Article Courtesy of The
By Jen Fisher
Published June 3, 2022
There never seems to be a lack of material to discuss when it comes to HOAs
(homeowner’s associations). Oh, how I wish we didn’t have to go there again, but
alas, we do. Allow me to provide some context. This morning, I received a call
from the buyer’s agent on a listing of mine that we have under contract
together. We are getting ready to close and she was reviewing the final numbers
with the title company when she noticed a rather shocking HOA fee that was being
charged. Since I had already contacted the HOA management company for all the
information on bylaws, codes, covenants and restrictions for this particular
complex before listing the home, I had been made aware previously of a mandatory
$100 transfer fee required and collected by the HOA each time the home transfers
title. Although it is literally a two-minute process for the HOA to set up a new
owner, this fee is common. Usually, the fee varies between $100 to $250 … just
enough to pad someone’s pocket but not enough to throw a rubber-legged fit over.
Either way, it’s still kind of a racket in my unsolicited opinion.
I disclosed the transfer fee on the MLS when inputting the listing so it could
be negotiated as part of the offer. In section 4.3 (c) of the Real Estate
Purchase Contract, it provides a space to mark who will be responsible for
paying such fees, which are specifically spelled out as “transfer fees,
community enhancement fees, HOA reinvestment fees, etc.,” if applicable. Since
the transfer fee was set at $100, the buyer agreed to pay the fee.
Since the property was a new build at the time my clients purchased it, this
would be the first time it had been sold. No other units in the complex had been
sold for a second time yet as the complex was less than one year old. Thus, it
came as a rather appalling, as well as revolting, shock when we learned the
“reinvestment fee” was an additional $2,200, or .5% of the purchase price. This
seems to me like a duplicate fee; $100, then another $2,200?
This isn’t my first rodeo. I have seen these junk fees before. Heck (not my
first choice of explicative), I have even seen some steep ones, but $2,200?
Heads were going to roll for this. I immediately called the HOA management
company and asked them to break it down for me.
“What exactly does this fee cover, pray tell?” I demanded.
“Um, well, I can’t really explain what it is for,” she stuttered back. I then
implored her, for the love of everything that is holy, to please find someone
for me to talk to who could. Just for the record, no one’s explanation was any
better than the first. I can explain it, however. It is basically just legal
plundering. The state of Utah sets a limit of a maximum of .5% of purchase price
for a reinvestment fee. There is not a detailed receipt from the management
company of the services provided to justify a fee of any kind. Interesting. No
other business can just bill for a service without providing an explanation.
Once, someone I had hired tried to bill me for a service they said they
performed. When I asked for proof and they could not provide it, I fired them,
as any would. Wish I could do the same to this HOA.
To be clear, this is not a fee set forward by the title company. Honestly, it
would make better sense to me if it were. After all, the title company goes
through an arduous process at best to be sure the HOA account holds no liens on
the property. This often includes repeated and unreturned phone calls to gather
all the needed documentation in order to properly transfer the title, as well as
collecting the minutes, bylaws, CC&Rs, rules and regulations, budget and
insurance information. It is 100% determined by the HOA and the HOA alone. No
other entity gets a cent of it.
Unfortunately, there will be no firing. There will only be a reluctant
overpaying to an HOA for which purpose no one can properly explain. If there is
a refusal to pay the fee, the closing cannot move forward. The term blackmail
comes to mind as does scam or scheme. Either way, it is certainly something to
be aware of when purchasing in an HOA.