Recent changes to the laws governing HOAs in Arizona have left HOAs perplexed and in danger of fines and penalties. When a unit is transferred to a new owner, there are two types of costs assessed after escrow ends: disclosure fees and transfer fees. These two types of fees are frequently confusing for HOAs.
Prior to recent legal changes, disclosure costs were combined with transfer fees and alluded to as such. Although the costs might seem to remain the same, changes to HOA rules have significantly altered them.
Although it can be challenging, doing so is eventually vital for the HOA to be able to charge prospective buyers lawfully. Contact flagstaff hoa management services for help.
Here are the fundamentals for comprehending the distinctions.
Fee for disclosure
After a unit sale, an HOA may levy a “disclosure fee” of up to a specific sum. This charge is meant to cover any expenses incurred by the association during the disclosure statement preparation process.
This disclosure statement contains several documents that an HOA must provide to a purchaser whenever a home is sold, including details about the bylaws, financial records, operating budget, and the HOA’s contact information. Certain requirements must be satisfied in favor of the HOA to charge for creating and delivering this disclosure form.
All the documents mentioned above, as well as those that describe any ongoing legal matters the association is associated with, whether a portion of the unit is protected by association-maintained coverage, and other information, must first be included in the disclosure statement. A.R.S. Section 33-1806 contains the whole list of relevant data.
Transfer charges
On the other hand, a “transfer fee” is a distinct price from the cost of creating disclosure statements. Transfer fees are frequently forbidden. Some transfer fees are permitted, though, provided that they are given to the organization for a specific reason and are mentioned in the Covenants, Conditions, and Restrictions (CC&Rs) of the HOA that are given to the new owner.
These costs, which the HOA uses for the benefit of the lot or unit, may alternatively be regarded as capital contributions, working capital fees, or reserve contribution fees.
Transfer fees are not restricted, but they must meet specific requirements. The property and unit must be included in the transfer fee. Transfer fees frequently cannot be charged to a 3rd party unless that entity is permitted to oversee the HOA’s development plan.
