Do HOA dues have to be prorated

Started by DavidB10 • 6 replies • 7789 views

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DavidB10 (Texas)
Posts: 2

Posted:

Do HOA dues have to be prorated from the month a homeowner closes on their home? We are a small HOA of approx 32 homes. Our yearly dues are only $120.00. We only have minor maint of front landscaping and street lighting. We do not have any playgrounds, pools or any type of othe comittments. According to the documents that we have at this time there is no provision for parcel payment of yearly dues. Dues that have been paid have been paid $120.00. WE have some new homeowners that only want to pay from the month they closed to the end of the year. Any information that you can give us will be gratly appreciated. Thanks

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't see a problem with starting from the first of the month after the new owner moves in. Yes, there may be the issue of proration. However, it can be quite complicated. You never know if the new owner has been informed their in a HOA and requesting money doesn't sit well. There's just alot of little factors that just starting the dues on a solid month makes sense and is easier.

We didn't prorate our dues. We usually still had the money from the previous owner covering that month anyways. Otherwise, we'd have to return a prorated amount to the original owner and then prorate the new owner. What a mess.

I will say we did return money IF the original owner paid for a complete year and sold before that year was over. That's the only time we ever officially prorated any dues.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

David:

Dues should be prorated. If I buy the home in July I am responsible for dues from July on, however I didn't own the home prior to July so you don't have a legal means to force me to pay it. The only difference would be a POA where dues go with the property and not the owner.

BobM5 (California)
Posts: 34

Posted:

Proration of dues is something to be determined by the buyer and seller in escrow. We bill in advance, so the September bill is due and payable on September 1. If a unit closes escrow in September, the new owner will be billed for October. If title to the unit changed hands on Sept 15 (for example), that is for the the buyer and seller to settle between themselves as part of the sales contract. In today's market, some sellers are offering to prepay 6 months assessments.

JoeW1 (New York)
Posts: 728

Posted:

DavidB10 - Proration of HOA dues, utilities, taxes, etc. are matters handled by the closing attorneys or broker/real estate agents in relation to the sale process of the home. Meaning as far as the HOA is concerned, dues begin from the month a homeowner closes on their home. Lets say the previous owner pre-paid a year in advance from Jan. 01 - Dec. 31 and home closes on July 31. Half the year was already paid by the seller so a credit to the seller is applied on the balance sheet during the sale process of the home.

DwightT (Idaho)
Posts: 664

Posted:

This may depend on how dues are paid. We bill annually in advance, and the dues are the responsibility of the owner as of Jan 1. If the title transfers on Dec 31, then the new owner is expected to pay the dues. If the title transfers on Jan 2, the previous owner is expected to pay. In reality, the escrow company pays the dues and which side of the balance sheet it comes from will probably be an item of negotiation between the buyer and seller.

GloriaM (North Carolina)
Posts: 829

Posted:

The answer is yes, the dues are prorated at the time of closing. The old Owner would be responsible up to the day they close and the new owner through the end of the year. If the old owner paid in full, then the closing attorney would have to get back the old owners proration at closing.

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