Why There Are Mandatory Fees When you Sell or Refinance your Home
When in need of documents for closing on a home please contact:
Kirkpatrick Management Company Closing Department at 317-570-4358
When a property in Woodland Springs, which is subject to a mandatory homeowner’s association annual assessment, is being sold or refinanced, the mortgage company requires certain documentation regarding assessments and other types of disclosures. In addition, some states mandate the information be provided to the purchaser. This documentation or ‘closing package’ is typically provided by the management company,. When the account is in legal collections, the closing package is prepared by the homeowner association’s or management company’s law firm.
A closing package goes by many names, such as; ‘resale package’, ‘estoppel letter’, ‘closing letter’, ‘clearance letter’, ‘certificate of assessments’, and ‘payoff statement’. No matter what it is called, it typically includes the following items:
- Association contact information.
- Governing documents for purchaser review.
- Notice of any covenant violations on the property.
- Notice of any leasing restrictions.
- Frequency of assessment (monthly, quarterly, semi-annual, or yearly).
- Due date for assessments…Woodland Springs, Inc due date is May 1.
- Notice of next due date for assessments…May 1, 2018
- The current amount charged for regular assessments, along with any amounts due for: delinquent assessments, including special assessments; delinquent fines; late fees; interest pro-rated to current date; initiation fees; management transfer fees; and lot maintenance done by the association.
The closing package is tailored to each owner. The information has to be compiled by staff members and in the case of Sentry Management supplied to a third party company, who then supply it to the closing attorney or mortgage company. Furthermore, the data is constantly changing. Items such as covenant violations, and current figures for assessments, late charges, and interest are not static in nature.
Not only does a lot of work go into providing a closing package, but the homeowner’s association and/or management company also guarantees the information is accurate. For these reasons there is a fee charged for the service. Fees among management companies range from $149.00 to $250.00. Sentry Management’s current fee is $179.00. In addition to the closing package fee, there may be ancillary costs, such as rush fees, courier expenses, W-9 tax form fee, and updated charges on expired closing packages. So just as a mortgage company would charge for providing a payoff statement, an homeowner’s association management company charges for the work that goes into a closing package.
The seller usually pays for the cost of a closing package, but like any other closing costs, payment or reimbursement may be negotiated between the seller and the purchaser. More and more management companies, law firms are turning to third party services in order to streamline the process.