AB 771(Betsy Butler, D-Torrance), a bill preventing home buyers in a common interest development (CID), such as a condominium or townhome, from being charged excess document fees, was signed by Gov. Jerry Brown early this month.
"We applaud the Governor for this action. Buyers have been charged exorbitant fees for the reproduction of extra documents that are not required," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "This law will create a form which will detail what is required and how much it will cost to obtain the needed documents."
Homeowner associations (HOAs) are required to provide specific documents to buyers of homes in a CID — a form of real estate ownership in which each homeowner has an exclusive interest in a unit and a shared interest in the common area property. In addition to the standard residential property disclosures, buyers of a unit within a CID must receive basic information about the structure, operation and management of the HOA that operates the CID.
Current law requires that this information come from the HOA and prohibits it from charging fees in excess of what is "reasonable," not to exceed the actual cost of processing and producing these documents. HOAs generally have provided the documents for approximately $75 to $250. However, more HOAs have been delegating the preparation of these documents to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. As a result, many home buyers have been forced to pay additional fees, as much as $1,000, for other documents which were "bundled" with the required documents.
AB 771 specifies that only fees for the required documents may be charged when such documents are provided, thus prohibiting the "bundling" of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. This will eliminate any uncertainty for the buyer as to exactly which documents are being provided and the precise fees being charged for those documents.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.