Appellate Court Rejects Class Action Claims Against HOA Management Companies Over Transfer Fees
October 28, 2013.
A California Court of Appeal issued a decision clarifying a community association manager’s ability to charge transfer fees upon a change of ownership. The appellate court rejected potential class action claims against a management company for charging transfer fees to update homeowner records. The plaintiff claimed that unless the management company filed a notice of the fee with the County Recorder, charging such fees violated applicable law (California Civil Code Section 1098.5) that requires the recording of prior notice of “transfer fees,” before such fees can be collected. The appellate court concluded that the fees charged by the management company for its services were not transfer fees as defined in the statute, noting that the statute contains an express exception for any transaction “authorized by the Davis-Stirling Common Interest Development Act.” Additionally, the court noted that while such “actual costs” may include an element of profit for the management company, there may be no “override” for the benefit of the association.