When a homeowners association decides to sell or transfer property, HOA transfer fee laws are in place to ensure full disclosure of documents between the real estate company and the homeowners association. The Davis-Stirling Act states that an HOA must disclose certain documents but allows the association to charge reasonable fees for the transferring of the documents
The Law on HOA Transfer Fees
Assembly Bill 771 was sponsored by the California Association of Realtors (or CAR for short). CAR believes that full disclosure of costs should be made in a real estate transaction, since HOAs can be inconsistent in the fees charged for providing disclosures in a sales transaction.
The bill determines the fees that HOAs may charge to purchasers for providing documents upon a sale or transfer of a property within their homeowners association.
Find out more on the definition of transfer fees
The Davis-Stirling Act requires:
“The owner of a separate interest [to] provide [certain] documents to a prospective purchaser of the separate interest, as soon as practicable before the transfer of title or the execution of a real property sales contract.” – Civil Code Section 4525
Rules on Homeowner Association Disclosure Documents
According to the laws on HOA disclosure documents, the homeowners association must provide:
- The disclosure within 10 days of the mailing or delivery of the request for the documents
- A written or electronic estimate of the fees (from a specific form) to be charged for providing the requested documents
Click here to download a Sample Fee Disclosure Form (Note: This sample form is intended as a guide only)
Keep in mind that your HOA can maintain its disclosure documents in electronic form and even post them on its website. The requesting parties (representing the prospective purchaser) will then have the option of receiving the documents by electronic transmission.
Allowable HOA Fees
The homeowners association may charge reasonable transfer fees based upon the HOA’s actual cost for the documents to be:
Once the charges have been estimated on the transfer fee disclosure form, no additional fees may be charged by the HOA for the electronic delivery of the documents requested.
Delivery costs of the required disclosure documents may be conditioned on the payment of the permissible fees.
Example: Miscellaneous fees such as key or gate fees, fines, or assessments that are due as part of the sales transaction
What Are The Required Disclosures?
Civil Code Section 4525 lists the disclosures required of HOAs, which include:
- Governing documents of the HOA
- Financials and most recent disclosures that are made to owners
- Any occupancy or age restrictions inconsistent with those allowed by law
- Outstanding assessments, association fees, or fines
- Outstanding violations of the documents (for which the selling owner has received prior notice)
- Any changes in the HOA’s documents that have been approved but are not yet in effect
- Any defects identified as a result of defect litigation.
- Up to 12 months of minutes (except executive session minutes) upon the buyer’s request
- Any rental restrictions
The HOA may contract with any person or company to make the process smoother and ensure the association is following HOA law. Your HOA might decide to contract with community association managers or online services like CondoCerts and other providers to help provide the required disclosure documents.
Adapted from information provided by Beth Grimm, an attorney with offices in Pleasant Hill and ECHO 2011 Volunteer of the Year. She is a member of various industry organizations in California and nationally, and also the co-chair of the East Bay Resource Panel. Learn more about Grimm on her website California Condo Guru.