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Subject: Management Company & Transfer Fee Compensation
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JoanneD1
(Arizona)

Posts:447


12/15/2008 12:22 PM  
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

RobertR1
(South Carolina)

Posts:5164


12/15/2008 2:50 PM  
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.
MaryA1


Posts:0


12/15/2008 3:35 PM  
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".
EllenS1
(Florida)

Posts:1148


12/15/2008 3:38 PM  
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.
KirkW1
(Texas)

Posts:1665


12/15/2008 3:46 PM  
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.
EllenS1
(Florida)

Posts:1148


12/15/2008 3:53 PM  
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.
EllenS1
(Florida)

Posts:1148


12/15/2008 3:57 PM  
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.
JoanneD1
(Arizona)

Posts:447


12/15/2008 4:15 PM  
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
JoanneD1
(Arizona)

Posts:447


12/15/2008 4:20 PM  
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
KirkW1
(Texas)

Posts:1665


12/15/2008 4:46 PM  
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.
KirkW1
(Texas)

Posts:1665


12/15/2008 4:59 PM  
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.
JoanneD1
(Arizona)

Posts:447


12/15/2008 4:59 PM  
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.
JoanneD1
(Arizona)

Posts:447


12/15/2008 5:10 PM  
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.
EllenS1
(Florida)

Posts:1148


12/16/2008 6:02 AM  
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.
JoanneD1
(Arizona)

Posts:447


12/16/2008 7:01 AM  
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.
EllenS1
(Florida)

Posts:1148


12/16/2008 7:13 AM  
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.
RobertR1
(South Carolina)

Posts:5164


12/16/2008 7:18 AM  
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.
RobertR1
(South Carolina)

Posts:5164


12/16/2008 7:24 AM  
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.
MaryA1


Posts:0


12/16/2008 7:24 AM  
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!!
RobertR1
(South Carolina)

Posts:5164


12/16/2008 7:38 AM  
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.
JoanneD1
(Arizona)

Posts:447


12/16/2008 7:47 AM  
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
JoanneD1
(Arizona)

Posts:447


12/16/2008 7:51 AM  
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
JoanneD1
(Arizona)

Posts:447


12/16/2008 7:51 AM  
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
RobertR1
(South Carolina)

Posts:5164


12/16/2008 8:27 AM  
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.
JoanneD1
(Arizona)

Posts:447


12/16/2008 8:38 AM  
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".
JoanneD1
(Arizona)

Posts:447


12/16/2008 9:01 AM  
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
RobertR1
(South Carolina)

Posts:5164


12/16/2008 1:11 PM  
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.
JoanneD1
(Arizona)

Posts:447


12/16/2008 1:20 PM  
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
EllenS1
(Florida)

Posts:1148


12/16/2008 6:48 PM  
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.
MaryA1


Posts:0


12/17/2008 6:36 AM  
Joanne,

Please feel free to contact me at:

[email protected]
RobertR1
(South Carolina)

Posts:5164


12/17/2008 7:07 AM  
Ellen,
Set me straight here.

You as the closing agent had a form with questions on it about the financial condition of any HOA you are working on. You asked if there were any indebtedness by the HOA (special Assessments). You then used this information to help clear the title to allow for closure. This act you all did was not connected to any Bank or Mortgageor. Is all that right?

Now when I first started to look at this I went to a lawyers office that closed on my place and asked what kind of information they requested. It has been a while ago,but I seem to recall that she said all the financial information is supplied by the Bank or Mortgage folks. I have recently gone to a Mortgage lender and was told all their form were not available for distribution as they were company files.

I really have no issue with any of these folks but I am trying to find out what information is routinely provided by the associations and does the association have any liability to see that this information is distributed and how they should handle that particular part of it.
EllenS1
(Florida)

Posts:1148


12/17/2008 7:47 AM  
I'm not certain what you are asking. The financial info we request is as it pertains to the individual property we are closing on. The banks here allow certain attorneys here to close on the loan documents so while we may represent a buyer or seller we also must make certain the lender is protected.

