HOA Upfront Charges

August 1, 2008 | By Kelley Koehler | Filed Under Homeowner Associations

Got an email from my management today that Lewis Management will be charging a “cancellation” fee, to be non-refundable and collected up front – that’s one of the big HOA management companies in town.

You heard that right – it’s a cancellation fee, paid on all files through escrow, up front. Which means someone – either the Buyer or the Seller – will have to deposit $225 into escrow to cover the “cancellation” fee when escrow is opened. That’s a fee negotiated in the contract already.

Lewis charges a $295 transfer/processing fee anyway, so if the file doesn’t cancel, then the funds would go towards that balance. Otherwise, Lewis gets to keep the $225.

Seems like a lot of money for mailing out a disk of HOA documents and changing records to reflect a new owner. Am I missing something here? Are there that many cancellations now?

Admittedly, I’m not a big fan of HOA management companies. They like to charge for giving out information that home buyers require. They don’t always send out the required information in a timely manner. I’ve run across a few exceptions.

Here’s a list of neighborhoods managed by Lewis. If you’re buying or selling in one of these neighborhoods, be prepared to pony up $225 just to get them to send out the HOA information required to be sent by contract.

tags: hoa, real estate, tucson

Comments

4 Responses to “HOA Upfront Charges”

Kevin Warmath - Alpharetta Real Estate on August 1st, 2008 7:52 pm

ya know, i don’t blame Lewis. I have no idea if the amount of the fee is reasonable, but i don’t blame them for trying to collect a fee for service. Many more contracts are canceling before closing and attorneys, lenders and realtors don’t get paid even after a lot of work has been done on behalf of the client. I have no problem with people asking to be paid for their service…i just wish realtors, particularly buyer’s agents, had a better way of securing some compensation for their effort and time when a deal fails to close and the buyer has no legitimate reasons for not closing.
Chris Centuori - Arizona Home Owner's Management Experts on August 19th, 2008 9:33 pm

I am with Arizona Home Owner’s Management Experts here in Tucson. The cancellation fee (which we do not charge) seems like a way to help make up for the thousands of dollars in lost transfer fees that the HOA mgmt. companies used to rake in during the real estate boom.

A lot of mgmt. companies are hurting right now because they depended on transfer fees for so many years and set their maintenance fees too low. Now they are stuck so they look for other places to places to charge more fees.

There has been a lot of abuse by mgmt. companies in the area of transfer fees. The costs of processing the paperwork (on disk) is minuscule with today’s technology. Companies like Condocerts can process the transfer for peanuts…almost nobody sends out a 3 ring binder as thick as a phonebook with ccrs anymore. Even a cancellation is no big deal….it takes five minutes to submit the demands to companies like Condocerts.

The “overage” covers liability (the HOA’s and Mgmt Company’s liability) and labor to inspect the properties for violations. We think some of the surplus, if any, should go back to the HOA.

Nice blog!
Charles on January 1st, 2009 11:31 am

I’m under a HOA management which does nothing but charge me $360.00 I was told when I purchased my home in 2007. Later I found out the fee was actually $460 a year, now they have an increase of $24 for what? I can follow all rules in my neighborhood with out paying $126 every three months. How can I get out of this so-called contract that does nothing for me at all?
Vicki Lloyd on August 7th, 2010 3:49 pm

This is one of my hot buttons! I am seeing transfer fees averaging $500 in my area, and some little condos have 3 HOAs to pay these fees for! On a $250,000 purchase, this can tip the buyer over the edge with their closing costs!

In California, the Davis Sterling Act (part of the Civil Code) prohibits non-profit HOAs from charging more than their actual costs to provide the documents and process the transfer. Unfortunately, the “for profit” private HOA management companies are exempt from this, so they take full advantage!

I recommend that homeowners get involved with their boards and voice their objections!

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