Can HOA collect a resale commission?

Started by MichaellB • 6 replies • 1543 views

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MichaellB (New Jersey)
Posts: 1

Posted:

Can a HOA employ a salesperson to resell condos only in its association? Upon the sale, the seller would pay a commission to the HOA. This commission would be added to the HOA operating income or its reserve fund. This would be an optional service available to the seller. Of course, the seller could opt to use whomever they wish to handle their sale.

SusanW1 (Michigan)
Posts: 5,202

Posted:

The "salesperson" employed by the HOA would have to be a real estate agent, so why would you do that? (create another middleman?)

RobertR1 (South Carolina)
Posts: 5,164

Posted:

MichaelB,

I'm going to take a guess and say you all are looking for ways to raise funds for your Reserve Account or money for the association for some use.
er. go. you figure you can make your place an exclusive listing for just one agent. Well, good luck on that if that is your aim, but I suspect as soon as some owner wants wider exposure of his property such as MLS you aren't going to be able to swing it. There are lots of associations that for a period of time the developer might make sale of homes an exclusive right of a specific agent, usually the developers Real Estate Office. And they might like to present themselves as an exclusive agent when they are not. Some "Project Manager", may also have a Real Estate arm, and show property out of their office which can be located on the association property. I suspect your proposal is going to create more problems than it will solve. Employee of a person to sell someone elses property, albeit to the monetary advantage (maybe)of the association seems risky.
The board of most Associations has no authority to use common property to run a business and hire employees to run it.
Add all this to if you do it, and pay insurance and meet tax requirements, remember you are a non-profit, you are not going to be able to stop other agents from selling property there. All in all, sounds like a bad idea to me. In our condo, and I would assume all HOA or POA's, the Board can provide select common property for the use of owners, for a fee. Such as Boat and RV storage areas, etc. Our condo rents out to owners storage space for golf carts, but we could not offer this to non-owners.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

MichaelB:
It sounds like you are brainstorming for a way to bring more income into the association's coffers, but this is a proposal with a few problems.

If the HOA employs a salesperson, this means you must PAY MONEY OUT--the seller CAN IF THEY WANT TO give the HOA a commission on the sale of their unit (why would they?)--the seller can use whomever they want to handle their sale (if they choose NOT to use the HOAs salesperson, then the HOAs salesperson gets nothing).

Some associations have what is called a Capital Contribution Fee. Upon the RESALE of any unit, the PURCHASING OWNER pays the Assn. a fee, the amount of which is established by the Assn--a flat fee or a percentage of the selling price. The fee is collected (at settlement) and can then be maintained with the operating income or capital reserve fund. It makes more sense for the "incoming buyer" pay a fee rather than the seller who is leaving. It would not be considered a Commission, but a type of initiation fee as part of buying into the condo community.

Check your documents to learn if you indeed have a fee such as this. If not, it would be required that all unit owners vote on an "amendment" to the CC&Rs so it can be officially recorded as part of the legal documents.

It is obvious you are a 'thinker' and you will come up with something, I'm sure. Good Luck!

GeraldT4
Posts: 1,022

Posted:

MichaellB - There would most likely be a legal challenge to the attempt of an HOA trying to bind a seller to pay a commission to a dictated agent. Lord knows I won't let my HOA encumber me in that manner on who can or cannot sell my home. It's even written into my gov. docs. that the HOA cannot do so. If you are looking for ways to bring in extra cash, try getting a rule passed for a one-time working capital contribution from the buyer to the HOA upon the sale of each home.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Michelle,
I would think that this would be not legal in most States because of the State Real Estate laws ,MLS listings and open concept of sales marketing. Even if you tried to restricted "listings" to a specific agent, I believe that is not legal. We need a licensed agent to reply on this subject. My own thoughts are that when I select an agent to represent my perspective sale, it will be someone that I am most confident in and who will work just for me and not someone who is assigned to me by my association.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

I don't think it has been mentioned but some states require a Broker
to complete a sale, usually the one that owns the Realy office, but he hs to be licenced. If so, that would put another layer of considerations to ponder.

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