As far as the associations' obligation or liability I really don't know. I have never had an association deny the information I requested.
RogerB
(Colorado)

Posts:5067


12/17/2008 9:10 AM  
In Colorado, those HOAs which fall under the Colorado Common Interest Ownership Act are required to provide to a potential buyer several items of information. DARCO provides the CC&Rs, Articles of Incorporation, Bylaws, Rules and Regulations, ACC request form, and past year's minutes and financials to the Seller or to the seller's agent. The seller then provides it to the potential buyer's agent or buyer. Our management agreements authorize us to handle HOA matters related to home sales. This also includes providing a status letter to the title complany and any correspondence with the parties to the sale and the title company. If we screw up (has never happened) then we would pay the costs involved. The seller and/or the buyer share in payment to us as per their agreed upon closing charges. DARCO has a licensed real estate broker who is involved in such transactions.
JohnK3
(Pennsylvania)

Posts:967


12/17/2008 9:25 AM  
Mary writes:

>>>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!!!<<<

Outlawed? Why? Our docs provide for a one-time contribution of 1 Q dues (currently $225) from purchaser(s). Look at it this way: our HOA has been in business since 2001. So since then, any original owners (say 70%) have been ponying up for 7 years. I don't think it's unfair to have newbies kick in a few coins to a fund from which they (may) benefit as soon as they move in.

BTW, we also charge a flat $200 fee to provide all the stuff, plus more, needed to complete a sales transaction. Somebody has to do all the work to compile and deliver everything whether it's a PM or our self-managed HOA.
RobertR1
(South Carolina)

Posts:5164


12/17/2008 1:35 PM  
To all,
Hear is what I am trying to worry about and maybe I should forget it.

Time after time we have read on this site that Boards cannot release any personal information about who is in arrears, etc, etc. Many times we have read of the resistance the BOD (some) present if an owner asks for specific financial data, even to include who signs the check and who uses plastic in their Board business. The Boards position about releasing or printing names of owners behind in their fees, have fine oustanding, have liens on property; is one of trepidation because it may come back and bite them. Yet they can release all this information to God knows who reads these closing papers. If fact our manager says there is no standard form he knows of and some information is released over the phone. Is there a problem here, aside from the phone bit which I am sure would never be provable anyway.
MaryA1


Posts:0


12/17/2008 3:13 PM  
Robert,

I don't know that a list of all delinquent h/o's is part of the disclosure package given to new HOA members.
MaryA1


Posts:0


12/17/2008 3:18 PM  
Posted By JohnK3 on 12/17/2008 9:25 AM
Mary writes:

>>>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!!!<<<

Outlawed? Why? Our docs provide for a one-time contribution of 1 Q dues (currently $225) from purchaser(s). Look at it this way: our HOA has been in business since 2001. So since then, any original owners (say 70%) have been ponying up for 7 years. I don't think it's unfair to have newbies kick in a few coins to a fund from which they (may) benefit as soon as they move in.

BTW, we also charge a flat $200 fee to provide all the stuff, plus more, needed to complete a sales transaction. Somebody has to do all the work to compile and deliver everything whether it's a PM or our self-managed HOA.




John,

You use the same logic as I've heard from others who's assn has a "buy-in" fee. Frankly, I don't "buy" it! Anyone moving into the assn will be paying the same fees as everyone else. Why should they have to pay a fee for all the years they didn't live there? You could say the same things about the assessments, which you've been paying since 2001. Should a new h/o have to pay a "catch-up" fee for assessments too? I still say these "capital contribution", "buy-in" fees or whatever other catchy names some assn's use should be outlawed. It's like paying for the privilege of living in the assn.
RobertR1
(South Carolina)

Posts:5164


12/17/2008 4:44 PM  
Mary,
I hope I didn't state that anyone asked for a list of all delinquent owners. I did say the information provided is any information requested on an owner in the association. I would imagine the total amount of arrears would be of interest to a prospective buyer, and please note this information requested is provided to the PROSPECTIVE buyer/s and their agents. I also would take exception to any BOD charging any fees to the owners because they CAN, as you provided in another post.

