When a homeowner purchases a home that is a part of a COA, HOA or POA there are generally fees that must be paid out at the closing table that belong to the community. In order to find out what fees are due at closing, it is the responsibility of the closing attorney to request a closing letter on that property prior to the closing date. At the time a property is sold, any balance belonging to the seller must be paid. Some communities also require the buyer to pay future assessments at the time of closing as well as any applicable initiation fees. In most cases, this process runs smoothly with the closing attorney requesting a closing statement in a timely manner and the Board of Directors (BOD) or Management Company completing and submitting the letter prior to the closing date. Closing checks are then submitted as per the instruction on the closing letter and the association is up to date with all necessary monies and information. However, sometimes one or more of these steps are missed and it becomes the Board or Management Company’s responsibility to remedy the problem.
The first step to collecting the association fees as well as finding the new buyer’s information is to determine whether a closing letter was ever requested by the closing attorney. Sometimes it is as simple as contacting the closing attorney and letting them know that the closing checks have not been received. Many times they will resubmit the payments and everything can be cleared up easily. If a closing letter was never requested and the closing took place, typically a little more digging has to be done to solve the problem. If the new homeowner has contacted the management company or BOD, the first thing to do is request a copy of their HUD statement. This statement will show proof of ownership for the new owner and will also list the contact information for the closing attorney responsible for collecting the closing fees. Typically, it is best to go ahead and complete a closing letter for the property and submit it to that closing attorney with a deadline as to when the checks need to be received. Because the closing attorney will be held responsible for collecting these fees, they will generally be easy to work with and will cut checks and submit them immediately. In an instance where you cannot collect fees from the closing attorney, the full amount due on the account including anything owed by the seller becomes the responsibility of the new buyer to pay. The buyer is then left to either pay the amounts themselves or contact the closing attorney to dispute the charges. This is why it is important for buyers, buyer’s real estate agents and the closing attorneys to understand the proper way to handle closing requests for properties within an association.
*This information is general in nature and each state/county may be different. Check with your attorney for the proper procedure in your area*
Tolley Community Management is a full service Community Management Division specializing in Residential and Commercial Association Management. We offer full service management options as well as accounting only packages. We take pride in assisting all of our associations and homeowners with their management needs in the Metro Atlanta area! For more information on our services, request a proposal for your association!
Tolley Community Management ° Backyard Realty Group LLC ° 8295 Highway 92 Woodstock, GA 30189°
(770) 517-1761 ° www.TolleyCM.com
