Can an HOA levy a transfer fee without a vote?

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cnblure
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Joined: Tue Jan 05, 2016 9:45 pm

Can an HOA levy a transfer fee without a vote?

Post by cnblure »

I received an email from someone who owns a town home in the same community I do. It reads:

"I have a closing on my townhouse next week and learned yesterday that our board has decided to levy a $2500 transfer fee, paid by the seller, for any unit that is sold. That means your unit is worth unit is worth $2500 less today than it was last month. They’ve evidently termed this a fee and not an assessment…but every unit is subject to the fee when it sells so what’s the difference?"

This community now has a new HOA/council of co-owners after the previous board was dissolved due to issues resulting in ongoing multiple lawsuits. Since the new regime has been established I've never received anything like new or updated bylaws. Also, I've never been asked to sign or agree to anything. I now live out of state and have been renting out my unit. So far it's been going well. But if I ever decide to sell this information is kind of unfortunate to hear.
fabdog
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Re: Can an HOA levy a transfer fee without a vote?

Post by fabdog »

Well, if you've not received any new/updated bylaws/covenants... what do the existing ones say?

If it's a new board, and same rules... if the rules permit adding a transfer fee with a board vote... well, there you are.

If not... then you should contact the board and ask what happened.

Do they have a website or publish minutes of their meetings? You may find your answer there as well

Mike
atikovi
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Re: Can an HOA levy a transfer fee without a vote?

Post by atikovi »

On titled property I would assume it would have to be recorded with the deed. I can assume it's unenforceable for existing owners that will sell.
Normchad
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Re: Can an HOA levy a transfer fee without a vote?

Post by Normchad »

In a lot of places, HOAs do have surprisingly broad powers.

Typical turn out for an HOA meeting here is usually about a dozen people for a community of a thousand homes. Maybe it’s possible they did have a vote and nobody showed up?

For the HOAs I’ve been in, what usually happens at these meetings is that they count up the number of attendees and declare that a quorum doesn’t exist, so they can’t vote. Then they recess for fifteen minutes, and reconvene and take a vote with the people that are actually there. That is how they manage to get things done with virtually no participation from the homeowners.

I was the president of the HOA once in NOVA. What I really learned was, never go to court against the HOA. The HOA wins, every single time. And the loser usually has to,pay the HOAs legal fees.

But man, a $2500 transfer levy really seems out of bounds. I would expect $250 or something, for some fictitious paperwork shuffling, but $2500 is a lot. Holy smokes.
Mr. Rumples
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Re: Can an HOA levy a transfer fee without a vote?

Post by Mr. Rumples »

I was on my HOA board for several years (not in one now). HOA statutes vary widely from state to state. You really need to see if your HOA law covers this - those statutes are cumbersome to read; or you can post it in an HOA forum. https://www.hoatalk.com/HOADiscussionFo ... fault.aspx

My first question though is when did the board vote? Was the vote legal? Most states have statutes regarding open board meetings, notification of meetings and so forth. If they voted by email, there are rules governing that also. In CO where I was on the board, all the emails of the board are open to members with only certain exclusions regarding pending litigation. When board members used their personal email accounts for board business, it really created some issues.

You could ask for the board meeting minutes where the vote was taken. If they can't do that, again, they might be in violation of statute. For example, CO law requires minutes.

It really creates problems for boards which do not follow the law. In CO, the Non-Profit Corporation Act and even some HOA bylaws permit actions without meeting, but the Colorado Common Interest Ownership Act (the name of the CO HOA law) grants to unit owners the right to speak on an issue before the Board votes on that issue and that law supersedes everything. We would therefore only vote by email in an emergency (such as an emergency expenditure for a repair to storm damage), the vote had to be unanimous (that is state law) and then during the next board meeting having it on the agenda and voting again so members could have a say. Keeping it that way kept us out of trouble .

(I know I am getting a bit picky, but be sure you use the right terms when discussing this with the board. Generally, the Covenants, Conditions and Restrictions (CCR's) are recorded in the courthouse. They are expensive and difficult to amend since they are formal court filed legal documents. The bylaws are enacted by the HOA and in some states may not be changed without a vote of the membership. Rules are a catch all for everything else and the board does this. Many new board members are not knowledgeable about what they can and can't do, but that doesn't let them off the hook.)
Last edited by Mr. Rumples on Sat Jul 18, 2020 10:08 am, edited 7 times in total.
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8foot7
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Re: Can an HOA levy a transfer fee without a vote?

Post by 8foot7 »

You are entitled to minutes of all board meetings which must be provided to you at your reasonable expense. Start there.

I think there is a very good chance this current fee/assessment is not legal simply because of the way it was enacted.

Whether a properly enacted (because correct voting and notice and meeting practices were followed) fee of that amount is legal without a broader vote is a much murkier question.

Around here these BS fees are called certification fees, where the HOA extorts several hundred dollars to write a letter saying the seller doesn’t owe any past due fines or assessments. These aren’t on the title and cash buyers don’t need to pay them but most lenders/title companies require these assurances and so there’s the fee.
Last edited by 8foot7 on Sat Jul 18, 2020 9:51 am, edited 1 time in total.
Normchad
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Re: Can an HOA levy a transfer fee without a vote?

Post by Normchad »

There may not be minutes. If the original HOA truly was dissolved and a new one was established, this may just be the new CCRa from day one.

