JoanneD1
(Arizona)
Posts:269
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| 12/15/2008 12:22 PM |
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| I live in a small HOA and a few years ago we passed a Transfer fee in the amount .3% of the townhome sales price. It was recently brought to our attention, that the management company has been taking $195 our of that transfer fee and the balance goes into our general fund. This action by the management company was never approved by our BOD or general membership. When the management company was confronted with the action, he claims that there was a law passed for him to do this. In addition, the management company also charges a HOA Disclosure fee of $195. That fee allow him to supply the necessary documents to the new property buyer. Can someone please give me clarification on this. |
Attachment: 1121522436971.pdf
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RobertR1
(South Carolina)
Posts:5164
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| 12/15/2008 2:50 PM |
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JoanneD,
To answer your question? I doubt it and I am positive I can't. If this has been collected over time, the HOA don't know about it, I sure would be trying to remove the HOA as far away from this as possible. It could be a simply, "It plays in AZ." We have a number of posters from Az and I hope they will discuss the issue. In SC, I doubt it would last five minutes. What do you do if the buyer refuses to pay, and takes you to court. Who does he sue? You can bet part of it will involve the association and the association won't look too swift if the judge finds out it has been going on without the association knowledge.
It all looks crazy to me and would appear suspect at the the least. But as I said maybe it "flies in AZ". Has this ever been presented to the state Attorney General and was there ever a state ruling or state statute that would allow this in any form?
I just don't know. |
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MaryA1
Posts:0
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| 12/15/2008 3:35 PM |
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Joanne,
Who wrote up this "sales/lease agreement"? Many mgmt. co's do charge a transfer fee; but it should be stated in their contract with the HOA. There is no AZ state law which says a transfer fee must be charged, much less paid to the mgmt co. The applicable statutes are: ARS 33-1260 for condos and ARS 33-1806, both titled "resale of units; information required; definitions". |
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EllenS1
(Florida)
Posts:1148
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| 12/15/2008 3:38 PM |
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| It sound like it is time to go through your contract with a fine toothed comb. Tell the management company to cite the exact law that allows them to do this. A discloure fee of $195 is unheard of. |
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KirkW1
(Texas)
Posts:1665
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| 12/15/2008 3:46 PM |
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So I am guessing that you think the management company should provide the services for free????
They have some real expenses and some potential liabilities that they take on and deserve compensation for the transfer. But the place to look for this is in the contract with the management company. And if the contract doesn't address it, then the area is open to negotiation.
Robert, it sure flies in Texas. Our covenants clearly obligate an owner to purchase a resale certificate. In the event that the buyer does not, then the responsibility falls to the buyer. And we just voted to hold a buyer to it this month. The buyer has recourse through all of the following:
- The seller.
- The title company (if used)
- The attorney paid to go over the sale (if used)
- title insurance (if purchased on behalf of the buyer)
Now if a buyer doesn't avail themselves of the bottom three, then the amount charged by us is a very small amount in the scheme of what they could end up paying. A competent title search though will show that a resale certificate needs to be acquired. And the association has no responsibility to those who don't have enough sense to have a proper title search done.
What bothers me is that the HOA believes that funding itself through owners selling their property is fair or just. To be honest, the cost of resale to the association should be equal to the cost of the association. Thus, if the management company charges $195 to take care of this, then the cost to the owner should be $195. Anything else is not fair. |
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EllenS1
(Florida)
Posts:1148
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| 12/15/2008 3:53 PM |
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Kirk,
What is involved here is simply seeing if assessmenta are paid up to dat and even though I never heard of this providing copies of covenants, etc. to the buyer. Is this worth $195...I doubt it. This is not reasonable. |
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EllenS1
(Florida)
Posts:1148
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| 12/15/2008 3:57 PM |
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Kirk,
What are the "real expenses" that the managemnt company has and the only liability the company has is if they report assessments are paid up to date when they aren't. |
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JoanneD1
(Arizona)
Posts:269
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| 12/15/2008 4:15 PM |
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| Thank you all for your responses. Thanks SO MUCH for referencing the statues and we will pursue getting a legal opinion on both of them Mary and I believe an audit is most definitely in order. Our community is aging and it is becoming more expensive with every passing year. Other than special assessments and increasing monthly HOA fee which is high(415), we thought this was a good way to raise revenues. When the market was HOT, we thought it was something that the buyer would pay, but now that has turned out to be something that is negotiated or eaten by the buyer. Many communities here have "Transfer Fees". Some call them "Capital Imnprovement Fees", but we found that too limiting. As I said, we had no knowledge that the management company was taking money directly out of the fee. Thanks again for all the responses on this. Joanne |
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JoanneD1
(Arizona)
Posts:269
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| 12/15/2008 4:20 PM |
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| I stand corrected......In most cases, the seller and buyer are splitting the .3% transfer fee, but since it is such a great buyer's market, the seller has had to eat it a couple of times. We are not opposed to the management making money, but when no one is aware of the way it is being taken or taken in the first place.....my antennas go way UPPPPPPPP!! Joanne |
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KirkW1
(Texas)
Posts:1665
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| 12/15/2008 4:46 PM |
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Ellen,
Real expenses would include:
- time taken to verify the standing of the property and double check if they have any outstanding fines.
