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Application fees, transfer fees and capital contributions

BY PETER S. SACHS – THE ASSOCIATION BARRISTER

Typically, an association’s governing documents provide the association with authority to approve or disapprove transfers, sales and leases of units.  In connection with such approval, many associations have an extensive application procedure, conduct background checks and charge application or transfer fees.  The authority to do so, however, is very different in a condominium association than it is in a homeowners association.

Homeowners associations are generally allowed to charge any fee in connection with the sale or lease of a home so long as this authority is contained in the association’s governing documents.  Chapter 720, Fla. Stat., does not regulate the amount that a homeowners association may charge an applicant for purchasing or leasing a unit.  In addition, homeowners associations’ governing documents may provide for a capital contribution payment to be paid upon closing of a home. 

In contrast, condominium associations are restricted as to the types of fees they may charge in connection with the sale or lease of a condominium unit.  Chapter 718, Fla. Stat., provides that, if the declaration or bylaws provide, an association may charge no more than $100per applicant.  It is important to note that a husband and wife as well as a parent and dependent child are considered one applicant for purposes of this transfer fee restriction.  In addition, although the Condominium Act specifically provides that the developer may charge a capital contribution fee on an initial sale of a unit, the Department of Business and Professional Regulations (DBPR) considers this to be inappropriate e because it likely will exceed the $100maximum provided in the statute.

The Condominium Act does allow an association to charge a reasonable fee for the exclusive use of a portion of the common elements.  Therefore, if a unit owner requests the exclusive use of an elevator or other portion of the common elements  in order to move into the condominium, it is our opinion a reasonable fee would be allowed as long as it is connected to the exclusive use of a portion of the common elements.

With this in mind, it is very important that associations consult with legal counsel when determining their authority to charge transfer fees, capital contributions and other related fees in connection with the sale or leasing of a home or condominium.

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Peter S. Sachs is the managing director with Sachs Sax Caplan in Boca Raton, Fla.

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