What Are HOA Transfer Fees and Who Pays For Them?

Written by Nailing x

February 26, 2018

Whether you’re buying or selling a condo or other type of home governed by a homeowner’s association (HOA), there are few extra considerations that need to be made compared to the average freehold home.

No matter what type of home you buy or sell, there will definitely be a list of closing costs that you’ll have to pay. And when it comes to homes governed by an HOA, there may be HOA transfer fees to pay on top of all other closing costs.

HOA’s are responsible for managing the housing development and collecting fees from all homeowners in order to cover the costs associated with the community’s upkeep. They also establish and enforce a set of regulations that are meant to maintain the value of the community, and all homeowners are required to abide by them.

Among the rules that HOA’s may have in place are HOA transfer fees, which might have to be paid when a unit in an HOA is sold and thereby transferred to a new owner. But what exactly is this transfer fee, who pays it, and why does it have to be paid at all?

What Are HOA Fees?

HOA transfer fees are actually standard fees that may occur when a property is transferred from one owner to another. They are meant to cover the costs associated with preparing documents, handing out HOA’s rules to the new owner, dealing with property inspection records, changing names in the homeowner databases, changing security codes, creating new security cards, and other administrative costs.

How Much Do HOA Transfer Fees Cost?

HOA transfer fees vary from one community to the next and are established by HOA management. These costs are charged based on the specific types of services that the HOA provides to both buyers and sellers involved in a transaction. That said, these specific types of fees typically range between $100 to as much as $1,000, though the average is somewhere around the $250 mark.

While it’s the HOA that determines the cost of transfer fees, state laws can come into play to regulate them. For instance, California state laws only allow HOA’s to charge transfer fees for costs directly associated with gathering, copying, and distributing documents.

Buyers and sellers should be aware that HOA transfer fees aren’t always included in real estate contracts. That’s because it’s not a term that can be negotiated between the two parties as it’s a fee that is mandated by the HOA.

Having said that, HOA’s are sometimes required to disclose these transfer fees to all parties prior to the sale. In California, HOA’s must make certain disclosures to buyers and are required to provide an estimate of the transfer fees within 10 days following a request for disclosure documents. Buyers and sellers would be well-advised to get in touch with the HOA management team to find out about any transfer fees that may be charged.

Who’s Responsible For Paying HOA Transfer Fees?

In California, HOA transfer fees are usually the responsibility of the seller and are added to all the closing costs when escrow is complete. However, there may be cases where the buyer is billed for this expense.

It’s important for both buyers and sellers to determine who will be responsible for paying this transfer fee in order to budget for all closing costs accordingly.

The Bottom Line

It’s not uncommon for buyers and sellers to be surprised by certain costs by the time their real estate deals close, and HOA transfer fees can be one of them. Don’t let these fees come as a surprise to you and make sure you do your due diligence, no matter what side of the real estate playing field you happen to be on.

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