When buying or selling a home, it is expected that all sorts of fees will pop up at closing. However, the HOA transfer fee is one that sometimes takes people by surprise. This is a one-time fee that occurs when a property is transferred from one owner to another. The HOA transfer fee is mandated by the HOA and isn’t always listed in the real estate contract because it is a non-negotiable fee, meaning that the buyer can’t negotiate the amount with the seller.
However, it is generally considered the responsibility of the seller or buyer to contact the HOA to find out about the transfer fees that will be charged. To learn more about the fee, what it covers and who is responsible for payment, read on.
What does the transfer fee cover?
The HOA transfer fee covers all costs that the HOA will incur when transferring the ownership records from the seller to the buyer. These are charges associated with preparing and distributing documents, updating names in databases, changing security codes and amenities passes, and other administrative costs.
How much is the transfer fee?
HOA transfer fees are generally in the $200-$250 range but vary from place to place. There is nothing legally mandated regarding the dollar amount that can be charged in most states, however, some states do have legal guidelines to protect buyers and sellers from being charged overly high transfer fees. These guidelines can possibly dictate what services and processes the HOA is allowed to charge a fee for. Be sure to consult your legal team when imposing or enforcing a transfer fee.
Who is responsible for paying the transfer fee?
An HOA is required to disclose the transfer fees to all parties prior to the sale, but the sellers are generally responsible for paying the transfer fee. That being said, there is no hard-fast rule about who is responsible. Home purchase contracts should clearly state who is responsible for paying the HOA transfer fees. Though the dollar amount of the transfer fee is non-negotiable, a potential buyer can include a clause in their offer requesting that the seller pays all fees. The seller can counter with a set dollar amount that will be put towards HOA fees, leaving the buyer responsible for anything above that amount. The HOA transfer fee is almost always paid at the time of closing so the HOA shouldn’t run into problems with the fee being left unpaid. However, in the rare event that the fee is left unpaid, the HOA can work with the new owner to consult the sales contract to determine who should be held responsible and proceed from there.
The HOA transfer fee isn’t a very large fee, but it is necessary to cover the expenses incurred when transferring ownership from one owner to another. HOA transfer fees should be listed in a community’s CC&R’s so nobody is taken by surprise when it comes time to sell or buy a house in the community.
For additional assistance managing your HOA community, or for general HOA management questions, contact Spectrum Association Management today and see what makes us refreshingly different.
