Selling a house can get expensive fast. Between agent commissions, closing costs, repairs, and moving expenses, homeowners often have plenty of bills to settle before they see any money from the sale.
Homeowners in a homeowners association (HOA) may face another closing expense. One homeowner recently discovered that their association wanted nearly $1,000 in fees to complete the sale, leaving them to question what they were paying for and whether they could challenge any of the charges.
The fees covered paperwork, a property inspection, processing, and other transfer-related expenses. Their experience sparked a discussion about HOA costs that homeowners may overlook until they’re ready to sell.
1. The Fees Added Up Faster Than Expected
The homeowner’s biggest charge was $340 for a standard resale package containing a resale certificate and the association’s governing documents. They were especially frustrated because the HOA’s website already had some of the same documents available for free.
The other charges included a $250 covenant compliance inspection, a $46 third-party processing fee that could increase, a $100 capital contribution, and a $250 transfer fee. Together, the fees totaled $986, nearly $1,000 before accounting for other expenses involved in selling a home.
Related: 17 Reasons HOAs Are More Harmful Than Helpful!
2. Resale Packages Can Cost Hundreds of Dollars
Selling a home in an HOA often requires providing paperwork that gives buyers information about the association and the property. A resale package may include a resale certificate, financial information, governing documents, and details about outstanding dues or violations.
Some of these documents may be available on the association’s website, but the HOA may charge to prepare or issue an official resale package. Sellers should ask exactly what the fee includes and whether they can use documents they already have to avoid duplicate charges.
Related: How HOAs Are Taking Over and Ruining American Neighborhoods
3. HOA Inspections Can Add Another Expense
The $250 covenant compliance inspection was another charge that caught the homeowner’s attention. These inspections typically check whether a property complies with the association’s rules before ownership changes hands.
An inspection may identify issues such as unapproved exterior changes, neglected landscaping, or other HOA violations. Sellers can review the association’s requirements before listing their property and address any known problems, though they should ask whether a separate inspection fee is still required.
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4. Transfer Fees Can Make Selling Even More Expensive
Transfer fees were another source of frustration in the online discussion, with homeowners reporting widely different amounts. Some described charges of several thousand dollars, while others said their associations based certain fees on a percentage of the home’s sale price.
A fee that looks manageable on paper can become much more expensive when tied to a property’s value. Homeowners should ask about transfer fees before listing so they can estimate closing costs and avoid being caught off guard by the final figures.
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5. The Seller May Not Have to Pay Every Fee
Just because an HOA charges a fee doesn’t automatically mean the seller must pay it. Depending on the location, association rules, and purchase agreement, the buyer may be responsible for certain costs, such as capital contributions or transfer-related fees, or the parties may negotiate them.
Sellers should review their contract and ask their real estate agent or closing professional to explain who is responsible for each charge. Getting that information early can help prevent disagreements and make it easier to estimate how much money they’ll receive from the sale.
6. Check the HOA’s Governing Documents
The association’s governing documents are a good place to start when questioning a fee. The CC&Rs (covenants, conditions, and restrictions), bylaws, and other HOA policies may explain which charges apply to a sale and how those fees are calculated.
Homeowners may have received these documents when they bought the property years earlier and forgotten what they contained. Reviewing them before listing the house can help sellers spot unexpected expenses and ask the association for clarification before closing gets underway.
7. State Laws May Limit Certain HOA Charges
HOA rules don’t exist in isolation, and state law may affect which fees an association can charge. Some states regulate resale certificates, transfer fees, document charges, or the time associations have to provide required paperwork.
Rules vary by state, so a fee permitted in one location may be restricted in another. Homeowners who believe a charge is improper can ask a real estate attorney, title company, or knowledgeable real estate agent to help determine whether the fee complies with local law.
8. Find Out About HOA Fees Before Listing Your Home
The nearly $1,000 bill that surprised this homeowner reminds us that selling a property can involve costs beyond the usual agent commissions and closing expenses. HOA charges vary widely, and some sellers may face much higher bills depending on their association’s rules and the requirements for transferring ownership.
If you’re planning to sell, request a complete breakdown of all HOA-related charges before putting your house on the market. Ask about resale packages, inspections, processing fees, transfer fees, capital contributions, and any other costs that could affect your proceeds.
It’s also worth checking these expenses before buying a home in an HOA. Monthly dues tell you what you’ll pay while living there, but selling fees can be different.