- Cost of the paper to provide a copy of the documents we so frequently refer people to.
- Labor to sit and produce said copies of the documents.
- Labor involved in tracking when the property transfers (or doesn't as the case may be.
- Labor involved in talking answering any questions the title company may have in regards to the association.
Perhaps in your area that management company doesn't provide a copy of the documents. But in this area they sure do.
there is also the liability issue. If they specify that the home is paid up and later find it owes either dues or fines your association will (rightfully) expect them to make up the difference. If the management company fails to make a note of the new owner, your association will expect them to deal with the mess and make up the difference. |
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KirkW1
(Texas)
Posts:1665
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| 12/15/2008 4:59 PM |
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In looking over your document, I am glad I didn't purchase there. You have presented your board with the authority to create a very expensive lawsuit and federal investigation. I would work hard to remove the "right of first refusal." This language is a throwback to the days of housing discrimination and should be removed.
Does your Board actually vote on the issue? If so, how do they decide if they want to allow the proposed sale or choose to purchase the property? Whatever their process, it most likely represents either a waste of time or huge liability. The first time the board either disapproves or exercises its "right of first refusal" there will be an open season for fair housing investigation.
(Unless perhaps your Board has instructed the management company to do some sort of background investigation to base the decision on, they should just say yes. And if they are going to just say yes, they should not bother.
By the way, you should not count on recouping the expense of an investigation no matter how misguided you believe the Board might have been should this ever happen. Instead count on paying up the hefty special assessment to cover the expense. |
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JoanneD1
(Arizona)
Posts:269
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| 12/15/2008 4:59 PM |
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| Well Mary, funny you should ask who crafted the "sales/lease agreement" because we did at our Budget meeting and we couldn't get a straight answer. This has grown to be a hot topic. The 2009 proposed budget that was actually sent to the homeowners had different numbers when compared to the numbers that were shown at the actual budget meeting in an elaborate slide show presentation. When I say different numbers, I mean to say the proposed budget does not reference the individual transfer fees collected. All of them are lumped into one number and those of us who were questioning the amount collected couldn't get the numbers to work and that is what started all of this in the first place. There are only 79 units here and my friend who is also an owner, sells most of the homes in here and we are on top of what sells for comps etc. This should be very interesting. Thanks for sending the statues to me. I have already forwarded them. |
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JoanneD1
(Arizona)
Posts:269
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| 12/15/2008 5:10 PM |
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| Kirk...I appreciate your response. I have talked to someone since reading your response. That is poart of the problem....no one from the BOD has ever seen this "sales/lease agreement" until we started checking out some of the numbers on our proposed budget. |
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EllenS1
(Florida)
Posts:1148
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| 12/16/2008 6:02 AM |
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Kirk,
Evidently the closing agents in Texas do not do what they do here. Except for your first item wich simply involves checking the ledger for the particular owner all the other items here are handled by the attorney or title company handling the closing. As to the last item we fax or mail a form letter and the management company fills in the blanks. As to liability, even if a problem arises, their insurance carrier would handle that. They also send a copy of the new deed. Answering the phone is just the cost of doing business. |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 7:01 AM |
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| Thanks for the input Ellen. This management company nickels and dimes everyone that it can. We recently did a HELOC(line of credit on our home). Because we carry structural insurance on the townhome through the association, my banker requested a statement that we had that insurance. I received an email from the bank stating that the management company charges $25 for faxing over a letter of insurance. The baner also said that they would not take a personal check and cited to me that they thought it was odd. I called the board president and blew my stack. Should not that be part of his job. I feel like they are "double dipping" at every opportunity. The management company also has something that they call a statement fee and some of the closing on sales include this 25.00 fee and some don't. I will get to the bottom of this if it is the last thing I do. Joanne PS. I have looked at the state statues and can't find one that supports the managment company's claim that he can take mone out of OUR transfer fee. |
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EllenS1
(Florida)
Posts:1148
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| 12/16/2008 7:13 AM |
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Joanne,
The contract with the management company should show what their services include. Sounds like it's time to lok for a new company. Our old management company was nickel and diming us too so we changed companies. |
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RobertR1
(South Carolina)
Posts:5164
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| 12/16/2008 7:18 AM |
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Ellen,
You mentioned you sent a form letter to the M/C prior to closing to fill in blanks.
