HOA Transfer Fees: What Are They and Who Pays Them?

I am frequently asked by listing agents why their seller is being charged for the homeowner’s association (HOA) transfer fee on the Alta settlement statement. In the past, this question was easily answered because the 2015 version of North Carolina’s Offer to Purchase and Contract explicitly stated that the transfer fee was to be paid by the seller; however, now the explanation is a little more complicated.

In order to properly answer this question, there needs to first be a discussion of what HOA transfer fees are and then it can be explained why the seller is being asked to pay for them. An HOA transfer fee is a customary fee that is just a part of doing business. This fee covers the expenses the association incurs when ownership of the property is transferred from the seller to the buyer in the association’s management company’s records. Such expenses include, but are not limited to, document preparation, distribution of the community’s rules and regulations to the new owner, and the handling and copying of the property’s inspection records.

Once it is understood what the fee is for, it is easier to determine who is responsible for paying it. Generally, we look to the Offer to Purchase and Contract to determine who is responsible for paying such fees. Although the North Carolina Offer to Purchase and Contract no longer specifically refers to HOA transfer fees, I believe, we can deduce from its language who is responsible paying this fee.

According to paragraph 6(b) of the North Carolina Offer to Purchase and Contract, the buyer is responsible for owner’s association fees incurred when providing information required by the buyer’s lender and fees charged for the buyer’s future use and enjoyment of the property. Further, according to paragraph 8(j), the seller is responsible for any association fees required to confirm the seller’s payment history and prorations, any fees incurred by the seller in completing disclosure statements and other certificates relating to sale of the property, and “any fees imposed . . . in connection with the transaction contemplated by this Contract other than those fees required to be paid by Buyer under paragraph 6(b)”. It seems, in my opinion, that since paragraph 6(b) does not require the buyer to pay for fees associated with the transfer of ownership of the property in the association’s records, the seller is deemed responsible for the HOA transfer fee through paragraph 8(j)’s catch all provision.

Published by Cynthia Schafer Pela on July 1, 2017