If your home is in escrow, you likely paid for the HOA resale package only to receive another payment request for an HOA demand statement. They are not the same, and this is normal.
The HOA demand and HOA resale package have two unique roles, and if agreed upon in the contract, you are required to complete the requested payment for the HOA demand statement.
So, what is an HOA demand? The HOA demand provides the title company or attorney information regarding your HOA dues, fees, payment history, violations, and the amount to collect from the buyer to prepay dues.
Determining reimbursements and prepayments is the most common use of the demand statement. For example, if an advanced quarterly HOA due is paid for July, August, and September, but ownership is transferring on July 31st, the HOA demand informs an escrow officer or attorney to collect August and Septembers payment from the buyer to reimburse the seller.
This article provides more details on HOA demand, including the average cost, and a brief explanation of additional HOA fees you should know.
Understanding the HOA Demand
The cost of selling in a homeowners association is high. There’s the resale package, demand statement, transfer fee, account setup fees, and often added convenience charges.
The HOA demand is a negotiable fee, but it’s common for sellers to bear the cost. Luckily, the demand statement is typically a smaller fee and costs between $100 and $300.
After ordering the demand statement, it’s delivered directly to the escrow officer or attorney and provides the following information:
General information in HOA Demands
- If your account is in collections
- The amount of the current regular dues
- The frequency of the dues (monthly, quarterly, bi-annually)
- The date you’ve paid to
- When the next payment is due
- The day of the month the assessment is due
- How many days past the due date the account becomes delinquent
- The penalty for late payments
With this information, escrow officers know the exact amount to collect from the buyer or seller based on the close of escrow date.
Fees owed to the association
- How many regular assessments to collect from the buyer in advance
- Any special assessments owed to the association
- The owner’s current balance due or owed
- A list of all fees associated with buying or selling a home in the community, including:
- Resale disclosure package
- Resale demand
- Rush fee
- Convenience Fee
- Archive fee
- Account set up fee
Violation and litigation information
Buyers need to know if a homeowners association is involved in any litigation, and unless you read all of the mail they send, you may not be aware of a pending lawsuit.
Common HOA litigations include:
- Misuse of funds
- Personal injury
Furthermore, if a seller has pending violations, like weeds or a dead tree, the resale demand statement provides this information so the seller can correct it before the close of escrow.
Additional HOA fees you should know:
HOA Resale Package
The HOA resale package provides buyers with the communities rules, regulations, and standards while also providing a breakdown of dues and fees.
Most states require the seller to pay for the resale package and set regulations regarding how quickly you must order it and how long the buyer has to review it. Buyers can cancel and receive their earnest money back if they disagree with any terms.
The average cost of an HOA resale package is $100-$400.
CIC capital contribution.
A one-time fee, often paid by the buyer, to deposit funds into a reserve account utilized for capital improvements to the property. The capital contribution fee can range as low as $75 and as high as $1,200, depending on the HOA and property type.
As a buyer, the resale package will list if the community has a one-time capital contribution fee. The capital contribution is negotiable.
CIC Transfer Fee/Setup Fee.
The CIC transfer and setup fee is another negotiable fee that the buyer often pays. This fee is the homeowners association’s cost to establish a new account for the buyer.
You can expect to pay $250 to $350 for the transfer and setup fee.
It often feels like a never-ending stream of fees when selling a home. Unfortunately, homeowner’s associations are the most significant contributor to costs.
Remember, what drew the buyer to your neighborhood very well may be the HOA. An HOA provides and supports public spaces, like parks and community pools, while keeping homeowners diligent in maintaining curb appeal.
It’s challenging to justify some of the fees, but I always tell my sellers it may cost you hundreds of dollars in fees to sell in an HOA, but you may be receiving thousands more in equity because of them too.
I hope you have a smooth transaction and an easy move.