Yes, it is a common practice in the HOA industry for a seller to pay a transfer fee upon the sale of their home. A homeowners association has the fiduciary responsibility, in direct correlation with the covenants, to collect all HOA assessments that are due to the community. If an owner is selling their home, North Carolina Real Estate law requires a third party verification of their balance to be provided to the closing attorney. That is where an HOA management company becomes involved. Since we are contracted to oversee the collection process for the homeowners association, we have access to the payment history of all lot owners. We track all owner balances including, but not limited to:
- Late fees
- Violation fines
- Special assessments
In preparation for a closing, when we are contacted by the closing attorney’s representative, we provide current information about the owner’s balance. We also provide all of the community’s governing documents such as:
- Covenants and restrictions
- Rules and regulations
- Architectural guidelines
Our role is to keep each lot owner’s balance within the acceptable level that is required by the covenants. If an owner is carrying a balance, it is critical that the closing attorney notifies us prior to the closing date so the balance can be paid in full at closing. The closing attorney plays a crucial role in requesting this information in a timely manner and we find that not all law offices are proactive and organized in this process. Often, issues with proper planning may be due to other parties involved with a closing.
What is a Reasonable Fee to Charge a Seller for the Required Closing Information?
The answer begins with the question, “How is the closing attorney handling his case load?” To help facilitate the process for the seller and real estate agent who have a window of time to schedule the necessary paper work with the closing attorney, we use a company called Condocerts, a subsidiary of Mutual of Omaha Bank. Condocerts is a national company that works with HOA management companies throughout the US. When a closing is scheduled, the closing attorney’s office contacts Condocerts and provides all of the necessary contact information, including the name of the closing attorney, community name, address and when the information will be needed for the closing. We charge $175 for the demand statement and Condocerts charges a fee of $29. These costs are based on the national average provided by Condocerts. If the closing attorney waits until 10 days before the closing, we charge a rush fee of $75, and if the order is placed within five days of the closing, we charge an additional $75 expedited rush fee. These rush fees can be avoided if the closing attorney contacts us immediately upon establishing a closing date.
Providing accurate and timely closing information at a reasonable price is vital for the seller and the closing process. Contact us today with any questions about how this process works for everyone involved.