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Subject: HOA Fees At Home Purchase Closing
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JohnD70
(Texas)

Posts:2


10/04/2020 1:26 PM  
Hello all,

Not sure exactly where to turn to for my question so I thought here might be a worthwhile option to pursue the solution to my query.

I purchased a home last year (2019) and on my closing papers with the title company, the HOA dues for 2019 were prorated for me to pay for the upcoming year (July 2019 - June 2020). I paid cash for the purchase of my property and on the closing papers were the cost of the HOA transfer fee and the prorated dues that were owed for the 2019 - 2020 period.

Last week, I got a notice from my HOA that I was delinquent the amount for the 2019-2020 period as it appears the amount I paid in cash for the property, plus the additional cost of the HOA fees on the closing paperwork was not remitted to the HOA by the title company.

My inquiry is, who do I chase down for the funds I paid to the title company at closing? Is it the closing company that still has these HOA dues I paid, but never transferred to the title company, despite me also paying a transfer fee at the time of closing?

Any insight on the best course of action on how to proceed getting this remedied would be ideal. In theory, should I go ahead and pay the HOA delinquency to get that cleared out in the meantime? Should I wait a day or two until I hear back from the HOA company confirming that the delinquency in fact orginated from failure of payment for the 2019 dues? That way I have on record from the HOA that the title company dropped the ball in remitting the payment, then go after them? If that is indeed the case, who do I need to get in touch with specifically at the title company to help address this issue?

Link for a copy of the Purchasing agreement at closing and the fees I was responsible for paying at closing, in addition to the house price.

Many thanks in advance for the assistance!

GeorgeS21
(Florida)

Posts:3275


10/04/2020 1:45 PM  
I would contact the closing company - it’s their job to disburse the various components. Do thus quickly - they’re probably local, right?

Should be fixable within a couple of days.
CathyA3
(Ohio)

Posts:1315


10/04/2020 1:52 PM  
Comments and suggestions:

* Was a realtor involved? If so, that person may be helpful in tracking down the missing money.

* Talk to the HOA/property manager. They may have dealt with similar issues in the past and may also be helpful.

* Start to compile an audit trail: copies of canceled checks (if any, a lot of this is done via wire transfer nowadays), receipts, copies of closing documents that show the amount due on closing plus the breakdown of that sum, anything else that may be helpful.

* Contact the title company if you're sure that's where the foul up was.

* If the amount of delinquent funds isn't huge and it wouldn't cause big problems, I'd be tempted to go ahead and pay it to avoid any late fees. But I'd talk to the HOA and get their blessing first, since at some point you'll be due a refund and the money may need special handling on their end.

Good luck!

MarkM19
(Texas)

Posts:667


10/04/2020 1:57 PM  
John,
I agree with George the Title Company gets paid a pretty good fee to handle this transaction. You are the first I have heard of that it did not happen correctly. I live in a Large Texas HOA that has many transactions monthly and if this had come up they would have been all over our PMC. I also think your lender and Realtor should share some of the blame because they must provide accurate information so that Title knows who is getting paid. I bet they both got paid correctly.

Please let us know the outcome so we can all learn from your issue. As board members and Managers we think we have seen it all until something else comes up.
ChrisE8
(New York)

Posts:128


10/04/2020 2:30 PM  
I would pay the HOA just to get them out of your way, with an explanation of what happened (and providing documents from the closing showing that you paid what you thought were the HOA dues) and then go after the title company for ALL damages.

Did you have a lawyer who handled this? If so, I'd consider going after the lawyer, too.
GeorgeS21
(Florida)

Posts:3275


10/04/2020 2:38 PM  
I’m confused, Chris ... when you say “go after,” and talk about “damages” ... aren’t we probably just talking about an error made by a closing company?
AugustinD


Posts:4153


10/04/2020 3:05 PM  
I would do the following, all within a day or two:

-- Contact the closing/title company; explain what happened; and ask if they can prove they paid the HOA and to send you the proof. Report back here with what the closing/title company says.

-- Send a letter to the HOA and explain what you think happened. Tell the HOA you are pursuing this with the closing/title company and will update the HOA within seven days. With the letter include a copy of the relevant page(s) of the closing documents that shows the HOA is to be paid.

