Release Date: 09/06/2016
Will Martin, Martin & Gifford, PLLC
QUESTION: I’m representing a buyer who is closing on a property that has an owner’s association. I am trying to figure out who is responsible for the payment of a “transfer fee” that’s being charged by the association’s management company. I’ve reviewed the Offer to Purchase and Contract (form 2-T) and I don’t see any reference to transfer fees on the Contract anymore. Who is supposed to pay it, my buyer or the seller?
ANSWER: Assuming that what is meant by the term “transfer fee” is a fee for updating the association’s records to reflect the transfer of the property from the seller to the buyer, the fee is the seller’s responsibility in our opinion.
To understand the basis for our answer to your question, it is important to understand the way in which the latest version of the Contract (released July 2016) assigns responsibility for the payment of the various fees imposed by owner associations and their management companies when a property regulated by the association is bought and sold.
According to the Contract, the buyer is responsible for the fees that are listed in paragraph 6(b). These include fees for providing information required by the buyer’s lender and fees charged for the buyer’s future use and enjoyment of the property.
The seller’s responsibility for association fees is addressed in paragraph 8(j). In addition to being responsible for fees required to confirm the status of seller’s account regarding dues or assessments, and fees for completing the Disclosure Statement and resale or other certificates relating to a sale of the property, the seller is responsible for fees “…other than those fees required to be paid by Buyer under paragraph 6(b) above.” In other words, any fee not allocated to the buyer in paragraph 6(b) is the seller’s responsibility under the “catch-all” provision in paragraph 8(j)(ii).
Applying this framework to your question, in our view a fee for updating the association’s records to reflect the change in ownership is not covered under paragraph 6(b) and therefore is the responsibility of the seller.
You are correct that the term “transfer fee” has been taken out of the Contract. This was done primarily to avoid potential confusion with the term “transfer fee” as defined in a statute that prohibits the practice of including in an association’s governing documents fees that are payable in perpetuity to the association’s developer on all transfers of property in the development.
NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
© Copyright 2016. North Carolina Association of REALTORS®, Inc. This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.
