Governor Brown signed Assembly Bill 771, on September 1, 2011. This bill prevents home buyers in a common interest development, such as a condominium or townhome, from being charged excess document fees.
Current law requires this information come from the Homeowner’s Association “HOA” and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents. HOA generally have provided the document for approximately $75 to $250. In the past HOAs have been delegating document preparation to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1000, for other documents which were “bundled” with the required documents.
AB 771 addresses this by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. The seller of the home must complete this form and transmit it to the prospective purchaser along with the required documents. This will eliminate any uncertainty for the prospective purchase as to exactly which documents are being provided and the precise fees being charged in those documents.