Pavilion from the Ocean

Pavilion from the Ocean

Welcome to iPavilionCondo.com

This forum, by owners for owners, provides useful information for owners to view and discuss.

This blog does not belong nor represents the views of the Pavilon Condo Association

You can subscribe to the blog by entering your email on the upper hand side on the blog. You will then receive an email with a link that you must click on to complete the subscription. Then every time the blog is updated you will receive an email message.

TRANSFER FEES – WHY ALL THE CONFUSION?


Great article by The Miami Herald this week regarding the fact that condo associations across the state are ripping people off by charging illegal and excessive transfer fees when someone is trying to sell or rent their unit. For those of you who missed it, here is the link:

Here is what The Florida Condominium Act says:

(i) Transfer fees.—No charge shall be made by the association or any body thereof in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant. However, if the lease or sublease is a renewal of a lease or sublease with the same lessee or sublessee, no charge shall be made. The foregoing notwithstanding, an association may, if the authority to do so appears in the declaration or bylaws, require that a prospective lessee place a security deposit, in an amount not to exceed the equivalent of 1 month’s rent, into an escrow account maintained by the association. The security deposit shall protect against damages to the common elements or association property. Payment of interest, claims against the deposit, refunds, and disputes under this paragraph shall be handled in the same fashion as provided in part II of chapter 83.

The only thing the article missed is the fact that the association does not even get the opportunity to charge any transfer fee whatsoever unless the association is required to approve such transfer. As I teach at every seminar, many association do not have the right to approve any transfers in their governing documents. They only have a right of first refusal. So, when determining if a fee can be charged in connection with the sale or lease of a unit, make sure the association first has the right to approve the transfer. If the association does not have the right, no fee can be charged.

Next, even if the right to approve is found in the governing documents, the fee for such approval must be found in the declaration, articles or bylaws. If there is no fee mentioned, no fee can be charged. If you want to charge a fee, amend your documents.

Of course the all important question is, how much can be charged. What is so difficult to understand about the statute specifically saying: in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant? It is amazing how many boards and management companies attempt to change the plain wording of the statute with creative thinking. I’ll hear things like “It’s not a transfer fee” it’s an application fee, it’s a background check fee, a move-in fee, an investigation fee. They will argue until they are blue in the face that it’s something other than a “transfer fee.” They are wrong. According to the Miami Herald article, a 2008 warning letter was sent to a Broward condo from the Division which states that “Transfer fees include such items as clerical fees, fees paid as a part of an applicant’s credit or background check or screening process and move-in fees.”

An attorney who represents a management company is quoted in the article as saying that if the fees are paid directly to the management company, and not the association, the law doesn’t apply. Let’s just say I and the Division disagree. Regardless of whether it’s being charged by the association or management, it’s still a mandatory fee that is being forced upon an applicant who wants to move into the community. The statute clearly intends to create a reasonable restriction on that fee. So, management companies are either going to be content to collect a $100.00 fee from the applicant, or they will simply charge the association directly for their assistance with these application fees and background checks and the association will need to include these fees in the association’s annual budget.


So, what’s the law as it applies to HOAs and transfer fees? There is none. The Miami Herald article opines that HOAs can therefore charge whatever they want. I disagree. If there is nothing in the associations governing documents that authorizes the association to charge a transfer fee, one can’t be charged.

Nobody is arguing that $100.00 may be too little to charge an applicant and that a criminal background and credit check costs the association more than that. That may be true. However, in the absence of language in the statute that allows the association to charge more, they simply can’t and need to stop coming up with creative phrases or reasons to violate the statute. If you’re not happy with the law, get it changed.


No comments: