HOA Documents Fee vs. HOA Transfer Fee
Question: We are selling our home in east Mesa for $800,000. Although the escrow is not scheduled to close for another three weeks, we recently learned that our Homeowners Association (“HOA”) is demanding a transfer fee of one-half of 1 percent, or $4,000, to be paid at closing. My sister is a real estate agent and she says that a new law limits the fee that an HOA can charge to $400. Does this $4,000 fee have to be paid to the HOA?
Answer: Probably. The Covenants, Conditions and Restrictions (“CC&Rs”) of an HOA can provide for different types of HOA fees, including a documents fee and a transfer fee. Your sister likely was confused with a law limiting HOA documents fees, because there are currently no limits for an HOA transfer fee.
An HOA documents fee is a fee for any documents related to the disclosures an HOA must deliver to the buyer upon the sale of the home — for example, information regarding bylaws, a current operating budget, and a most recent financial statement. For these required disclosures A.R.S. § 33-1806 limits an HOA’s documents fee to no more than $400, and an additional $100 if the documents are required to be expedited.
The CC&Rs may also authorize an HOA transfer fee on the sale of a home. An HOA transfer fee can be thousands of dollars, and is frequently a percentage of the sales price of the home, such as your $4,000 transfer fee. Since there is no law limiting the amount of a transfer fee, you will probably have to pay the $4,000 transfer fee. Closing cost fees are negotiable between a Buyer and a Seller including HOA transfer fees. Many times the buyer pays for an HOA transfer fee much like they would a membership fee to a health club; in other cases the transfer fee is split 50/50 or, in some cases, the seller pays.
Note: If you were the purchaser of a new home within a development, there would not have been an HOA transfer fee when you purchased the new home. Unless you were familiar with this provision within your HOA CC&Rs, the HOA transfer fee may come as a complete shock as the fee can be a considerable amount of money.