But seriously, I may be off base with this whole thing because it just is not being accepted or even considered as a problem. All I am saying is: if we as owners have to fight city hall (Board, M/C, whoever to abtain any information from those just mentioned, and they answer us that the requested information is Priority Information, if is personal information, we may get sued if we tell you what you want to know; in the next breath they readily give this information out to ANY Company with a Letterhead to freely pass around for the purpose of assisting a PROSPECTIVE buyer in his desire to purchase a unit or not. If I read this right, I think is presents an issue. I will even go one step further and agree this is a way of doing business all over the place, but, the BOD's are fond of stating we must put out a disclaimer if we mention the name of a member on the website, then I think they should disclaimer this, and that would be one for a lawyer. Our documents does not specify what information can be given out to Closing Agents, Banks, Mortgage Co, folks trying to refinance, and God knows who else. They just fill out any form received by anyone involved or pass the information over the phone. They are no records kept, no copies made of information released, and their explanation is, "they are just trying to help the Owners (Sellers)."

My final answer.
JoanneD1
(Arizona)

Posts:447


12/17/2008 7:57 PM  
Mary, I want you to know that we have compiled a list of 20 transactions and there are only a couple where the settlement statements seem consistent from one to another. I have written a stern letter of concern to the BOD and told them they need to regard this matter as urgent and of TOP priority. I think we have some things to think about....like the transfer fee etc. When our owners first inacted a transfer fee....they did at .5% and that gets expensive really fast when you are talking about million dollar properties. We had a real battle getting it lowered to .3%. The BOD never gave us a choice to go lower. I specifically asked the BOD about a contract and any clause in there that allow the MC to take fees directly out of our transfer fee. Thanks again for you help. Sincerely, Joanne
JoanneD1
(Arizona)

Posts:447


12/17/2008 8:01 PM  
JoanneD here and thanking you for all the information that you gave me. I have written a VERY stern letter to the BOD and have asked them outright about the contract with the MC and any clause that allows him to take fees directly out of it. I told them we had documented over 10 transactions where there appears to be highly irregular charges and fees to both the seller, buyer and both on the same transaction. I don't think anyone is watching or understands. We take alot for granted....BUT not anymore. Thanks again and Merry Christmas. Long tooth.....I am too young to know what that means HAHAHA
RogerB
(Colorado)

Posts:5067


12/17/2008 8:29 PM  
It seems to me that many of the comments on this thread are speculation; things sometimes appear to be postulated that are not correct. For example, a status letter is provided to a title company but never to a prospective buyer. The title company needs this information in order to collect any delinquent assessments from the seller at the closing (title transfer) and to be aware if the current owner is in violation of a restriction in the CC&Rs.

Anything dealing with title transfers which a management company is involved for an HOA need to be their management agreement. This prevents many of the concerns expressed on this thread.
RobertR1
(South Carolina)

Posts:5164


12/17/2008 8:33 PM  
Joanne,
Long in the tooth is an expression of getting old, or older.
Even today you will see folks that deal in buying and selling horses will look into the horses mouth. Some can estimate how old the animal is by how long some of the teeth are. When animals, humans, also age they tend to lose tissue around the teeth making the teeth appear longer (older). Am I to believe your husband never gave you a tooth inspection before he married you. I do have some statistics that indicate most husbands will inspect their spouses teeth when they are sleeping so I suppose you never hear it mentioned. All human males go to a two day class to learn how to read teeth. I bet you passed easily and your husband now knows you are young of teeth and also very smart by now.
JohnK3
(Pennsylvania)

Posts:967


12/18/2008 8:54 AM  
Mary asks:

>>>Why should they have to pay a fee for all the years they didn't live there?<<<

Because it sez so in our docs (which I didn't write). Matter of fact, in our CCRs (page 18), which would require a 2/3 vote of Membership to change. Recalling it took us months to get enough (simple majority) to change on of our ByLaws this year TO SAVE THEM $$$, should I write:

"Dear Kids,

Remember when you had to pay 1 Q dues into our Reserve Fund when you bought your homes? Well, Mary (not her real name) thinks this should be outlawed for future purchasers, so how 'bout we eliminate that from our CCRs and give them a free ride. It will only take a 2/3 vote. Please sign the attached ballot and return it to the PO Box.