-- Telephone your realtor and ask for his or her advice.
JohnC46
(South Carolina)

Posts:10014


10/04/2020 3:45 PM  
Posted By AugustinD on 10/04/2020 3:05 PM
I would do the following, all within a day or two:

-- Contact the closing/title company; explain what happened; and ask if they can prove they paid the HOA and to send you the proof. Report back here with what the closing/title company says.

-- Send a letter to the HOA and explain what you think happened. Tell the HOA you are pursuing this with the closing/title company and will update the HOA within seven days. With the letter include a copy of the relevant page(s) of the closing documents that shows the HOA is to be paid.

-- Telephone your realtor and ask for his or her advice.



I agree. That said, if what the HOA says you owe (and you agree) is not a large amount to you I might pay it and fight with whoever getting it back.
MelissaP1
(Alabama)

Posts:9648


10/04/2020 3:54 PM  
I would contact the HOA first to find out what their process is of showing payment is posted. Something seems hinky there. Do not know how the HOA recognizes payments. Sounds kind of strange but how do we know how they post in their ledger. Remember they have to recognize the property has been sold. How is that triggered in their system?

We had to mark the Lot # on our checks to the HOA to be posted to our property. Paying in cash some of the normal process is not followed as if you had a mortgage. Meaning how do we know they did not send a check but it posted wrongly on their end?

Paying cash for a home isn't always the best move. Most people do not do that. So it can be easy to see why/how the HOA would not know how to react.

Former HOA President
ChrisE8
(New York)

Posts:128


10/04/2020 4:44 PM  
Posted By GeorgeS21 on 10/04/2020 2:38 PM
I’m confused, Chris ... when you say “go after,” and talk about “damages” ... aren’t we probably just talking about an error made by a closing company?




Damages would include the entire amount owed to the HOA: the original dues plus any penalties, late fees, fines, etc. Whoever screwed up (title company, lawyer, etc.) should pay all of those amounts.
MelissaP1
(Alabama)

Posts:9648


10/04/2020 6:33 PM  
Wow did we go to TALK to Title company/HOA to a lawsuit? Calm down. It's a simple communication mistake. We don't even know all the details. I still think it's a simple clerical error involving the way the purchase was done.

Former HOA President
MarkM19
(Texas)

Posts:667


10/04/2020 6:59 PM  
Chris,
Are you a Lawyer by any chance? Who would pay to sue to break even? This is about making things right not damages. Who was damaged if the late fees are removed?
JohnC77
(Washington)

Posts:207


10/04/2020 7:51 PM  
This kind of mix up happens more than you know, especially if it is a cash transaction. The OP just needs to forward a copy of the settlement statement. It is proof that funds were set aside for the transfer fee and the HOA fees. DO NOT pay the fees again.

Couple of things could have happened, 1) The name and/or address of the HOA or their agent wasn't known, 2) checks were never cut, or 3) the check was cut and funds applied to the wrong account, possibly to the old account. A management company can handle this with one or two phone calls. I wouldn't even bother with the realtor at all.
ChrisE8
(New York)

Posts:128


10/05/2020 2:50 AM  
Posted By MelissaP1 on 10/04/2020 6:33 PM
Wow did we go to TALK to Title company/HOA to a lawsuit? Calm down. It's a simple communication mistake. We don't even know all the details. I still think it's a simple clerical error involving the way the purchase was done.




Posted By MarkM19 on 10/04/2020 6:59 PM
Chris,
Are you a Lawyer by any chance? Who would pay to sue to break even? This is about making things right not damages. Who was damaged if the late fees are removed?




If both posts are directed in response to mine, sounds like I need to clarify my position.

"Damages" is simply a description of the out-of-pocket losses that whoever screwed up would need to pay.

A lawsuit would be a terrible idea in this case. This was simply an error by someone involved in the process, and errors like this happen. The error just needs to be corrected and I would think that pointing out the error and asking that it be fixed is the way to go. The homeowner shouldn't be out one more cent, though, even if the HOA imposed fines and penalties--whoever screwed up should pay that.
JohnD70
(Texas)

Posts:2


10/05/2020 7:11 AM  
Thanks for the info. I am anticipating I will hear back from the HOA regarding my query to them today.

