I am cash offering on a condo w/HOA litigation, who is responsible for paying the HOA doc/transfer fee if I back out? would deposit will be returned?

Asked by Jerry Zheng, Milpitas, CA Fri Jan 6, 2012

My agent mentioned that there are two costs buyers pay, HOA doc fee and HOA transfer fee (in this case, litigation report), but only when the deal is closed, right? My deposit would be fully refunded if the deal doesn't get through even the HOA doc are ordered and reviewed, right?

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Pacita Dimac…, Agent, Oakland, CA
Fri Apr 6, 2012
First one you should ask is your agent.

Then look in your contract -- what did you state are your obligations to pay? HOA doc fee and transfer tees are negotiable ( but in a short sale, don't count on the seller/short sale lender to pay for it)

Are you buying a bank-owned property, short sale, or regular sale>

When are your contingencies due to be released/cleared? If you released your contingencies already, then no, you may not be entitled to get your deposit back (limited to 3% of purchase price) which the seller may be entitled to keep as liquidated damages.

No one can tell you what you are entitled to get back without looking at the provisions of your contract and your contingency status. Your realtor should address your question.
0 votes
Jennifer Lei…, Agent, Fremont, CA
Sat Jan 7, 2012
Hi Jerry,

Buyers are responsible for paying the HOA doc/transfer fee. You need to carefully read the contract to avoid any out of pocket costs to you once you back out a deal especially like appraiser report, etc. Usually the HOA management will ask the buyers to pay first before they can order the HOA doc to be sent to your agent. Buyers deposit will be refunded to you if within the contingency period and sellers agreed to release the fund. I would never recommend any buyers to buy a condo/townhouse with HOA litigation issues. The HOA fee will potentially increase if the litigation resolved.

Best wishes,
Jennifer
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Steven Ornel…, Agent, Fremont, CA
Fri Jan 6, 2012
Jerry:

"I am cash offering on a condo w/HOA litigation, who is responsible for paying the HOA doc/transfer fee if I back out?"

I most agree with Brian on this one; meaning, you need to read your contract, specifically, Para 4D3 & 4D4.


"My agent mentioned that there are two costs buyers pay, HOA doc fee and HOA transfer fee (in this case, litigation report),.. "

I consider the HOA docs to almost always be a Seller disclosure (even with REOs), and hence, I predominantly have the Seller pay for these items. In fact, the CAR Standard Residential Purchase Agreement "defaults" to the Seller being responsible for requesting and supplying HOA disclosures using CAR Form HOA, which details what disclosures are statutorily required in addition to called for in the RPA. See Para 7A and 7B.


"....(in this case, litigation report), but only when the deal is closed, right? My deposit would be fully refunded if the deal doesn't get through even the HOA doc are ordered and reviewed, right?"

Not necessarily! The deal does not have to close in order for Escrow to charge for the documents provided. There is a chance the Escrow Company may charge a cancellation fee. If you received a Preliminary Title Report towards the end there's probably a section that states:

CANCELLATION NOTE:
THIS REPORT IS SUBJECT TO A MINIMUM CANCELLATION CHARGE OF $400.00 AS REQUIRED BY SECTION 12404 OF INSURANCE CODE AND RULE 2 OF BULLETIN NO. NS-35E.

Can Escrow really do this?
Yes. The State of CA's Department of Insurance Bulletin No. NS-35E (dates back to 1965-66) allows the Escrow company to charge a fee - restrictions do apply. See: http://docs.Steven-Anthony.com/NS-35E_EscrowCancellationFee.pdf

-Steve
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The Medford…, Agent, Fremont, CA
Fri Jan 6, 2012
If it is a short sale, then you will most likely have to pay for the HOA doc and transfer fees AND be stuck with the doc fees bill should you back out or the deal fall apart for any reason. If it’s a normal sale or REO, then it depends on your contract.
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Laura Coffey, Agent, Santa Clarita, CA
Fri Jan 6, 2012
You should read the CAR purchase agreement as well as the escrow instructions. Even though in the contract the seller agrees to pay for HOA document fees if you cancel escrow sometimes has it written that you pay. Have you signed and returned your escrow instructions yet?
If you want to cancel and there is a discrepancy with who pays what, escrow can hold your deposit until the buyer & agree.
Talk to your agent, escrow, and possibly legal council.
Web Reference:  http://www.laura4homes.com
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Brian Ripp, Agent, Fremont, CA
Fri Jan 6, 2012
Hi Jerry,

On page two of the C.A.R. contract it will state who will pay these two HOA items.
It is not unusual to either split these fees with the seller 50/50, or ask them to pay both 100%.
However, you will need to look at your purchase contract and see what was already agreed upon.

These fees are paid during the escrow, along with your other closings costs.

good luck,
Brian
0 votes
Ron Thomas, Agent, Fresno, CA
Fri Jan 6, 2012
You're asking us?
We cannot see your contracts: We don't know what the HOA expects.
Possibly you should negotiate with the HOA before you get past the point of No Return.
Have you read the CCRs?

Your DEPOSIT for the Condo should not have been cashed until you are under Contract: And your contract should spell out the terms under which you can back-out.
Don't ask us.

Good luck and may God bless
0 votes
Byron Lohman, Agent, Palm Springs, CA
Fri Jan 6, 2012
Garry, Most HOA doc and transfer fees are negotiable but local custom often dictates whether a cost is to be paid for by the buyer or seller. Your executed contract will identify if you are paying for those items. When it comes to HOA doc fees and such, these are costs that escrow must pre-pay out to the HOA Management company for your benefit. You have a contract, they request the documentation on your behalf and then you receive the documents that you requested. So the usual course of action is that you pay for those services whether you actually close the unit or not. This is usually spelled out in your escrow documents as well. If that is the case, escrow will deduct the costs incurred on your behalf from your deposit prior to returning it to you. Often, if the documents can be transferred to a subsequent buyer after you cancel, the costs may be transferred to the new buyer but often the documents must be updated by the HOA Management company and they charge for the services again. I hope this helps.

Byron Lohman, CCIM, CDPE, SFR
Prudential CA Realty
Lic #01272085
byron@byronlohman.com
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