HOA transfer and doc prep fees


#1

Are HOAs allowed to charge transfer and doc prep fees for units purchased at a trustee sale?


#2

Grey area. I assume they don’t try because they are glad to start collecting dues. Whether they are legally allowed to try and milk you, I don’t know.
I haven’t paid them, and so far no demand has been made. on the few condos I’ve been involved with since the crash. I do give them a copy of the Trustee’s Deed. Usually you can’t get keys until you prove you are the new owner. Of course there are other ways of getting keys to a bldg…


#3

Hi Bradley,
That is a great question. You would want to review the CC&R’s that would be senior to the foreclosing deed of trust (most HOA’s are not a prelien for dues which is why the dues are wiped out but the CC&R’s are senior). I could see the transfer fee but I am unsure what the doc prep fees are for? Could be to give you copies of the CC&R’s Bylaws and copies of the minutes from the board meetings. Sometimes the management companies charge for copies of these documents.
I will check with my title company friends to see if any of them can answer.


#4

Michele is correct; the doc prep fee might be what they are calling for a copy of the HOA?s, and board minutes ordered by Title. They always charge some fee for that service. It can be very complicated dealing with HOA at any point in foreclosure properties. You should handle them on a case by case for each property. Each company has their own rules and fee?s. After your escrow is open, first you need to find out who the HOA is, because it is not on your PRELIM report and escrow usually gets that information from the seller, if not provided within the CCR?s. We usually get this information from the seller who is not longer available. The HOA will have two amounts due, you can get the old one wipe out from the previous owner who went into foreclosure, but you will need to pay the amount due from date of your Trustee Deed. Your issue will be if the new lender wants a clean PRELIM, and the HOA?s recorded them as a lien and won?t send a release to title unless prior dues are paid. You are then at the mercy of the HOA to get your release to close your escrow, which means big $$$$. Fidelity National Title does not show that first amount as a lien on your PRELIM which is very important to know. Why? Because sometimes we see where the HOA is very delinquent and the HOA turned the case over to a collection company. This gets really messy for everyone because now we need to order a demand from the collection agency and the HOA and that can get really costly with extra fee?s and take lots of time, which we don?t have in escrow! Working with a Title & Escrow team that is very knowledgeable about these types of transaction is a MUST!!! I personally have over 15 years in the businesses and my escrow officer, Michele Reed has over 30. We handle all counties in CA from our Sacramento location. We specialize in these types of transactions so we know what to look for before it happens. Please call me at 916-708-2603 if you have any questions. Smiles Shelly G


#5

Shelly -
I am unclear as to what you wrote. When I find a buyer after the fcl. sale and open title, ALL the liens that were junior to the Deed of Trust are not shown. The pre is “clean”. HOA liens ARE wiped out.
If your title company is showing wiped out HOA liens on title, change title companies. You DEFINITELY DO NOT have to pay them.

Look at Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093. You can find it via Google seach.
Up until that case was published, it was a grey area about the priority of HOA liens. Title companies really didn’t know what to do and decisions were made on a case by case basis. One reason the case was published was - the Title Companies wanted to have solid case law upon which to make their underwriting decisions.
AFAIK, that case has not been changed by law or newer case law…
Even before that case, HOA liens were always junior to first Deeds of Trust. It was (and I’m sure still is) put in every CC&R - the reason being banks would not make loans to buyers if they could be junior to HOA liens.
I can bore you with more technicalities, if you wish
For obvious reasons, I know more about that case then anyone, except, maybe, my ex-wife.


#6

I believe the original question is about HOA transfer and doc fees (not delinquent dues). I have bought several condos and it seems to be different for each HOA. When you call up the management company to introduce yourself, they keep asking ‘but we don’t have an escrow??? how did you get the property without an escrow??? We need to charge the escrow…’ I have to spend time educating them that properties CAN be purchased through various means without an escrow, including trustee sales.

There has NEVER been an issue about being charged for delinquent HOA dues, the recorded CCRs always state that they are wiped out by a lender foreclosure. Otherwise, no bank would give a loan to buyers in the building.

But, each HOA seems to make their own rules regarding charging a ‘transfer fee’ to create the new ownership from trustee sale. I have had 3 change ownership without a transfer fee, but in my last purchase the HOA management company was obstinate about insisting on over $400 in fees just to put the account in my name. When I questioned it (like… exactly how long can it take to change the name on the account???) they just got very rude.

But, you do not want to pay ‘document fees’ on your trustee sale purchase, especially if they are separate from the transfer fee. If you are going to re-sell you don’t need any of those documents. If you do want them you can get most of the docs electronically from the title company that will be providing title in your selling transaction. These are the CCRs, developer docs and by-laws that are recorded. The only ones you cannot get are copies of board meeting minutes, HOA treasure accounting and audits. These will be required in your sales transaction and then you or your buyer will have to pay for just those docs - and another ‘transfer fee’. Highway robbery.

GJ