Business & Real Estate
- Published on Wednesday, 28 September 2011 01:00
- Written by Los Altos Town Crier
Town Crier Report Gov. Jerry Brown signed California AB 771 into law early this month, legislation that safeguards buyers of common interest developments (CIDs) such as condominiums and townhomes from unnecessary document fees. A CID is a form of real estate ownership in which each owner has an exclusive interest in a unit and a shared interest in the common area property. In addition to the standard disclosures, homeowner associations (HOAs) must provide specific documents to buyers within the purchase documents that contain basic information about the structure, operation and management of the association that runs the development. Current law prohibits HOAs from charging fees in excess of what is “reasonable, not to exceed the actual cost of processing and producing these documents.” Associations have provided the documents at a charge between $75 and $250. Many HOAs have delegated the preparation of these documents to third-party providers or contractors who, under a 2007 court decision, are exempt from fee limits. Some of these third-party vendors charge buyers as much as $1,000 for bundling other documents with the required ones. “We applaud the governor for this action. Buyers have been charged exorbitant fees for the reproduction of extra documents that are not required,” said Gene Lentz, president of the Silicon Valley Association of Realtors. “This law will create a form that will detail which documents are required and the cost, which will prevent the gouging of buyers.” AB 771 specifies that only fees for required documents may be charged, prohibiting bundling fees for other documents. The bill adds a new form detailing which documents are required and mandates disclosure. The Silicon Valley Association of Realtors provided information for this article.