I will get in touch with the title company directly next once I have a final confirmation from the HOA that the funds were never received for the 2019-2020 timeframe. I'd like to clarify with them that they are not coming after me for the 2020-2021 year, which I paid directly to them online through their ClickPay system which I have transaction confirmation numbers for showing that it has been paid.

Ideally, I would like to avoid any issues with the HOA and let them know that this appears to be a breakdown at closing with the title company not sending the payment last year. The letter I received indicates I have until the 20th of October remit full payment so, in some aspects, I have a couple of weeks to get this right, but I'd prefer to have my debts settled as soon as possible, but as someone else mentioned, I'd rather not have the existing funds outstanding and pay again before getting those existing funds back or readdressed.
GenoS
(Florida)

Posts:4130


10/05/2020 11:53 AM  
Posted By JohnD70 on 10/05/2020 7:11 AM
I'd like to clarify with them that they are not coming after me for the 2020-2021 year, which I paid directly to them online through their ClickPay system which I have transaction confirmation numbers for showing that it has been paid.

Be careful and keep a close watch on this. Texas isn't Florida, I know, but in Florida any payment will first be credited toward an outstanding/delinquent balance regardless of what you intended the payment to be for.

In other words, if you owed an outstanding balance for September which was under dispute for any reason, and then pay in advance for October and write "FOR OCTOBER ONLY" on your check, the funds would be credited toward your September assessment, late charge, interest, etc. regardless. You would be delinquent then on your October assessment right off the bat.
BillH10
(Texas)

Posts:565


10/05/2020 12:09 PM  
Geno is partially correct, a payment received by an HOA in Texas is applied to the most senior past due amount, then the next, etc. If there is no past due assessment, the payment is then applied to the current assessment.

However, collection of other charges such as recovery of attorney fees, late payment charges, and other costs of collection only begins once the assessments are current.

See the Texas Property Code § 209.0063. Priority of Payments.

Given the state mandates the priority of application of payments received, I doubt written messages on a check, such as "For October" will have any effect on how the payment is applied to the account balance.
GenoS
(Florida)

Posts:4130


10/05/2020 12:29 PM  
There you go. BillH10 lays out a significant difference between FL and TX.
JohnC46
(South Carolina)

Posts:10014


10/05/2020 12:31 PM  
JohnD

How much is the disputed amount?
DouglasK1
(Florida)

Posts:1538


10/06/2020 11:42 AM  
We're all guessing at this point, but in my experience most title companies have their *stuff* together much more than HOAs and MCs do. It could be a title company error, but I'm leaning towards an HOA/MC failure to credit the money properly.

Escaped former treasurer and director of a self managed association.
ChrisE8
(New York)

Posts:128


10/06/2020 12:23 PM  
I've bought and sold several properties in the past few months and everyone involved (including me) has made mistakes as part of the numbers in the closing documents. It happens. Every. Single. Time. All that matters is that it's fixed and the homeowner doesn't have to pay any penalties.
JaniceM7
(Maryland)

Posts:3


10/08/2020 6:31 AM  
Also double check that the HOA didn't apply the check to the wrong account. Mistakes happen in all areas.
DavidG45
(Delaware)

Posts:29


10/27/2020 5:53 AM  
Posted By JohnC77 on 10/04/2020 7:51 PM
This kind of mix up happens more than you know, especially if it is a cash transaction. The OP just needs to forward a copy of the settlement statement. It is proof that funds were set aside for the transfer fee and the HOA fees. DO NOT pay the fees again.

Couple of things could have happened, 1) The name and/or address of the HOA or their agent wasn't known, 2) checks were never cut, or 3) the check was cut and funds applied to the wrong account, possibly to the old account. A management company can handle this with one or two phone calls. I wouldn't even bother with the realtor at all.




This ^^

The first thing to do is simply forward a copy of the closing statement to the HOA/Property Manager and DO NOT pay the fees again. The closing statement is your proof that you paid, and should resolve the issue for your liability. It's basically up to them to then track down the money; but there's nothing wrong with you assisting them if they ask.

GeorgeS21
(Florida)

Posts:3275


10/27/2020 7:00 AM  
Wait for an update from JohnD?
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