Home owner association transfer fees

Are you going to buy or sell a home?

Did you get sticker shock when you received a extravagant invoice for homeowner’s association transfer fees?

This is a discouraging thing to experience.  The property management company uses their “interest hold” on the property to prevent you from buying or selling until somebody steps up to pay the fees.

Sound unfair?

Well it is, and the Arizona State Senate agrees with you.

First what exactly is a transfer fee?

HOA(s) restrict usage of a property and provide additional services to home owners in their community.

These restrictions are intended to protect the interests of the homeowners such as property values and living conditions.

The HOA holds a lien for each property in the community which may be exercised to recoup monetary damages should a home owner fail to meet HOA obligations.

This is where the HOA transfer fee comes into play.  It ensures this responsibility is cleanly transferred onto the new home owner when a property is sold.

HOA transfer activities includes – updating the lien / lien estoppel; making new owner aware of *CCR(s); delivering HOA disclosures; inspection of property for CCR violations; and other HOA ownership transfer services.

*CCR are Covenants, Conditions, and Restrictions.  They detail how a property within a HOA can and cannot be used.

SB 1149 protects you from unreasonable HOA transfer fees

In 2011 Arizona Senator Biggs wrote a bill to prevent HOA(s) from price gouging for transfer fees.

Paragraph C on SB 1149 Page 8 reads, “The association may charge the member a fee of no more than an aggregate of four hundred dollars to compensate the association for the costs incurred in the preparation of a statement or other documents furnished by the association pursuant to this section for purposes of resale disclosure, lien estoppel and any other services related to the transfer or use of the property.  In addition, the association may charge a rush fee of no more than one hundred dollars if the rush services are required to be performed within seventy two hours and after the request for rush services, and may charge a statement or other documents update fee of nor more than fifty dollars if thirty days or more have passed since the date of the original disclosure statement or documents were delivered.”

Disclaimer: I am not a lawyer nor to I intend to be.  You should consult legal council when interpreting the law.  This article is merely intended to help you raise questions when it comes to HOA Transfer Fees and not to be relied on as a legal authority.

OK wake up.  I know you love reading legal documents so I am going to paraphrase for you…

How exactly does SB 1149 help you from paying too much for transfer fees?

It mandates a maximum amount that Property Management Companies can charge transfer ownership in the planned community / HOA onto new residents.

Maximum $400 total for – preparation of resale statements; disclosure documents; and ownership transfer fees.

Maximum $100 for rush fee – the rushed documents must be received within 72 hours of the rush order request.

Maximum $50 for updated documents – this fee may only be charged if 30 calendar days has elapsed from the original document order.

Disclaimer:  This article is based off SB 1149 as of July 18th, 2013.  You will want to view the most recent copy as of reading this article.  Click here for the Arizona You will want to check the latest version of the Bill.  Click here to search through the Arizona state legislature archives.

What do I do if you are being charged more than Arizona law permits?

Homeowner association transfer fee billFirst of all cut the property management company some slack.  Most management companies are fantastic.  Not all of them realize this bill was passed so we need to educate them.

Sit down with your real estate agent and share the information on SB 1149 with them (not all Realtors know the bill passed either).

Also speak with your ESCROW officer if you are under contract.  They will be working up the final invoice / HUD1 closing statement.  Inform them to make sure they put the correct transfer fees on the statement.

Your Realtor and ESCROW officer will work together to educate the property management company of the bill.  If they do not comply then you may want to consider (1) filling a complaint with the Arizona district attorney’s office.

Disclaimer:  Again I am not a lawyer and make no guarantees to the accuracy of my interpretation of the law.  The article is merely intended to raise questions for discussion.  I advise you consult licensed legal counsel prior to making any decisions which involve the law.

Click here to show your appreciation for Senator Andy Biggs & SB 1149