HOA Transfer Fees Cost Homeowners and Businesses Millions

5 Replies

The HOA Transfer Fee is assessed HOA home owners upon the sale of their home. The fee ranges from under $50 to over $1,000 with no requirement to justify the fee based on work performed. It's pay it or you can't sell your home. Misunderstood is the fact that the fee is not retained by or amount determined by the HOA but by the HOA's property manager. The fee is not negotiable nor can the services it supposedly provides be shopped for in the market place. Worse yet the fee is not legally mandatory like taxes and filing fees but unquestionably entered on closing documents. The fee costs Colorado home owners upwards of $10 million a year.

The fee was made illegal via SB 11-234 on all residential home sales except those with community associations such as HOAs, condominiums, mobile home parks, and time shares. The fee can be assessed home owners for unreimbursed costs incurred by property managers related to the sale of a home in an HOA. Thus only extraordinary costs apply. At no time in the debate to allow this fee has anyone from the property management industry and their trade group, Community Association Institute (CAI), offered evidence of what these unreimbursed expenses were to warrant any fee let alone fees averaging $350+. Home owners pay HOA dues to cover updates to administrative and billing records, changing and exchanging security codes and cards, creating monthly billings and home owner financial status documents. The dues also pay for updating and making readily available copies (for a small fee) of HOA governing documents. So why are home owners being charged $350 on average to do what they are already paying for?

There is more. Title/home closing companies charge a document fee averaging $150. This in part/full is to cover costs associated with ensuring the buyer receives copies of the HOA governing documents and a Status Letter (no more than a final billing statement indicating the home owner's financial status with the HOA). The property manager, not the HOA, can bill the Title company a fee in any amount to provide this information. Thus the Title company may or may not use the fee in total to cover their own costs. As mentioned, the HOA official documents can be obtained free by the home owner/Realtor via the HOA's web site and hard copies cost no more than $25 and the home owner has already compensated the property manager to complete these ordinary tasks with their HOA dues.

Then there is the Transfer Fee on home refinancing. Yes, you buy a home then refinance a year later and pay the fee again. The administrative and billing records remain the same and your security codes/cards don't change. The Status Letter (current billing) and HOA governing documents are emailed to the Title company and this costs you hundred's of dollars in a Transfer Fee and "for what"?

Legislation to end this abusive, excessive, and illegally applied fee was pursued in Colorado several years ago but was watered down and then killed by HOA property manager interests. The HOA property manager licensing bill was supposed to address the disclosure of the fee but not ending or limiting the amount or ability to challenge the fee: basically allowing things to continue as is. Then the State Agency overseeing licensing endorsed disclosure to be a one-liner on closing documents ("HOA Transfer Fee") with no detail, invoice, limit on amount, or justification required.

The Colorado HOA Forum, a Colorado home owner advocacy organization, will continue to lobby legislators to support a Bill to end or limit this fee.

The same gouging is common here in Texas. Where I live, the HOA charges $300 and its management company charges an additional $490 each time a home is sold. In another association, where I have a rental, the management company charges $500.

You've heard all the excuses offered to justify these fees, but it comes down to "because they can get away with it." HOA boards, typically eager to get along with management, are unwilling to rein in the management company charges.

Before the most recent session of the Texas Legislature, my state representative, Tony Dale, was kind enough to meet with me to discuss these fees, but he declined to do anything about them. My state senator, Charles Schwertner, also declined to do anything.

I'm an agent in the Cincinnati/Dayton, OH area and also agree that the cost to transfer a condo is absurd. What's even more absurd is that several communities have a master association & a condo association - meaning the costs double since they are technically a member of 2 associations. For example, on a $170,000 condo, my client had to pay over $900 in order to move forward with the sale. If the docs needed rushed it would have been $1800. That's absolutely uncalled for and unfair to these homeowners. That's $900 for 3 documents with a 15-20 day turnaround time. So, if it is a cash transaction closing within 2 weeks a rush is required, so the seller would be stuck footing the $1800 bill. 

There is one large property management firm in my area that charges an arm and a leg because there is no real competitor. They hire a 3rd party company (homewisedocs) to handle the document ordering (status letters, condo certs, etc.) which drives the price upward. I have questioned these associations (and do almost every time I have to call them) and their excuse is that they'd have to hire an in-house full-time employee to handle the property transfers. Interesting.. The smaller pm's are much more reasonable and usually range from 1-200 in fees to transfer. 

Lol I could go on for days on HOA's.

@Stan Hrincevich this could potentially be a RESPA violation (Real Estate Settlement Procedures Act.) As part of a settlement, no fee can be charged for a service not rendered.

Maybe a class action suit is in order. 

The fee is not negotiable

I suspect the management company doesn't want to get into a lawsuit. It may be more negotiable than you think.

I've never seen a transfer fee of over $250. Not saying they don't exist. I've just never seen it.

I personally have never understood the purpose of HOAs. As far as I can tell, they don't provide anything, other than the protection against your neighbor opening an auto mechanic shop in his garage. And I know some HOAs have amenities like neighborhood pools, etc.

Having said that, I love my HOA. It's all voluntary. The fee is $20 a year. You can pay it or not. It's up to you.

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