Thanks for your generosity,

The Board"

Right. When pigs fly!

MaryA1


Posts:0


12/18/2008 2:06 PM  
John,

OK, so the declarant wrote it into the docs. Probably because he didn't want to fund a reserve so he put the burden on the property owners. Even so, I don't think this type fee is proper and should be outlawed. I know there are individuals working on this in AZ and perhaps one day it will get to the legislature. If, and when, I'm sure the law will be prefaced with: "Notwithstanding any provision in the community documents. . .", meaning it won't matter what your docs say, you cannot charge a "capital contribution" or "buy-in" fee to fund your reserves.

BTW, I also know of many, many assn's that charge this type fee, but it's not written into their CCRs. Some of these fees are quite high too. I heard of one assn in AZ that charges $10,000!
JohnK3
(Pennsylvania)

Posts:967


12/19/2008 11:36 AM  
Mary,

I'm sure you'd agree that HOAs are private organizations that folks can choose to join by purchasing a chunk, or choose not to if they don't like the terms. Some private golf clubs charge in the $100,000s to become a member. Is that improper? Should that be outlawed? I don't think so. As for the AZ HOA you mention with the $10K ante, so what? Apparently its well-heeled traffic can bear (and choose) the cost of joining. Who's to complain and on what basis?

Free to be You and Me. Thus spoke Margo Thomas.
JoanneD1
(Arizona)

Posts:447


12/19/2008 1:08 PM  
Hey John, I hear what you are saying, but let me give you another side of the proverbial coin. We have owners here who bought in at 300-700k some years back....granted the property values have increased BUT there is another breed of buyer that is here part time and they are buying in at over a million and don't care how much the assessments and monthly HOA fees rise. I am one of the full time "poor" folks whose retirement accountant is hemmoragging to say the least. I have no vehicle to get it back. I'd don't want 500 per month HOA dues nor do I want a wasteful special assessment for a fancy clubhouse renovation to impress my friends. I have my own fabulous kitchen. At this point in time, clubhouse upgrades won't have ANY effect on our property values. No one has not ever bought in here because we didn't have a fancy clubhouse. That is not why people come in here. So the dilema is the "haves and the have nots", much like what is happening in the country! I would LOVE to get out and let them do what they want, but I would have to take too great a loss because we bought a little to the high side and renovated. Oh well....such is life. Just a little food for thought. The rules and world are changing. Sincerely, Joanne
MaryA1


Posts:0


12/19/2008 2:26 PM  
Posted By JohnK3 on 12/19/2008 11:36 AM
Mary,

I'm sure you'd agree that HOAs are private organizations that folks can choose to join by purchasing a chunk, or choose not to if they don't like the terms. Some private golf clubs charge in the $100,000s to become a member. Is that improper? Should that be outlawed? I don't think so. As for the AZ HOA you mention with the $10K ante, so what? Apparently its well-heeled traffic can bear (and choose) the cost of joining. Who's to complain and on what basis?

Free to be You and Me. Thus spoke Margo Thomas.




Equating the HOA buy-in fee to the fee to join a private golf course is like comparing apples to oranges. People don't mind paying the golf course fee in most instances because it's a matter of prestige. There shouldn't be a required "buy-in" fee to purchase a home. These buy-in fees are generated as a means to subsidize the reserve fund, which should be subsidized by the members' monthly assessments. IMO, any set of covenants that has this requirement built in was done so by the declarant so he wouldn't have to fund a reserve fund. Just my opinion, of course, and also my opinion that these buy-in fees should not be allowed. BTW, I don't give a hoot what Marlo Thomas says!
KirkW1
(Texas)

Posts:1665


12/20/2008 9:23 AM  
Outlawed? Why? Our docs provide for a one-time contribution of 1 Q dues (currently $225) from purchaser(s). Look at it this way: our HOA has been in business since 2001. So since then, any original owners (say 70%) have been ponying up for 7 years. I don't think it's unfair to have newbies kick in a few coins to a fund from which they (may) benefit as soon as they move in.



