Is $80 for photocopies of 21 pages of homeowner documents just a tad high? What about a transfer fee of $250? These are just two actual examples of what could be millions of dollars annually being fleeced from unsuspecting sellers. Basically, what I’m talking about are the amounts charged for homeowner documents and transfer fees to California sellers of condos, planned unit developments and planned residential developments.

The sad fact is that the seller, who pays for the copies of documents, and in most cases the transfer fee, really does not know how much they are being charged until, and if, they review their closing statement. This is, of course, after the property has closed! By then, in many cases, the seller has relocated out of the city or state, and is not about to question one of many fees in connection with their sale. Plus, even if questioned, is an individual really going to pursue a possible $75 excessive charge? Obviously, and especially for a relocated seller, this would not be cost effective.

This blatant overcharging is routinely occurring on a majority of common interest property transfers. Are you doing anything to look out for your seller?

This trend continues in part, because it is assumed by sellers, Realtors and escrow officers, that these fees are ‘standard.’ Although, the transfer and document fees are ‘standard,’ their costs are not. So, should the question occur to both escrow officer and Realtor, “what is this fee?” and an explanation is given, it's surprising that the amount of the fee is almost never questioned.

Every time I have questioned condominium management companies on what I feel is an excessive fee, they back off and reduce the fee for my client. What about all the thousands of other sales where the ‘transfer and document’ fees are never questioned?

Under Section 1368 of the California Corporation Code, item 5b clearly states the document copy fee “shall not exceed the association’s reasonable cost to prepare and reproduce the requested items.” Also, in this same section part 5c states: “An association shall not impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except the association’s actual costs to change its records and that authorized by subdivision (b).” In light of the above law why are there $250 transfer fees?

Personally, I believe many management companies are using this as a profit source. In some cases, management contracts with Homeowner associations are based in part on the management company retaining all or most of the transfer fees.

As a former co-owner of a homeowner association management company, I fully understand all of the work involved by the property manager at the time of a sale. Of course there are documents to be completed, fees to be collected, names to be changed, etc. One management company went so far as to write a two page memo as to the duties involved. Having first-hand experience, I saw clearly through the smoke screen. In an efficient, automated office all the tasks combined are only minutes of work. Don’t be fooled by verbose arguments. Certifications, documentation, balancing out accounts, setting up records . . . . it’s a few simple tasks for which they collect exorbitant fees.

In looking out for the interests of our clients, what can we do to help? To show that you are doing a superior job for your seller, here are a few ideas when dealing with Homeowner associations and common interest subdivision transfers:

• A. On listings, inquire and collect all the association documents the seller may have that are required to be provided to the buyer. Inquire directly to the management company what the cost of the balance of the documents will be. This way the seller will know what the document charge will be at close.
• B. Always request the C.C.&R’s through a title company at, or prior to the listing, where they are usually provided free-of-charge.
• C. Check your state law on allowed fees. In California, copy the code section above and send it along to the management company with a request that they send a written itemization of what is contained in the transfer fee and how the amount was calculated. Again, the seller will know ‘up-front’ what to expect. If they feel it is excessive, perhaps they could attend a board meeting and show the board members the code section.
• D. On your contract to purchase, why not put down that the buyer will pay the transfer fee? Being a seller’s agent myself, I almost always counter that the buyer is to pay this cost. Basically, I feel this is a cost incurred by the buyer. More importantly if the buyer has to pay an ‘excessive’ fee, he/she by virtue of living in the community can much more readily address the situation than an out-of-area seller ever could.
• E. After the close, if fees appear to be excessive, send a copy of the code with a certified letter (on behalf of your client) requesting an adjustment. If they refuse an adjustment, ask for a detailed written response justifying the fee, in light of the code. If you do get your client a refund, you’ll always be looked on as a true professional who went above and beyond to protect your client. This will also be the case, even if your efforts do not get direct results.

Editor's note: Although this article is written based on California law, the principals brought fourth here may apply to may other states as well. Please review your states laws as they apply to fees imposed by homeowners management companies in your state.

Published: February 24, 2001

Use of this article without permission is a violation of federal copyright laws.

Bob Schwartz is a Certified Residential Specialist, real estate broker specializing in San Diego real estate & co-owner of an Internet search engine optimization firm, WebsiteTrafficBuilders.com, specializing in domain name registration and Internet domain website hosting. Bob received his BBA majoring in real estate & computer programming. Bob is an expert witness for major San Diego law firms, has served on the Consumer Affairs Community of the San Diego Association of Realtors, is past president of a local HOA and co-owner of a condominium management Co., and directs a multi-state high traffic network of legal directory sites. You can visit Bob's San Diego real estate site at BrokerForYou.com.