TRANSFER FEES Ė WHY ALL THE CONFUSION?

By Eric Glazer, Esq.

Published June 6, 2016 

 

Great article by The Miami Herald this week regarding the fact that condo associations across the state are ripping people off by charging illegal and excessive transfer fees when someone is trying to sell or rent their unit. For those of you who missed it, here is the link: South Florida condo boards rip off consumers with high application fees

      

Here is what The Florida Condominium Act says:

(i) Transfer fees.óNo 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. However, if the lease or sublease is a renewal of a lease or sublease with the same lessee or sublessee, no charge shall be made. The foregoing notwithstanding, an association may, if the authority to do so appears in the declaration or bylaws, require that a prospective lessee place a security deposit, in an amount not to exceed the equivalent of 1 monthís rent, into an escrow account maintained by the association. The security deposit shall protect against damages to the common elements or association property. Payment of interest, claims against the deposit, refunds, and disputes under this paragraph shall be handled in the same fashion as provided in part II of chapter 83.

 

The only thing the article missed is the fact that the association does not even get the opportunity to charge any transfer fee whatsoever unless the association is required to approve such transfer. As I teach at every seminar, many association do not have the right to approve any transfers in their governing documents. They only have a right of first refusal. So, when determining if a fee can be charged in connection with the sale or lease of a unit, make sure the association first has the right to approve the transfer. If the association does not have the right, no fee can be charged.

 

Next, even if the right to approve is found in the governing documents, the fee for such approval must be found in the declaration, articles or bylaws. If there is no fee mentioned, no fee can be charged. If you want to charge a fee, amend your documents.

 

Of course the all important question is, how much can be charged. What is so difficult to understand about the statute specifically saying: in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant? It is amazing how many boards and management companies attempt to change the plain wording of the statute with creative thinking. Iíll hear things like ďItís not a transfer feeĒ itís an application fee, itís a background check fee, a move-in fee, an investigation fee. They will argue until they are blue in the face that itís something other than a ďtransfer fee.Ē They are wrong. According to the Miami Herald article, a 2008 warning letter was sent to a Broward condo from the Division which states that ďTransfer fees include such items as clerical fees, fees paid as a part of an applicantís credit or background check or screening process and move-in fees.Ē

 

An attorney who represents a management company is quoted in the article as saying that if the fees are paid directly to the management company, and not the association, the law doesnít apply. Letís just say I and the Division disagree. Regardless of whether itís being charged by the association or management, itís still a mandatory fee that is being forced upon an applicant who wants to move into the community. The statute clearly intends to create a reasonable restriction on that fee. So, management companies are either going to be content to collect a $100.00 fee from the applicant, or they will simply charge the association directly for their assistance with these application fees and background checks and the association will need to include these fees in the associationís annual budget.

 

So, whatís the law as it applies to HOAs and transfer fees? There is none. The Miami Herald article opines that HOAs can therefore charge whatever they want. I disagree. If there is nothing in the associations governing documents that authorizes the association to charge a transfer fee, one canít be charged.

 

Nobody is arguing that $100.00 may be too little to charge an applicant and that a criminal background and credit check costs the association more than that. That may be true. However, in the absence of language in the statute that allows the association to charge more, they simply canít and need to stop coming up with creative phrases or reasons to violate the statute. If youíre not happy with the law, get it changed.


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About HOA & Condo Blog

Eric Glazer Eric Glazer graduated from the University of Miami School of Law in 1992 after receiving a B.A. from NYU. He has practiced community association law for more than 2

decades and is the owner of Glazer and Associates, P.A. a seven attorney law firm with offices in Fort Lauderdale and Orlando and satellite offices in Naples, Fort Myers and Tampa.

 

Since 2009, Eric has been the host of Condo Craze and HOAs, a weekly one hour radio show that airs at noon each Sunday on 850 WFTL.

   

See: www.condocrazeandhoas.com.

   

He is the first attorney in the State of Florida that designed a course that certifies condominium residents as eligible to serve on a condominium Board of Directors and has now certified more than 10,000 Floridians all across the state. He is certified as a Circuit Court Mediator by The Florida Supreme Court and has mediated dozens of disputes between associations and unit owners. Eric also devotes significant time to advancing legislation in the best interest of Florida community association members.


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