of providing new owners with mail keys and pass cards/key fobs for access to the building or common areas. The transfer fee is usually paid at the closing. It's nonrefundable, and could start around $75 and up.
Condo Documents Fee
Condo Documents detail the rules, regulations and responsibilities of the HOA and individual homeowners. Essentially, the condo documents serve as the "law" for a condo or townhome complex. Although the name "condo documents" infers that they pertain to condos only, townhomes have these documents as well.
Prior to purchasing a condo or townhome, it is essential that a potential buyer carefully review these documents to fully understand the governance of the property and what will be expected of them as a homeowner. In a conventional transaction, the seller provides the condo documents to the buyer free of charge, but in some cases, the buyer may have to pay a fee to obtain them. This is especially common when the property is a foreclosure. Banks typically won't provide or pay for the condo documents, requiring the buyer to foot the bill. Condo documents fees are normally paid to the HOA before the closing. They are nonrefundable and might cost anywhere from $75 to $150.
Ongoing Fees Throughout Ownership
Condo and townhome buyers should prepare for the possibility that they may encounter additional fees during the course of ownership. The monthly HOA fees this year may be higher next year, and a special assessment may be levied if the building needs major or unexpected repairs (such as a new roof). Additionally, HOAs have the right to impose fines on homeowners who pay their dues late or who break the rules disclosed in the condo documents.
Condos and townhomes can be a wonderful investment, but buyers need to increase their awareness about the total cost of ownership. Before finalizing the sale, buyers should ask a lot of questions, thoroughly read the condo documents and be proactive in gaining a full understanding of the financial commitment.