Home Buying in 92677>Question Details

Mikemir121, Home Buyer in 92677

How can I dispute the Property Management (HOA) fees after our escrow is cancelled?

Asked by Mikemir121, 92677 Thu Sep 2, 2010

We were notified from our escrow company that the Property Management (HOA) company for the condo we were going to purchase has charged us $972 for documentation fees. This is after we were rejected FHA loan approvals due to the undisclosed lawsuit pending against the same HOA company. The two sets of Xeroxed documents sent to us are in very bad quality (copy of the copy of the copy) and are unreadable. And, in case you wondering, the pages are not covered in gold ;)

Can the property management that has been the main reason for our misery for the past 6 months turns around and charge us this ridiculous fee? How can we fight this?

Help the community by answering this question:


Mike -

You've received some great answers here - I'll add a few comments that might help clarify as well.

1) Check your contract - typically Seller pays for these items but more and more in short sales and REOs teh Buyer is being forced to pay - These items are always negotiable during the contract negotiations but in many cases the current lenders (taking a loss) will decline those charges to be paid from the proceeds.

2) See 1 above - in the case of short sales, the seller typically does not have the money to "front' the fees for the documents and typically escrow will draw instructions to have the Buyer "Front" the money from their Earnest Money Deposit. Typically in this instruction it will be very clearly stated that these fees are NOT refundable.

3) The quality of the documents really doesn't matter as long as they are readable and they have included everything necessary to close the transaction such as Budget, Financials, Meeting Minutes for the past 12 months.

4) In OC, (and especially in South OC) the HOA management companies charge outrageous fees for providing Documents - and it is getting more expensive now that the HOAs are struggling.

5) There are very few HOAs that do NOT have a pending litigation against them - almost every HOA has some sort of "Slip and Fall" claim underway.

6) The SELLER should have disclosed the pending litigation in the SPQ or the TDS. They cannot claim they "did not know" as all HOAs must notify their homeowners and it should be in the minutes you received.

Here's a suggestion - go back and review the Seller's Disclosures to see if the lawsuit was disclosed. I suspect it was not. Then go to your REALTOR and have him/her call the other agent to bring the lack of disclosure to their attention. That will put the problem sqaurely on the Seller. At that time I think you'll be able to work something out to get your funds back. If it was not disclosed, you should have your REALTOR notify Escrow that there is "a problem" with disclsoures (if there is).

If you signed escrow instructions allowing escrow to pay for these HOA Docs from your money, and there is no issue with the litigation being disclosed properly, that money may already have been paid to the HOA from your funds.

I've been through a few of these,

Best of luck -

Thom Colby
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END a Transaction in our Brokerage. There is NO benefit to the Seller or Buyer but only benefits the Agent. Also, NEVER use your RE Agent / Broker as your Lender!
888-391-5245 Direct Cell
DRE# 01398570
0 votes Thank Flag Link Sat Sep 4, 2010

Your Realtor should be going to bat for you on this. I have had a similar situation within the past few months. My client could not get FHA financing because the seller refused to complete FHA required repairs. The argument I made was, "my buyer would have purchased the property if she was able, and therefore should not be charged for items that are (a) reusable, (b) of no value to her but of significant value to the seller, and (c) she should not be penalized for circumstances which were outside of her control. The resolution - we returned the documents to the escrow company for use with the next buyer and therefore did not have to pay for the documents. The escrow company also waived their cancellation fee - as my client was willing to perform, but unable to do so due to circumstances outside her control.

Talk to your agent and/or their broker. Have them fight for you on this. Dare to Dream.

Shel-lee Davis, QSC®
Certified Distressed Property Expert – CDPE®
Short Sale & Foreclosure Resource – SFR®
Certified HAFA Specialist – CHS®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
0 votes Thank Flag Link Fri Sep 3, 2010
Hi Mike,
I had this happen just a couple of months ago. The fee was only $250 but same principal. I physically returned the documents to the association. They can use them for the next sale. They waived the fee!
Worth a try. Also check your contract and see who was supposed to pay for the documents. Is the box checked that says you pay for them? Make sure of that.
Best of luck to you,
Conni Bramble
Prudential CA Realty
0 votes Thank Flag Link Thu Sep 2, 2010
Normal fees are $150 to $225, you got ripped. However, association management companies are like appraisers, they usually get paid regardless of whether or not the deal closes. I have rejected HOA documents as unreadable, sugguest you consider that.
I agree with Scott, you should see a lawyer regarding the unusual circumstances regarding non-disclosure of the law suit and its affect on your cancellation. Plus, get advice on not paying the HOA's fee.
0 votes Thank Flag Link Thu Sep 2, 2010
Hopefully, you returned the bad quality copies of the documents they sent you. When the home is sold to the next buyer, those documents can be delivered to them.

I just went thru that with one of my clients - there were 3 HOAs and each charged $375 for the documents. We returned them, but still got charged $75/each for cancellation.

The seller really should be the one to pay for HOA documents, since it is their responsibility to provide them to the buyers as part of the disclosures. You should ask the seller to tell escrow to hold the documents for the next buyer, and give you your money back.

Good luck -
0 votes Thank Flag Link Thu Sep 2, 2010
This seems very unreasonable to be charged that. Your best bet is to at least meet with an attorney for the first free meeting to get some direction. Your agent should be at least guiding you through this. good luck working things out
0 votes Thank Flag Link Thu Sep 2, 2010
Have you asked the HOA for your money back?
0 votes Thank Flag Link Thu Sep 2, 2010
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