California state law requires the seller of a property in a “common interest development” – a condominium, townhome, planned unit development, or tenancy-in-common to name a few examples – to provide the buyer with copies of all relevant HomeOwner’s Association (HOA) documents during a purchase transaction. Examples of these documents would include HOA meeting minutes (1 years worth), Covenants, Conditions & Restrictions (CC&Rs), Bylaws, Articles of Incorporation, House Rules, and budgets, reserve studies or bank statements.
Many associations outsource the management of their association to a third party company, and a court ruling in 2007 exempted these third-party companies – like property managers – from caps that could be charged to the seller or buyer to provide these legally required documents.
California Assembly Bill 771 (CA AB 771), sponsored by the California Association of Realtors, goes into effect on January 1, 2012 and prohibits property managers or any other “3rd party company” from gouging buyers and sellers for these documents.
In specific, the bill:
- prohibitsÂ bundling the fee for providing required HOA disclosures with any other fees, fines, or assessments.
- prohibitsÂ bundling together both mandatory and non-mandatory HOA documents and charging a higher fee for providing all the documents.
- prohibitsÂ charging any additional fee for electronic delivery of HOA documents.
- prohibits charging any fee other than one that is reasonable based upon the actual cost for procuring, preparing, reproducing, and delivering the HOA documents.
- prohibits theÂ withholdingÂ of the HOA documents for any reason once the fee has been paid.
In addition, the bill mandates that at a buyer’s request the association must provide 12 months of approved minutes from the governing board (excluding executive sessions) and that delivery of the required documents must be accompanied by a cover sheet itemizing theÂ documentsÂ required by law and those actuallyÂ provided.
I’ve seen property managent companies charge close to $1,000 dollars for delivery of these documents in the past, which is clearly gouging. I’m really happy to see this law go into effect, and look forward to sellers and buyers having to pay substantially less for these incredibly important documents.