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Sellers Paying for HOA Document Fee & Transfer Fee

Posted by Jessica Anaya on July 5, 2012 at 1:51pm in Short Sale Discussions

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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Replies

Katherine Muhs July 8, 2012 at 6:04am

It is not illegal in Ca for a seller to pay s s fees. It IS illegal for a s s lender to require a seller contributioN. (SB 458). That said, I do a lot of ssales with Hoa docs. Only once have I seen the lender approve the doc fee (MetLife). It's up to the buyer and seller to decide who pays for what. The reality is the seller is short selling due to financial hardship so having seller pay hoa fees isn't usually feasable. As the listing agent I either post to the MLS that buyer is to pay HOA doc/xfer fees. If the offer says seller to pay, we counter before acceptance. You can ask seller to pay them but is the buyer really willing to lose the property over a couple of hundred dollars ??
Robert Boerner July 8, 2012 at 3:57am

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.
- Thom Colby CA Brkr 888-391-5245 > Robert Boerner July 8, 2012 at 4:28am
  
  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
Thom Colby CA Brkr 888-391-5245 July 8, 2012 at 1:39am

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!