AB 2430 Signed: HOA Transfer Disclosure Docs; Seller Paid Fees

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hoa-transfer-fees.jpg*New Legislation

Civil Code Section 4530 sets forth the responsibility of homeowners associations (“HOAs”) to provide copies of governing documents, financial disclosures and other documents to a homeowner (or a homeowner’s authorized agent) within ten (10) days of a receipt of a request for those documents. This applies in the context of a sale of a property (a unit or lot) within a HOA. The documents to be produced are identified in Civil Code Section 4525, and are commonly known as “Transfer Disclosure Documents.”

Section 4530 does provide a HOA with the right to “collect a reasonable fee” based upon its efforts in producing, preparing and delivering Transfer Disclosure Documents. However, in satisfying this request and in seeking reimbursement, disputes would sometime arise as to whom should pay the fee (i.e., should it be the seller of the property or the prospective purchaser).

Fortunately, AB 2430 (Maienschein), effective January 1, 2015, has amended Section 4530 to specify the seller’s obligation to compensate the HOA for the aforementioned fee. Other notable changes in the law that will result from AB 2430 include:

  • The HOA must provide an estimate of the fees that will be assessed in producing the Transfer Disclosure Documents, prior to producing them.
  • The fees must be “separately stated” and “separately billed” from all other fees, fines or assessments that are billed as part of the transaction.
  • The Transfer Disclosure Documents may not be bundled with any other documents.
  • If the seller is in possession of any Transfer Disclosure Documents, the seller is required to provide copies to the prospective purchaser at no cost.
  • The form used for estimating the fees, as described in Civil Code Section 4528, is amended to include the following within the rightmost column of the form: “Not Available (N/A), Not Applicable (N/App), or Directly Provided by Seller and confirmed in writing by Seller as current document (DP).”
hoa laws AB 2430’s primary benefit is in clarifying the party responsible for a HOA’s costs in producing the Transfer Disclosure Documents (the seller). This should prevent needless billing disputes that hinder property transfers within HOAs. However, HOA Boards and especially management professionals should recognize the need to provide the estimate of fees via the Section 4528 form before producing the Transfer Disclosure Documents, and that failing to do so may inhibit the HOA’s ability to ultimately recovery them.