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What is an HOA transfer fee, and who pays for it?

Yahoo Personal Finance· Getty Images
Aly J. Yale
·Freelance writer
3 min read

Closing costs encompass a whole host of different fees. There are charges for appraisers and surveyors, commissions for real estate agents, and expenses covering taxes, insurance, lender costs, and more.

Another common closing cost — at least for suburban homes — is the homeowners’ association transfer fee. You might owe this if you’re buying a home in a community with a homeowners’ association, which is an organization that sets and enforces guidelines for the neighborhood. Here’s what to know about the HOA transfer fee if you’re buying a house in an area with one of these associations.

Read more: Closing on a house — What to expect and how to prepare

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HOA transfer fees are charged when a property in an HOA-controlled area transfers ownership. They cover the costs of preparing documents, updating records, changing amenities access, and other expenses the HOA board may see as a result of new ownership within the community.

You may hear HOA fees referred to as initiation fees, new owner fees, or buy-in fees. Whichever term you use, remember that this fee differs from HOA dues. An HOA transfer fee is just a one-time charge paid when you first buy a home. You’ll pay HOA dues more regularly (typically once yearly, quarterly, or monthly).

The buyer typically pays the HOA transfer fee, though it’s possible for sellers — or both parties — to cover it as well.

For example, if you’re in a buyer’s market, where the pool of for-sale properties is larger than the number of buyers searching for a home, you may be able to ask the seller to sweeten the deal by covering some or even all of your transfer fee.

Learn more: How much money do I need to buy a house?

The exact cost of homeowners’ association transfer fees varies by location and the HOA community. Generally speaking, though, they can range anywhere from $100 to a few thousand dollars.

You can find the exact HOA transfer fee you’ll owe by reading the HOA’s governing documents — called the Covenants, Conditions, & Restrictions (CC&Rs). Your real estate agent may also be able to help.

If you want to avoid paying an HOA transfer fee (or just lower how much you pay), talk to your Realtor about having the sellers cover some or all of it. They may be able to negotiate this on your behalf.

You could also contact the HOA directly and ask if they offer any discounts or waivers for certain groups of people, such as veterans or first-time home buyers.

Dig deeper: How to make an offer on a house

An HOA transfer fee covers the costs of transferring a property to a new owner in a community governed by a homeowners’ association (HOA). It goes toward things like preparing documents, updating records, changing amenities access, and more.

HOA transfer fees and HOA resale certificates are two separate items. The first covers the administrative costs of transferring a property’s ownership, while the certification offers the new owner a summary of the property’s current status with the HOA, the HOA’s finances, any lawsuits against the HOA, and other state-required information.

HOA transfer fees are typically paid by the buyer, but either party could technically pay. Buyers may be able to negotiate with sellers to cover some or even all of their HOA transfer fees. Ask your real estate agent more about this option if this is something you’re considering.

Some states set a limit on how much HOAs can charge for transfer fees. In Arizona, for instance, the cap is $400. Check your state’s laws or talk to your real estate agent for more information on transfer fee caps in your state.

This article was edited by Laura Grace Tarpley.