Payoff Demand with Management Company

[Jimbo925]

Jurisdiction

California

I understand the concept of a Payoff Demand Letter but my management company charges a fee for this when someone moves into the community. Why is the management company involved at all if this is all between the individual and the lender? Where does the management company come in?

Thanks,
Jim

 

[adjusterjack]

I'm guessing that whatever this is that you are referring to is addressed in the HOA's CC&Rs and ByLaws. Why it happens is something you will have to ask of the people who wrote the CC&Rs and ByLaws.

If I had to guess I would guess that it has to do with any past due HOA fees that are in arrears for that property.

 

[hrforme]

Real estate closings in our area usually require the demand letter that nothing is owed to the HOA (either dues or fines). Our HOA does these for free, but we are a small group of homes (don't get more than 5-6 per year) and we have a paid accountant who is paid out of annual dues anyway.

The Board hired the management company to manage the HOA (depending on how big the HOA is, this can be comman) and the management company often charge fees for things like this to offset their fees to the whole community. That is, it's only charged to those that actually need that specific service when they need it -- you'd need to talk to the HOA Board and/or look at the CCRs to see what other things bring charges...

 

[zddoodah]

I understand the concept of a Payoff Demand Letter

That's great, but you'll get better responses here if you explain to us exactly what you're talking about.

my management company charges a fee for this when someone moves into the community.

I assume you're talking about a company that manages your residential neighborhood that is subject to the rule of a HOA. Correct?

Why is the management company involved at all if this is all between the individual and the lender?

Involved in what?

Where does the management company come in?

You'll have to be a lot more clear as to what you're talking about.

By the way, here's what I think you're talking about: You are refinancing the mortgage on your home. Your home is located in a community governed by an HOA. The HOA has hired a management company to manage the community. Before extending the refi loan, your lender wants to make sure that you don't owe money to your HOA that could give the HOA a lien against your property that is superior to your new mortgage loan. Thus, the lender has asked the HOA, through the management company, either to certify that nothing is owed or make a demand for what is owed so that it can be paid off by the loan. Correct?

As for why the management company charges for this? Because it can.

 

[Jimbo925]

That's great, but you'll get better responses here if you explain to us exactly what you're talking about.



I assume you're talking about a company that manages your residential neighborhood that is subject to the rule of a HOA. Correct?



Involved in what?



You'll have to be a lot more clear as to what you're talking about.

By the way, here's what I think you're talking about: You are refinancing the mortgage on your home. Your home is located in a community governed by an HOA. The HOA has hired a management company to manage the community. Before extending the refi loan, your lender wants to make sure that you don't owe money to your HOA that could give the HOA a lien against your property that is superior to your new mortgage loan. Thus, the lender has asked the HOA, through the management company, either to certify that nothing is owed or make a demand for what is owed so that it can be paid off by the loan. Correct?

As for why the management company charges for this? Because it can.

Good Morning,

Actually, the management company charges $325.00 for this letter to any and all new arrivals to the community so it wouldn't be anything regarding owing the HOA any outstanding balances. I can't see where this would be necessary then unless it's just a money grab for the management company.

 

[Jimbo925]

Real estate closings in our area usually require the demand letter that nothing is owed to the HOA (either dues or fines). Our HOA does these for free, but we are a small group of homes (don't get more than 5-6 per year) and we have a paid accountant who is paid out of annual dues anyway.

The Board hired the management company to manage the HOA (depending on how big the HOA is, this can be comman) and the management company often charge fees for things like this to offset their fees to the whole community. That is, it's only charged to those that actually need that specific service when they need it -- you'd need to talk to the HOA Board and/or look at the CCRs to see what other things bring charges...

Thanks, see below for additional information

 

[Jimbo925]

I'm guessing that whatever this is that you are referring to is addressed in the HOA's CC&Rs and ByLaws. Why it happens is something you will have to ask of the people who wrote the CC&Rs and ByLaws.

If I had to guess I would guess that it has to do with any past due HOA fees that are in arrears for that property.

Thanks, see below for more info.

 

[army judge]

Good Morning,

Actually, the management company charges $325.00 for this letter to any and all new arrivals to the community so it wouldn't be anything regarding owing the HOA any outstanding balances


. I can't see where this would be necessary then unless it's just a money grab for the management company.

