My team is representing the buyer in a short sale and the listing side is asking the buyer to pay for the HOA Document Fee & Transfer Fee. Before asking our clients to pay for these fees, we want to ask the seller to pay for it first.
The listing agent's e-mail says, "In California, it is illegal for the seller to pay any costs of the short sale."
Has anyone come across this before? How could this be when some lenders request cash contributions from sellers?? Is there any truth to her statement? That is the first I've heard of it and would love some feedback from the Short Sale Superstars in California...
Thanks!
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Hi Harry,
Thank you for the information. We do have short sale approval already; however, we were told that the lender did not approve the HOA Document Fee nor the Transfer Fee.
Listing Agent is asking that buyers pay for these two fees and we want to go back to ask if the seller can pay them. In short sales, are you seeing buyers paying for these types of fees regularly?
Not sure if CA SB458 would apply since the Lender is not requiring the seller to pay anything.
Thanks again for the advice!
It depends. I have seen very few transactions in CA where the short sale lender allows HOA fees to be paid from the proceeds. If anything, they sometimes allow a transfer or doc fee and typically under $300 total. I've never seen them allow past due HOA fees to be paid from proceeds.
Good luck!
Was there a bank-provided short-sale addendum added to the purchase contract? If so, did it address HOA documents and the transfer fee? I wonder what the estimated HUD-1 indicated regarding the fees when it was approved by the lender. Were you given a copy of the lender's approval letter and the HUD-1?
Even in a short-sale or REO deal, California law requires the seller to provide certain HOA documents to the buyer. If requested by the the buyer, the seller must also provide 12 months of HOA meeting minutes as well. (Cal. Civil Code Section 1368)
If the seller does not provide the documents, they won't be able to meet their disclosure timeline. Pointing this out to the listing agent might get a positive response.
Robert,
True, the Seller is required to provide the HOA Docs and facilitate / cooperate with the HOA transfer. But, there is no requirement that the short sale lender allow the costs to come from the short sale proceeds. Recently (at least with the deals I've had visibility into) it has become more common for short sale lenders to remove these fees from the Seller's side (unless under $300 as I said above). So, if the Buyer is willing to pay the fees, a simple Addendum works.
I'm working on a file where the monthly HOA fee is greater than $2,000 per month and is delinquent more than a year. Obviously the lender has decined the almost $30,000 in past due HOA even with a lien against the property. The Buyer may pay it, with an equal reduction in price....... we'll see.
Cheers,
Thom Colby
Broker & Negotiator
Newport Beach and Palm Desert CA
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