Fees charged at closing?

For many years we've been charging a $200 transfer fee and two months of dues ($410) that goes into the reserves at each new sale and resale. We are now being challenged by one homeowner wanting to sell and thinks he or the buyer shouldn't be obligated to pay them. It's not specifically written into our CC&R's or Bylaws, but is disclosed by the manager when sales and title paperwork is being filled out. Does anybody have any experience with this? Does it have to be written in the CC&R's or bylaws? We're in Arizona and the conflict is coming from a bankruptcy judge. Thanks for any input. Justine

Transfer fees are charged by the management company for setting up a new account for the new buyer. It doesn't impact the HOA in any way. A new buyer can't just take over the account of the previous owner as there may be a balance owing that may need to be pursued legally.

Sorry, I should have been more clear. We are run by on-site staff. There has never been a management company involved as we operate a Cafe, liquor license and a huge community center with many activities.

John

I would suggest you read some management contracts. The transfer fees are in every one that I have read in California, and the number is pretty high.

I have lived in 5 associations, been on the BOD of 3 of them and have read many management service contracts plus many more requests to be such.

I have never seen management service charges fees without BOD knowledge and approval.

Have I seen tranfer fees? Yes, but never without BOD knowledge and approval.

Do I agree with transfer fees? Yes, if the association profits from them.

These transfer fees are strictly fo accounting purposes, they are not for the transfer of property, like a city or county tax.

The transfer fees are in the management contracts which the Boards approve and sign.

Larry

I could read into the orginal poster statement that the transfer fee stayed with a management company or HOA, but the two months of dues went into the reserves. Whether you agree that its legal or not, management company have been receiving these fees for many years. You may be surprised at the fees a management company can make outside of the per door charge.

You ask under what theory of lawwe can collect these charges, it called a Seman Statement, which a management fills out on behalf of the HOA. It includes any past due assessments still on the books, fines, etc, and the dreaded "transfer fee". We also make $200 per sale for providing the escrow package, governing docs, miniutes, financials, insuranace declarations, budgets, etc.

Our CCR's specify that during the declarant control period, at settlement each buyer must pay three months dues as a "capital contribution". For each subsequent transfer of title a "subsequent member fee" of $500 is due at settlement. The only issue we have had was raised when a homeowner in the community bought a second home in the community and wanted the subsequent member fee waived since they had paid it on the first home they purchased. A careful reading of the CCR's showed no provision for the board to waive the fee, so we insisted on payment.

Please see this from Davis-Stirling.com

http://www.davis-stirling.com/MainMenu/MainIndex/AssociationEscrowFees/tabid/1805/Default.aspx#axzz290Y2Bor1

Justine,

Richard pointed out a provision in California law that authorizes an association to charge "transfer fees." Well, it turns out that Arizona has pretty much the same provision in it's Non-Profit Corporation Act.

ARS 10-3302 states:

"Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs including power to:

* * *

"16. Impose dues, assessments, admission and transfer fees on its members."

This may be your response to the bankruptcy judge, the buyer, and the seller. Assuming that your association is incorporated as a non-profit, state law authorizes the association to charge a transfer fee.