Question:
“On the condo we’re selling, the escrow company said it will cost over $500 just for HOA papers for the buyer. Is that legit?”
Answer:
Yes, unfortunately. And it’s something that always upsets me because my clients are being taken advantage of by HOA (Home Owner Association) management companies.
(These are not the HOAs themselves. They’re firms the HOA hires to manage many aspects of running an HOA. HOAs do this because they’re run by condo owners like you and me, not professional managers.)
As the seller, you’re required by contract to provide the buyer all the most up-to-date HOA docs: CC&Rs, by-laws, meeting minutes, financials, etc.
And HOA management companies typically gouge owners (their own clients!) by charging hundreds of dollars merely to send the latest PDF of these documents, something that costs them almost nothing. And this is actually completely illegal, but no one does anything about it.
Per Civil Code §4530, (see full text at https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4530#axzz2CR2ljirY):
(1) The association may collect a reasonable fee from the seller based upon the association’s actual cost for the procurement, preparation, reproduction, and delivery of the documents requested pursuant to this section. An additional fee shall not be charged for the electronic delivery in lieu of a hard copy delivery of the documents requested.
Clearly, $500 is not reasonable. Unfortunately, the penalty to HOA companies is minimal (see https://www.davis-stirling.com/HOME/Statutes/Civil-Code-4540):
Any person who willfully violates this article is liable to the purchaser of a separate interest that is subject to this section for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred dollars ($500). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorney’s fees.
If you’ve got the time and desire, here’s what I recommend:
- Pay the $500 now because you’re required to provide the documents to the buyer ASAP. Your dispute is with the HOA management company, not the buyer.
- Request from the HOA management company their justification for the cost.
- Tell them they’re in violation of Civil Code §4530 and you will file in small claims court unless they refund you most of the fee (all but $100?).
- I’d recommend seeking legal counsel, but you may not feel it’s worth the money. Instead, do your own research.
- If they don’t refund enough, then file in small claims court.
- Go to court and make them pay!
