With the exception of certain entities that qualify under Civil Code Section 4580, an association may not impose or collect any assessment, penalty, or fee in connection with the transfer of title of any property within the association’s development. (Civ. Code § 4575.)
*Exception – Actual Costs & Escrow Document Fees
Notwithstanding the above, an association is permitted to charge the following fees and costs in connection with the transfer of title of a property within the association’s development:
- An amount which does not exceed the association’s actual costs to change its records. (Civ. Code § 4575(a).)
- An amount authorized by Civil Code Section 4530. (Civ. Code § 4575(b).) Those fees and costs relate to the various documents that an association must compile and deliver to a seller in order for the seller to provide them to a prospective purchaser of the seller’s property pursuant to Civil Code Section 4525. (See “Transfer Disclosures & Escrow Documents.”)
Deed-based Transfer Fees
The foregoing does not apply to a “transfer fee” as defined under Civil Code Section 1098. Such transfer fees are not imposed by an association, but are “imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid as a result of transfer of the real property.” (Civ. Code § 1098.) The requirement to pay such a transfer fee is often recorded by a CID’s developer at the inception of the CID within each of the owner’s respective deeds.