Can The Association Charge Transfer Fees For Sale Or Lease Of Units?

Introduction

Mr. Andrew Cuevas, Esq., is the President of Cuevas, Garcia & Torres, P.A., and Vantage Property Title Company. Cuevas, Garcia & Torres, P.A. provides legal services in the areas of Community Association Law, Real Estate law, and Business Immigration, including title insurance services through Vantage Property Title Company. If you have any questions regarding this article or any other questions, you can contact Mr. Cuevas at (305) 461-9500 or at [email protected]. If you are interested in reading previous newsletters, please visit our website at www.CuevasLaw.com, and select the icon for Newsletters, then choose the area of law you are interested in.

In our struggling economy, financial success has favored the creative Community Associations. A creative Association finds ways around fee limitations, by disguising a “Transfer Fee” under the cloak of “Capital Contribution” fees or even an “Initiation fee”. Board members and managers seem to be very creative when it comes to circumventing the Florida statutes, which limit the transfer fee to $100. They call them “Impact Fees,” “Move-In Fees” (adding “elevator fees,” if applicable) and “Application Fees.” There have been cases where application fees were non-refundable and boards denied the first few buyers, just to make some extra money! Normally it hurts the seller most, since buyers have a big inventory of units for sale from which to choose. Not only is this practice immoral…its also illegal.

In Florida, The Condominium Act, under Fla. Stat. 718.112(2)(i) specifically states that “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.”

The totality of both the Declaration wording and the operating history in each condominium could matter.

Consider the following scenarios:

Do the condominium documents provide that a Transfer Fee is due on any type of ownership transfer – but the contribution fee is due only on a SALE of the Unit? One concept of the contribution fee is to collect it upon a SALE of a unit -which requires actual 3 ^rd party new owners to make this one time investment in the condo’s capital improvement fund. Similar to paying a membership fee in a country club.

OTHER EXAMPLES WHERE TRANSFER FEE ARE NOT THE SAME AS CONTRIBUTION FEE:

Suppose John and Jane Smith own title as husband/wife and change the form of their ownership by quit claiming to Smith Family, LLC.(a company with their name). Does the Association charge a Transfer fee –but not a new Capital Contribution fee — because there was no SALE? Some Associations claim the contribution fee in tandem with a transfer fee without any regard for the practical reality there was no SALE to “new owners” -and the Association has a habit of claiming a contribution fee is technically due for each and every “transfer” regardless of whether there was a SALE. Even when the Declaration stated the contribution fee was due upon a PURCHASE & SALE of the unit.

What if Mr. & Mrs quit claim to “Mr & Mrs and their daughter Jane Doe as a Joint Tenant with rights of survivorship”? Does the Association charge a Transfer fee –but not a new Capital Contribution fee — because there was no SALE?

What about when heirs inherit title through a Will or through probate without a Will? Is there a transfer fee but no contribution fee?

If the contribution fee is not always applicable to every “transfer” situation– then one could argue it is not a “Transfer Fee.” But if the Association documents are worded in such a way and/or their treatment is to charge the contribution fee in tandem with the transfer fee –each and every time in every circumstance blindly with no difference-then the Condominium Association’s creative billing is failing to comply with Florida Statutory Requirements.

This article is solely a partial explanation of all the issues related to the topic of this newsletter, and is not to be considered legal advice. The association should consult with its legal counsel to obtain explanations of all issues addressed herein and determine what it should do to minimize these types of claims.