I agree with your last sentence.

It is also NOT an uncommon practice to bilk the weak of their loot.

It might be time to organize the residents and seek redress.

 

[zddoodah]

Actually, the management company charges $325.00 for this letter to any and all new arrivals to the community so it wouldn't be anything regarding owing the HOA any outstanding balances. I can't see where this would be necessary then unless it's just a money grab for the management company.

Ok...so my supposition about what's happening isn't correct? Then what is happening? Your questions are completely lacking in context. They also not appear to raise any legal issue, but I'll reserve judgment about that.

 

[Jimbo925]

Ok...so my supposition about what's happening isn't correct? Then what is happening? Your questions are completely lacking in context. They also not appear to raise any legal issue, but I'll reserve judgment about that.

What's happening is our management company is charging all new arriving residents $325.00. What's happening is I'm trying to find out if this is a legit/legal fee that has a purpose or it's a money-grab by the management company on unsuspecting new homeowners.

 

[zddoodah]

What's happening is our management company is charging all new arriving residents $325.00.

Charging them for what? What product or service is the company providing for this money? Apparently it's a charge for some sort of letter. I speculated what this letter might be, but you indicated I wasn't correct, so what is it that this letter says and to whom is it addressed? Is the charge being assessed before or after these folks buy their homes? When are the "new arriving residents" informed of this charge?

I'm trying to find out if this is a legit/legal fee that has a purpose or it's a money-grab by the management company on unsuspecting new homeowners.

First of all, it can be both legal and a money-grab, and whether it's "legit" is a matter of subjective opinion. Obviously, there's nothing illegal about charging for a product/service. Equally as obvious, if folks are informed about this charge before they buy their homes, they have the ability to avoid it by not buying into the community.

 

[Jimbo925]

Thanks everyone for trying to help. I'll give a bit more detail. When a resident purchases a property in the community, the management company charges fees to the title company (Which is passed onto the buyer) for such documents as: Previous months of board meeting minutes ($60.00), rules on violations ($50.00), CC&Rs ($50.00), bylaws ($35.00) etc. The one I noticed was "Required Statement of Fees" AKA Demand ($300.00). It's in the title paperwork and the buyer just pays because they figure that's just another fee to buy the property. Total for all management company fees are $600.00. Seems to me a bit much to obtain some copies.

 

[zddoodah]

Thanks everyone for trying to help. I'll give a bit more detail. When a resident purchases a property in the community, the management company charges fees to the title company (Which is passed onto the buyer) for such documents as: Previous months of board meeting minutes ($60.00), rules on violations ($50.00), CC&Rs ($50.00), bylaws ($35.00) etc. The one I noticed was "Required Statement of Fees" AKA Demand ($300.00). It's in the title paperwork and the buyer just pays because they figure that's just another fee to buy the property. Total for all management company fees are $600.00. Seems to me a bit much to obtain some copies.

So...basically, the HOA (or the HOA's property management agent) is charging a fee for providing goods (the documents). That's pretty much the concept that the United States economy is based on. Is it exorbitant? Sure. However, since the HOA is the only entity from whom those things are available, the HOA can charge whatever it likes. If you or anyone else doesn't like it, you can seek election to the HOA board and seek to reduce the fees.

 

[Jimbo925]

I am the HOA VP and I think I will. Thanks

 

[adjusterjack]

When a resident purchases a property in the community, the management company charges fees to the title company (Which is passed onto the buyer) for such documents as: Previous months of board meeting minutes ($60.00), rules on violations ($50.00), CC&Rs ($50.00), bylaws ($35.00) etc. The one I noticed was "Required Statement of Fees" AKA Demand ($300.00). It's in the title paperwork and the buyer just pays because they figure that's just another fee to buy the property. Total for all management company fees are $600.00.

That's the explanation you should have given us in your first post. Sometimes I think I need a dental degree to be able to get information out of posters.

I am the HOA VP

Then you are in a good position to put a stop to it.

 

[army judge]

The HOA Board should NOT allow the management to do anything that isn't in the contract.

If you're a high ranking potentate of the board, it might be time for the board to consult it's attorney.