And why should a new buyer have to pay for renovating what you have been using for 7 years? You had the benefit for those years. Further, there has been a chain of owners paying in to support the system for all those years.

Here is how I see your logic
  1. The developer placed some improvements to increase the sales price.

  2. The developer then charged a fee on top of the increase in costs to which someone paid.

  3. The person now sells their property (having paid upkeep all these years).

  4. You believe that even though the items have now been paid for three times, this new person owes something for what happened before.


The only thing that makes it "fair" is that you agreed to pay it and think the next person should to.

BTW, we also charge a flat $200 fee to provide all the stuff, plus more, needed to complete a sales transaction. Somebody has to do all the work to compile and deliver everything whether it's a PM or our self-managed HOA.



I don't think that this is included in what Mary wanted to outlaw. There is nothing wrong with charging a fee for providing the information needed for a sale, and dealing with updating records.

By the way, I think that most of the private golf clubs are just as insane. The only time the club should get money for new members is when the new membership represents an increase on the total number of memberships available. Instead a member should be able to sell their membership when they don't want it anymore.
JohnK3
(Pennsylvania)

Posts:967


12/20/2008 9:50 AM  
Kirk writes:

>>>Here is how I see your logic
1. The developer placed some improvements to increase the sales price.
2. The developer then charged a fee on top of the increase in costs to which someone paid.
3. The person now sells their property (having paid upkeep all these years).
4. You believe that even though the items have now been paid for three times, this new person owes something for what happened before.
The only thing that makes it "fair" is that you agreed to pay it and think the next person should to.<<<

Not quite. My logic derives from Article 14.3 of our CCRs which states:

“Contribution to Capital. Each Owner, at the time he acquires title to the Unit shall be obligated to pay to the Community Association a one-time working capital contribution equal to one-fourth (1/4) of the then currently estimated Common Assessments for the Unit, which contribution shall not be refundable or transferable and may be used for any lawful purpose which the Board deems appropriate.”

Dat’s da rule here. What other HOAs choose (or don’t) to levy, charge, or otherwise collect is not my concern, it's theirs, and potential Acquirers can choose to Acquire or Not Acquire.
MaryA1


Posts:0


12/20/2008 10:39 AM  
John,

Besides the fact that it's written in your CCRs to charge this fee, you project the image of agreeing with the rule. Kirk and I don't believe it's fair. I think it should be outlawed! Guess we'll have to agree to disagree on this one. :-)
JohnK3
(Pennsylvania)

Posts:967


12/20/2008 10:50 AM  
Mary,

Let me repeat:

>>>Dat’s da rule here. What other HOAs choose (or don’t) to levy, charge, or otherwise collect is not my concern, it's theirs, and potential Acquirers can choose to Acquire or Not Acquire.<<<


PattiM


Posts:0


12/27/2008 3:11 PM  
Kirk-

As they say about Florida- the rules are different here!

I have seen management companies charge $100 to fill out a form for the title company (working up the closing on behalf of the lender). In one case, the fees went to the HOA, in another the PM kept them. The time taken to complete the form was- five minutes or less in most cases- just involved giving amount of dues; when due; how paid- monthly, q, annual; any arrearage; breakdown of int. and late charges and any other fees owing- legal, etc. Nowadays it usually comes via e-mail or fax and is returned by e-mail or fax. And in both cases, the property manager had a disclaimer on the bottom stating that they were not responsible for incorrect information!

No information is provided about a mortgage payoff- the title company gets that from the owner's lender, and insurance questions get directed to the insurance company.

RE: the new owner- when filling out the form, they have added that a recorded deed must be submitted.

CCRs, etc. do cost to reproduce, but can often be sent via a pdf to save the buyer money. But I have seen property managerment companies charge to provide them- over and above reproduction costs. Even downloading to a disk would be less expensive. Many HOAs have them on their website and they are also available at the clerk of court's office- online.