Any chance of seeing a Form. As I posted I think someone is telling me stories, being very very cautious, abiding by polices or just plain want to be difficult. |
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RobertR1
(South Carolina)
Posts:5164
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| 12/16/2008 7:24 AM |
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Joanne,
Check your docs regarding insurance. Ours have a requirement that the BOD will provide each and every owner of record a yearly copy of form showing the forthcoming years insurance coverage (condos) It is part of doing business according the covenants. No charge. |
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MaryA1
Posts:0
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| 12/16/2008 7:24 AM |
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Joanne,
There's nothing wrong with the mgmt co taking their fee from the transfer fee collected at closing. But, ONLY, if it is spelled out in their contract with the HOA that they charge a transfer fee in the amount of $$$. (BTW, this is not addressed in statute.) It sounds to me like the board is allowing the PM to do whatever he/she chooses w/o first checking with the board. It's not uncommon for the PM to run the show instead of the BOD. The PM should be working for the board, not the other way around. I would certainly be looking at the mgmt co's contract to see exactly what the board agreed to. Someone on the board should have read the contract thoroughly b/4 the Pres. signed on the dotted line. Incidentally, I've not heard good things about Heywood -- the board may want to check out other mgmt. co's.
There are 3 types of fees the assn's routinely charge:
1) Disclosure fee: sometimes split by the buyer and the seller, charged to defray the cost of providing certain disclosure documents required by state law and perhaps the gov. docs.
2) Transfer fee: sometimes required by the gov. docs; charged to defray cost of eliminating seller and adding buyer info to the assn records.
3) Capital Improvement Fee (may be called a buy-in fee): this fee is charged simply to beef up the reserve fund. This fee is not charged by the majority of assn's, as is the transfer and/or disclosure fee. IMO, this fee should be outlawed! I heard of one AZ assn that charges $10,000!!!
I'm looking for future legislation that will regulate the amount that can be charged for a disclosure or transfer fee and elimination of a capital improvement or buy-in fee. In the meantime, the assn can charge all of these fees if they so choose and can set the fee as they see fit. Also, they will have to pay their mgmt co whatever they've agreed to in their contract. IMO, it's a real racket!! |
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RobertR1
(South Carolina)
Posts:5164
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| 12/16/2008 7:38 AM |
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Joanne,
Go get'em. I think they are on shaky ground, I think they do it because they can get away with it and I think the Board carries at least some of the blame.
I also think the Board (as a elected body of the owners) may or should look for ways to raise needed funds. Sharing or paying a fee to collect them is wrong. Suppose the Board didn't have a M/C? The collection of these fees could be done by the Manager hired to manage. He is paid a salary to do a job description. Same for M/C IMO. |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 7:47 AM |
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| Mary, You are a God send!! When we had our budget meeting last Sunday and when we raised the question about the MC taking the fees directly out, the BOD didn't even know that was happening so if there was a contract signed, they were not aware of what they were signing. I have heard that Heywood was let go from another HOA and I need to talk to someone from that BOD to see if they will disclose the reason. Our BOD is so SLOW to react to anything it drives me crazy. We have our first foreclosure here and the owner was delinquent on this dues for 9-10 months before they reacted. I am so angry I could spit!!! When I smell a rat, I go a little crazy and this place elected 4 out of 5 BOD who only are here 3-4 months of the whole damn year and that in itself in another story. Thanks so much for giving me the needed energy to pursue this. I wish I knew more about who you are. Sincerely Joanne |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 7:51 AM |
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| Thanks for the support Robert. There is a small group of us who are hot on this trail and if there is anything funny, and I suspect there is, we are going to expose ALL of it. We have some very fat cats living here and that is part of the problem......they want to spend money like there is no recession.....and then there are the rest of us peons who have lost so much in our retirements that it is seriously impacting our lives. Can't sell our homes without losing so we are stuck. By, the way the other scary thing is that the BOD allows this MC to get all the bids on work and I can hardly think about what is going on with that. Funny how his bids are high, higher and highest!!! Will keep you in the loop on this. Sincerely, Joanne |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 7:51 AM |
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| Thanks for the support Robert. There is a small group of us who are hot on this trail and if there is anything funny, and I suspect there is, we are going to expose ALL of it. We have some very fat cats living here and that is part of the problem......they want to spend money like there is no recession.....and then there are the rest of us peons who have lost so much in our retirements that it is seriously impacting our lives. Can't sell our homes without losing so we are stuck. By, the way the other scary thing is that the BOD allows this MC to get all the bids on work and I can hardly think about what is going on with that. Funny how his bids are high, higher and highest!!! Will keep you in the loop on this. Sincerely, Joanne |
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RobertR1
(South Carolina)
Posts:5164
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| 12/16/2008 8:27 AM |
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Joanne,
Admire your resolve. My best feature is that I have some experience in some of this, long experienec. Would advise: nibble at your target and nibble till you get recognition, then ibble some more till you get respect, then organize and make changes. If you can't do it, and you can't do it all, one of the most importance actions you can take is pick the very best people to do the very best job, and money has nothing to do with this.
