Statutory Limitation on Condominium Transfer Fees

Statutory Limitation on Condominium Transfer Fees

A Reminder that the Limit is the Limit

Transfer fees are those fees an association may charge in connection with the sale or lease of a unit. There are significant differences between allowable transfer fees for homeowners’ associations as compared against condominium associations. When it comes to transfer fees for condominium associations, Florida law is patently clear – in no event may such a fee exceed $100 per applicant. In spite of this clear limitation, some condominium associations charge more than the statutory maximum, and doing so is not without significant consequence.

 

In fact, unit owners of a condominium association recently brought a successful class action lawsuit in Miami-Dade County against their condominium association that charged transfer fees beyond the statutory limit. That association now faces a significant financial impact from the suit. Not only must the association return the money charged over the statutory limit to each member of the class, the settlement stipulated that the association must pay $95,000.00 in attorney fees to the law firm representing the residents. The class period was from 2014 to 2019, and the association may end up paying over $200,000.00 to satisfy all the claims in the class. Yikes!

 

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Specifically, section 718.112(2)(i), Florida Statutes, provides that “no charge shall be made by a condominium association in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless i) the association is required to approve such transfer and ii) a fee for such approval is provided for in the declaration. In no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.” The law does allow the association to require a prospective lessee place a security deposit, not to exceed the equivalent of one month’s rent, into an escrow account maintained by the association.

 

It is important to note that the statute requires that the condominium’s declaration provide authority to the association to approve a transfer and to impose the transfer fee. If these powers are not granted in your declaration of condominium, the condominium association may not charge any transfer fee. If the declaration of condominium does provide for a transfer fee, then the association must abide by the statutory maximum.

 

It is not unheard of for more than one condominium association to attempt to circumvent the statutory limitation by changing the name of the fee. Some may call the charges “screening fees” or “move in fees,” but that does not change the fact that the fees are still legally considered transfer fees. Remember, the limit is the limit, regardless of whether the condominium association’s expenses in obtaining credit and criminal history reports exceeds the $100.00 limitation. Any condominium association charging more than the statutory maximum is violating the statute and opens itself up to liability. With the award of attorney fees, there is an incentive for attorneys to bring more cases challenging any transfer fees that violate the statute. Your condominium association could be liable for hundreds of thousands of dollars for charging improper transfer fees.

 

On the other hand, there is good news for homeowners’ associations, these statutory maximums only apply to condominium associations. However, homeowners’ associations are not without some statutory limitation. Section 689.28, Florida Statutes, declares that transfer fee covenants violate public policy by impairing marketability of real property. However, section 689.28(2)(c)7., Florida Statutes, does allow a homeowners’, condominium, cooperative, mobile home, or property owners’ association to charge a fee if the declaration allows such a charge. So, a homeowners’ association may only charge a transfer fee if the authority is granted to the association in the declaration. Just keep in mind, if your declaration specifies a set fee, your association is limited to the fee provided in the declaration.

 

Now is a good time for all board members to review their community’s governing documents and seek advice from the association’s lawyer as to whether any existing transfer fee complies with the statutory requirements. A simple check now can help your association avoid costly litigation in the future.

Article written by Jeff Rembaum of KBRLegal.com 
with permission for SFPMA to republish for our industry.

 

Kaye Bender Rembaum, Attorneys at Law

The law firm of Kaye Bender Rembaum, with its 19 lawyers and offices in Broward, Palm Beach and Hillsborough Counties, is a full service law firm devoted to the representation of more than 1,200 community and commercial associations, developers, and their members throughout the State of Florida. Under the direction of attorneys Robert L. Kaye, Michael S. Bender and Jeffrey A. Rembaum, the law firm of Kaye Bender Rembaum strives to provide its clients with an unparalleled level of personalized and professional service that takes into account their clients’ individual needs and financial concerns.

Thank You, SFPMA.COM

 

 

Tags: Condo and HOA, Condo and HOA Laws, Management News