IMO, it is old school to charge such crazy fees for this information in this day and age, but if there is a charge written into the governing docs, it should go to the association. Many proeprty managerment companies still operate in an 80s mentality and many boards don't know the difference.
JoanneD1
(Arizona)

Posts:447


12/27/2008 3:23 PM  
There is a website called "Condo Certs". They charge 39 and you can order any documents you need and there are individual fees for each document. We have a situation where the MC is not only charging a "Processing" fee, but he is directly taking money out of our "transfer" fee. A small group of us are demanding that the current BOD tell us how, when and why this practice started. It seems no one in our community of 79 townhomes was aware that the MC was doing it...or at least no one is admitting it. Get this...the MC is making NO LESS than 390 for every sale. That is outrageous and we are going to stop it!!!! This is causing some very hard feelings because we are pushing and they are VERY slow to respond. I am stunned at how naive these people are. I could go on and on, but to suffice it to say that each and every owner should be looking carefully at their HOA's monthly financials. We are conducting our own audit so that we have all the recorded information right off the title company closing statements. It is pretty amazing that this has been going on for 3 years and no one knew it!!! Sincerely, Joanne
RobertR1
(South Carolina)

Posts:5164


12/27/2008 5:39 PM  
JoanneD,
This is causing some very hard feelings because we are pushing and they are VERY slow to respond. I am stunned at how naive these people are. I could go on and on, but to suffice it to say that each and every owner should be looking carefully at their HOA's monthly financials. We are conducting our own audit so that we have all the recorded information right off the title company closing statements. It is pretty amazing that this has been going on for 3 years and no one knew it!!! Sincerely, Joanne

This from your post. This is exactly what you get when you have a Board that thinks if they hear no complaints, everything is fine and all are happy. Because of that attitude , they now have several or more people unhappy enough to try and stop this ridiculous nonsense.
Good job to you and to all in your "Gang." Because sure as shooting someone is going to post and lambast you for not going through the Board, and call you rebel gangs.
MaryA1


Posts:0


12/28/2008 7:01 AM  
Patti,

On the surface it would appear that if a transfer fee is written in the declaration the HOA should get the $$$; however, that may be offset by the fact that the mgmt co charges a fee, as outlined in their contract which the board agreed to. I believe this is what happens in many assn's, even those whose docs do not have a transfer fee specified.
JoanneD1
(Arizona)

Posts:447


12/28/2008 7:27 AM  
I have sent two very specific emails to ALL members of the BOD in my HOA and they have NOT answered any of my questions regarding policy and procedures in relationship to the MC taking a fee DIRECTLY out of our HOA transfer fee and then on other occasions, piling it on top of the transfer fee. I have specficially asked to see the contract between the MC and my HOA. I have asked when this policy and procedure was started. I have them asked who approved the policy and procedure. I have asked them if they were even aware of the policy or procedure. I have gotten NO RESPONSE. I finally went to an attorney who is a past board President here and he is NOT aware of the policy and procedure. He emailed all the BOD and president and used legal language asking for a writing that governs the imposition, collection and disposition of the transfer fee. He has had no response. The BOD states the PM is compiling the "transfer fee" information and it will be done by next week. We want more specific information and can't get any answers from the BOD. We have already called and executed a "Special Meeting" to protest the increase in our monthly HOA fees. We are concerned that calling another Special Meeting will just aggravate the owners here and make us look like complainers. In the meantime, the PM will have over 3 weeks to gather information that should be in a file on his desktop and accessed with the push of a button. Any advice other than to sit by and allow the PM time to "gather" the information. The President of the BOD stated that she had complete confidence that the PM would make good on the funds and will not skip town. I can't believe that was even said!!!! Sincerely, Joanne The nonresponsiveness of this BOD has really got a few of us steamed!!!
MaryA1


Posts:0


12/28/2008 7:55 AM  
Joanne,

Have you cited state law governing requests for records?