Certainly a good idea to ask though.
mw1739
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Re: Can an HOA levy a transfer fee without a vote?

Post by mw1739 »

I’m treasurer of my HOA and can’t imagine charging a $2500 fee. We charge $50 for a transfer, which offsets my time drafting a letter to the title company stating no dues are outstanding. The $50 also offsets most of the cost of the welcome basket we provide new homeowners. From what I understand, our $50 fee is on the lower side for our area (homes typically $500,000-$1 million). Our bylaws don’t specifically address transfer fees but we have the ability to determine fees or fines as needed.
Mr. Rumples
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Re: Can an HOA levy a transfer fee without a vote?

Post by Mr. Rumples »

Of course, assuming the fee is legal, the board's attitude might be to assess this fee to sellers since they are leaving anyway. If the HOA was badly managed before, the reserves might need a boost. A real estate agent should have a general idea of what is the norm for the area.
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CAsage
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Re: Can an HOA levy a transfer fee without a vote?

Post by CAsage »

Isn't there some rule that says fees have to be either reasonable or in line with actual expenses? I could see a fee like that being .... illegal somehow but I don't know anything about HOA...
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
Big Dog
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Re: Can an HOA levy a transfer fee without a vote?

Post by Big Dog »

Normchad wrote: Sat Jul 18, 2020 9:33 am In a lot of places, HOAs do have surprisingly broad powers.

Typical turn out for an HOA meeting here is usually about a dozen people for a community of a thousand homes. Maybe it’s possible they did have a vote and nobody showed up?

For the HOAs I’ve been in, what usually happens at these meetings is that they count up the number of attendees and declare that a quorum doesn’t exist, so they can’t vote. Then they recess for fifteen minutes, and reconvene and take a vote with the people that are actually there. That is how they manage to get things done with virtually no participation from the homeowners.

I was the president of the HOA once in NOVA. What I really learned was, never go to court against the HOA. The HOA wins, every single time. And the loser usually has to,pay the HOAs legal fees.

But man, a $2500 transfer levy really seems out of bounds. I would expect $250 or something, for some fictitious paperwork shuffling, but $2500 is a lot. Holy smokes.
A transfer/paperwork fee is common, but $2500 is up there. I'd expect something about 1/10th that amount ($250) to be reasonable for the paperwork.
ChrisC
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Re: Can an HOA levy a transfer fee without a vote?

Post by ChrisC »

Hmmmm, this transfer fee is quite common in NYC co-ops, called a “Flip Tax.” I’ve never heard it applied in Condos or other planned community development housing, which could suggest it’s of dubious legality in that context as an undue restraint on property ownership. Co-op ownership is significantly different than other forms of real estate ownership so Flip Taxes and other forms of restraint on selling a share in the Co-op, which is what you own, appear valid.

Is the townhouse here in a Co-op?
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Steelersfan
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Re: Can an HOA levy a transfer fee without a vote?

Post by Steelersfan »

We've had one at our condo association for 10 years, and our declaration and bi-laws allowed the board to implement it with a majority vote of board members.

Ours is a percentage of the sale price (.5%), and averages about $750, paid by the seller. At that level it has not been a noticeable disincentive to sales or purchases. They are not uncommon for condos in our area. The funds go into our reserve fund and are used to maintain and improve our property.

You need to check state laws and your condo's declaration and bi-laws to see if it was implemented legally. Ours was.
4nickt
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Re: Can an HOA levy a transfer fee without a vote?

Post by 4nickt »

I was on a SF condo board and we never assessed a transfer fee. That said, we should have to fund repairs etc... If I were you I would refuse to pay the fee, and let the HOA enforce its rules 9 times out of 10 ALL rules are not enforced. They could potentially block sale by placing a lien but that is the risk you run. Try negotiating a better fee as this may work to save you money. The board can always make exceptions with a "vote." Happens all the time.
THY4373
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Re: Can an HOA levy a transfer fee without a vote?

Post by THY4373 »

Was doing some research on places to move to in a couple of years and one place I was saw was a rather expensive townhome that had a 1% assessment the buyer had to pay to the HOA upon purchase. $7500 in this case.
megabad
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Re: Can an HOA levy a transfer fee without a vote?

Post by megabad »

4nickt wrote: Sat Jul 18, 2020 12:16 pm I was on a SF condo board and we never assessed a transfer fee. That said, we should have to fund repairs etc... If I were you I would refuse to pay the fee, and let the HOA enforce its rules 9 times out of 10 ALL rules are not enforced. They could potentially block sale by placing a lien but that is the risk you run. Try negotiating a better fee as this may work to save you money. The board can always make exceptions with a "vote." Happens all the time.
Not sure how you would sell the home at all if the HOA refuses to say there is no lien? It is pretty clear they are trying to extort money from you at a time when you pretty much have to do whatever they say. It is pretty egregious but common in places with terrible HOAs in my experience. All the nicer neighborhoods we have live in just charge a small paperwork fee as noted above, certainly much less than 2500.
quantAndHold
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Re: Can an HOA levy a transfer fee without a vote?

Post by quantAndHold »

Can they? Yeah, probably. It depends on how the bylaws are written. Should they? That depends on local conditions. If I were a board member, I would certainly be prioritizing the happiness and wellbeing of people who own and continue to live in the complex over people who are selling and leaving.

What to do about it if you don’t like it? The most obvious thing is to replace the board members at the next election, with people who want to remove the fee.
Yes, I’m really that pedantic.
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