Our board run for years and years with all absentee owners. out of five members we now have one fulltime owner, but it is a big one and the new Board members as they come aboard will know and understand most of the problems, and will be active or if not active will lend expertise. In the end most of the stuff will be done by a small number of owners and not all Board members. Nature of the absentee beast. |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 8:38 AM |
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| Mary, Do you have any MC names that you could share with me. We are in Scottsdale, so Phoenix and any of the surrounding areas would work. Thanks! Another interesting thing that the BOD has done....they allow Heywood to get bids on projects. The last project was one I refused to let him do so I volunteered and for a fountain rejunvenation, I saved this community over $1500 and got a better looking fountain base than what was proposed by Heywood's bidder. I can't even begin to tell you some of the wierdness. Sending us an inferior contractor and having to do jobs twice. After I screamed loud enough, the BOD finally said the contractor was not allowed back on any jobs. It is the history here that no one is paying attention to that is making me crazy. It is seeing the news with this Maddoff guy who had a ponzi and took 50B from people because no one was watching and there were no laws to protect people. As Rush Limbaugh said, "People are out of control". |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 9:01 AM |
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| Robert, You're a doll. I have attended almost all of the BOD meetings over the summer. One director present along with the PM writing minutes and all communication is done by passing a cell phone from person to person and barely being able to hear the responses. They said the phone line was not working and this went on for two months until I made enough noise that they converted to a speaker phone on a land line and believe it or not, it was worse!!!! I attempted to run for the board, but I am not electable as I am too vocal and really don't mince words. The majority of the wealthier owners side with the BOD. Next huge dispute will be a major clubhouse renovation and funds obtained by special assessment. Most of us don't want a large reserve because the BOD can spend directly out of it without a vote and thbey have spent too much for projects because they allow the PM to get the bids and he has NO vested interest in how much we spend,,,nor do the wealty ones here. I am the pitbull without lipstick. Sincerely, Joanne |
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RobertR1
(South Carolina)
Posts:5164
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| 12/16/2008 1:11 PM |
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Joanne,
You are right about me being a doll. Albeit, a little (lot) long in the tooth. (Know where that expression comes from?)
Anyway I shall solve your board telephone meeting problems and anyone else that wants to do it. Just send me a large check for info. Serious. Google "Skype", you can set up and use free of charge a telephone conferencing system. Cell phone work as do regular phones. You (I suggest) tell them you will offer it free but you have to set it up. Take your Laptop, I bet you $100 you have one, get registered, follow the directions, the day of meeting set up your Laptop with remote speakers and mike, log in all who want to listen in or participate by dialing their # and telling them it is show time. We do it, it is not flawless but the newer the Laptop the better the calls. Our system is wireless.
After you have veted the system, motion the Board to amend your docs to approve the use. But if they are using a cell phone share program there should be no objection.
Any problem, click help button on Skype. |
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JoanneD1
(Arizona)
Posts:269
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| 12/16/2008 1:20 PM |
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| Robert, You most deinitely would have won the lap top bet but screen has gone out so I am using it as a keyboard and of course the data is stored in it. Aren't you just a wealth of knowledge? I will refer them to the website that you mentioned. I have emailed the board president to see if the PM has responded to the "law" that he referenced about taking direct money from the transfer fee. It is really a Capitol Improvement Fee, but for some reason they changed it to a transfer fee. Have a great evening and I will keep you posted on how things shake out. Sincerely, Joanne |
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EllenS1
(Florida)
Posts:1148
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| 12/16/2008 6:48 PM |
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Robert,
We sent a form that asked if the assements were up to date, how assessmets were collected (monthly, quarterly or whatever), when was the next assessment was due, were there any special assesments due or any pending special assessments or lawsuits. I am retired and do not have a form but common sense will let your hoa know what info to provide. |
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MaryA1
Posts:0
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| 12/17/2008 6:36 AM |
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Joanne,
Please feel free to contact me at:
sweetpea.43@cox.net |
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