ARS 33-1258 (condos) or 33-1805 (planned communities). The law states the assn has 10 business days to provide the records (at no charge to the member to review the records or not more than 15 cents per page for copies) after receiving a written request from the member. If they continue to ignore your request give them a copy of the statute and tell them you're prepared to file a complaint with the Ofc of Admin Hearings -- this might scare them into complying.

The fact that the former Pres did not see a written policy does not mean these transfer fees are not included in the current mgmt co contract. I know this is what most mgmt co's do -- the fee is stated in their contract. Either the assn pays the fee or it's collected from the buyer or seller at closing. Sometimes the fee is high enough that some is left over for the assn to collect, other times it only covers what the mgmt co charges. There is no state law regulating these fees so the assn can charge whatever they feel and believe me some assn fees are outrageous! Transfer fees, disclosure fees, buy-in or capital contribution fees -- buyers and sellers pay them, oftentimes not even aware that they have until long after closing, if even then -- and most never complain!!
RobertR1
(South Carolina)

Posts:5164


12/28/2008 8:33 AM  
Joanne,
I would be steamed to.
You all are doing all the right things. I don't, as Mary believes,think the owners should be running all this covenant stuff to ground. If it is written somewhere the Board is mandated to provide that information. What is the problem there?

Your Lawyer letter must have pushed some buttons and the Board is now on record of receiving your written requests and promised some action in a specific time. Give them the time stated, no more. I expect your Past President lawyer may feel he doesn't want to get too deep in all this because of his loyalty feeling to BOD in general, and I would respect that. However, you need to document and convey to the Board the conclusions that came out of your Special Meeting. When I say "you" I am talking about your group that are concerned. If you have not, you should name your supporters, state your concerns up to present and mail a letter to the Board with those concerned listed on the letter. If the Board and C/M come through, fine, take what they offer, and then decide where to go. If all I can read is correct, I really think the Board will offer to sit down and talk aboout this. You may mention in your letter I mentioned, that you would like a group meeting with BOD and your members to discuss the issues presently on the table. Whatever you decide to do now, couch your efforts to the Board, you are not going away and word your correspondence as if at a later date, some judge may be going to read it and have to render a decision, in other words, don't be unfair.
JoanneD1
(Arizona)

Posts:447


12/28/2008 9:06 AM  
Robert, Thanks so much for your reply. The BOD views me just as a noisy owner and gives me little, correction, NO RESPECT. However, I do speak for MANY owners here. I am rallying the troops as we speak because of the "irregularities" we just happened to fall upon when looking into a related matter. The irregularities I speak of are over $10,000 in shortages over a 3 year period of home sales and this is information off the closing statements. Our owners have been providing us with that information and we had access to much of it ourselves. When another "male" owner contacted the BOD and told him of our findings and documentation of the data, he also requested either a special meeting with the BOD OR to be alloted time on the agenda of the next board meeting. The response from the president(coached I am sure)was that they would review the information from the PM and then decide "whether or not" to call a special meeting or put us on the agenda. They did not ask to see our data. We interpretated that to mean that if the numbers added up, they would be satisfied. I guess I could be wrong on that. We have 27 sales transactions and can't even get close to getting the numbers to make sense. Being that the treasurer lives out of state 8 months of the year, I can't imagine what kind of data the PM will present to them. WE OWNERS SEE NOTHING OF FINANACIAL STATEMENTS AT ALL! They don't record anything in the meeting minutes. They present a slide show at the annual budget meeting and those numbers are also a mess!!! The only thing we hear from the BOD is that we need to build the reserves. See, now you've got me started and it is like turning on a faucet. I stood up at the budget meeting and had 12 months worth of newsletters and minutes in my hand. I reported to the owners that in all of this, there is nothing about how much is in the reserves, money in or out, home sales, welcome new neighbors......no numbers at all! I find this outrageous and the next thing you know, one owner stands up and praises the president on what a wonderful job she is doing on the newsletter!!!! Maybe I am the crazy one afterall?
MaryA1


Posts:0


12/28/2008 9:32 AM  
Robert,

Could you please explain this remark you made in your last response? THX!

"I don't, as Mary believes,think the owners should be running all this covenant stuff to ground."
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