Who pays owner association “transfer fees?”

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: In answering the question, it is important to understand the way in which Form 2-T 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 Form 2-T, the buyer is responsible for the fees that are listed in paragraph 9(b) and the seller is responsible for payment of the fees listed in paragraph 9(a). 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 since, according to paragraph 9(a), the seller is responsible for payment of “any fees charged for transferring or updating ownership records of the association.” In addition, the seller is responsible under paragraph 9(a)(iv) for payment of “any fees other than those fees specifically required to be paid by Buyer under paragraph 9(b) below.” Since there is nothing under paragraph 9(b) that would make the buyer responsible for the payment of a “transfer fee,” it would, in our view, be payable in any event by the seller under the “catch-all” provision in paragraph 9(a)(iv).

By the way, the term “transfer fee” was taken out of Form 2-T many years ago now.  This was done primarily to avoid potential confusion with the term “transfer fee” as defined in a North Carolina statute that was enacted in 2010 to prohibit 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.

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