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HOA Documents and New Upfront Status Letter/Transfer Fees January 2012

If you have been selling real estate for any length of time, you are probably aware of the difference between CIC documents and the HOA status letter.

CIC Documents
In the new 2012 contract, CIC documents are now called “Association Documents.” The seller is required to provide these documents to the buyer, per the contract, and it is the seller's responsibility to be certain they are providing all of the information required, and the most updated information.

The CIC documents should be ordered immediately after the contract is executed, in order to meet the deadline specified in the contract. They provide the buyer with the financial status of the HOA, meeting notes, declarations, by-laws, rules and regulations, etc., from the homeowner's association. Some associations will provide these free of charge to the seller directly; in other cases, the HOA will charge for them.

The CIC/Association Documents also include the CCRs, which are disclosed on the Exceptions page of the title commitment. Land Title automatically includes a copy of the CCRs with the commitment, either as a link on the electronic version of the commitment, or as a paper copy sent out with the first commitment. Agents may want to double check that the seller has provided these to the buyer as part of the CIC/Association Documents.

Land Title's Front Range clients have the benefit of the expertise of Land Title's full service HOA Department, which will provide the association documents for a fee (with or without a Land Title closing). The HOA Department staff is familiar with the nuances of the different local HOAs, stays up-to-date on legislative changes for homeowners associations, and offers CE classes to real estate agents. For more information about pricing, services, or classes, contact your Land Title account manager.

HOA Status Letter
The status letter is ordered by the closer a week or two before closing and gives the closer a written status of how much the dues are for the property, when they are charged, how current have they been paid, and the balance of any outstanding amounts the title company needs to collect at closing. This letter typically contains a transfer fee (sometimes called a change of record fee) or a status letter fee charge, or sometimes both. It is designated in the contract who pays these fees — seller, buyer, or split.

Since many subdivisions now have multiple associations, there will be a transfer or status letter fee for each association. Real estate agents may want to give clients this information early in the transaction, since these fees can add up quickly.

New: Upfront Status Letter/Transfer Fees
More and more management companies are requiring payment of this transfer fee or status letter fee up front. They will not issue the title company the status letter until they have received their fee. The real estate agent should be prepared to call their client (seller or buyer), depending on who is paying. The title company then either needs to have the party provide a credit card for this payment or provide a check up front, depending on what is required by the management company.

Most of the time the management company is using a service that requires a credit card payment and will not accept a check, although there is at least one association that requires a check instead. For credit card payment, the following information is required: the card number, the code on the back, the name on the card, the billing address for the card, and the card's expiration date.

These are charges that have normally been paid at closing, but now these companies are requiring payment up front (much like an appraisal).

It is helpful if the real estate agent can let buyers and sellers know the importance of the status letter — the title company cannot facilitate the closing without it.

The DORA website has additional information about HOAs.  Or, as always, feel free to contact your Land Title account manager or closer with your questions.

Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal or accounting advice or other expert assistance is required, the services of a competent professional should be sought.
© Copyright, 2012, by Land Title Guarantee Company