A guide to HOA transfer fees

Homeowners association (HOA) can offer several benefits such as community maintenance and amenities, for which you have to pay. While HOA fees are recurring and ongoing costs, HOA transfer fees are different financial obligation entirely.

HOA transfer fees are a one-time charge imposed by homeowners associations when a property is sold or transferred within their jurisdiction. These fees typically cover administrative costs associated with processing the transfer, updating ownership records, and ensuring compliance with HOA rules. 

What are HOA transfer fees?

An HOA transfer fee, also known as a resale certificate fee, private transfer fee, estoppel fee, disclosure fee, initiation fee, HOA reinvestment fee or even an “additional fee,” is a charge levied by the homeowners association on a property seller during the sale of their home. 

The fee is intended to cover the administrative costs associated with transferring ownership from the seller to the buyer. These fees are a standard practice in many HOA-governed communities and are usually outlined in the HOA's governing documents. The services and items covered by HOA transfer fees can vary by organization.

What do HOA transfer fees cover?

• Document preparation: HOAs compile and provide a variety of documents to the buyer during a property transaction. This can include the CC&R (Covenants, Conditions and Restrictions), bylaws, financial statements, and meeting minutes.
• Accounting verification: The HOA verifies that the seller's account is up to date, with all dues, fees and assessments paid.
• Assessment information: Information about pending or outstanding assessments on the property is provided to the buyer.
• Ownership verification: The HOA ensures that the seller is indeed the legal owner of the property and has the right to sell it.
• Legal compliance: The HOA makes sure that the property transfer adheres to the community's legal and regulatory requirements.

Learn more about the pros and cons of HOAs

Who pays HOA fees and when?

HOA transfer fees are typically paid by the property seller, not the buyer. This fee is usually due when the money is in escrow as part of closing costs. It's important to note that the fee amount can vary depending on the specific HOA and the region in which the property is located.

HOAs are required to disclose transfer fees to both buyers and sellers before the sale, even if the seller is responsible for paying the transfer fee. Note that there’s no rule that says the sellers have to pay the HOA transfer fee — it’s possible that the parties may negotiate for the seller to take on the transfer fees. They may also agree to put a certain amount toward transfer fees, with the buyer covering the rest. 

If there are any questions as to who is responsible for paying the fees, checking the sales contract or the CC&Rs should indicate who must pay. The buyer, seller or HOA board can then hold the appropriate party responsible.

What's the average HOA transfer fee?

The average HOA transfer fee can vary widely based on factors such as the location of the property, the complexity of the HOA's administrative processes, and the services covered by the fee. On average, transfer fees can range from $100 to $500, but in some cases, they might be higher. It's crucial to review the HOA's governing documents or contact the HOA directly to understand the exact fee amount.

Specific HOA transfer fees will be listed in the CC&Rs, so check that document before buying or selling a home.

Can HOA transfer fees be negotiated?

In some cases, HOA transfer fees may be negotiable. It's advisable to discuss this with the seller or their agent during the purchase negotiation. However, it's important to note that not all HOAs may be willing to adjust their transfer fees, as they are often based on their governing documents and established policies.

HOA transfer fees are an integral part of property transactions within homeowners’ associations. They cover administrative costs related to transferring ownership, ensuring a smooth transition of responsibilities from the seller to the buyer. Understanding these fees, who pays them, and their potential range across different states can help both buyers and sellers navigate the process of property transactions more effectively. 

If you're buying or selling a property in an HOA community, taking the time to comprehend these fees can save you from any unexpected surprises during the closing process.

How much are HOA transfer fees in different states?

HOA transfer fees can vary significantly from state to state, even within the same region. For example:

• California: Transfer fees in California can range from $200 to $500, with some communities charging even higher amounts.
• Texas: In Texas, transfer fees can vary widely but generally fall within the $100 to $400 range.
• Florida: Florida transfer fees are capped at $150 per applicant.
• New York: Transfer fees in New York can be relatively high, ranging from $300 to $1,000.

It's important to remember that these figures are rough estimates and can change over time, especially if new legislation is passed. Always consult with the specific HOA or a real estate professional in your area to get the most accurate and up-to-date information.

FAQs

Here are more answers to all your questions about hOA transfer fees.

What is a homeowners’ association?

A homeowners’ association is a community organization formed within a residential development or neighborhood with the goal of managing and maintaining the common areas and shared amenities of the community. HOAs play a crucial role in shaping the living experience for residents in planned communities, condominiums, townhouses, and some single-family home developments. 

At its core, an HOA is a legal entity established to oversee and maintain the communal aspects of a residential community. These can include common areas like parks, swimming pools, fitness centers, landscaping, roadways, and even shared utilities. The HOA operates based on a set of governing documents that typically include the Declaration of Covenants, Conditions and Restrictions (CC&R), bylaws and rules and regulations.

What are the benefits of an HOA?

HOAs offer several potential benefits to residents, and contribute to the overall quality of life in a community. Some of the advantages of living in an HOA-governed neighborhood include amenities and maintenance, community engagement, and an enforcement of standards. By enforcing rules and regulations, HOAs help maintain a certain level of quality and consistency in the community's appearance and conduct.

Are transfer fees paid by buyer or seller?

The responsibility for paying HOA transfer fees can vary depending on local regulations and the terms negotiated between the buyer and the seller. In some cases, the buyer may be responsible, while in others, the seller may cover these fees. It's crucial to clarify this aspect during the negotiation and include it in the purchase agreement.

Are HOA transfer fees the same as regular HOA fees?

HOA fees are recurring payments made by homeowners to cover the ongoing costs of maintaining and managing the community. In contrast, HOA transfer fees are one-time charges imposed by the HOA when a property is sold or transferred, covering administrative expenses related to the transfer of ownership.

While HOAs offer numerous benefits, residents should also consider some potential drawbacks. These may include monthly dues or assessments to cover maintenance costs, limitations on property modifications and varying degrees of control over certain aspects of homeownership. In addition to this, an HOA transfer fee may be levied when you buy or sell a home in an HOA area.