In 2012, the Tennessee Association of Realtors (TAR®) changed the way HOA fees and charges are allocated between the Buyer and Seller of real property. Well, we’re well into 2014, and some Title Companies are still having trouble with the concept. Understanding the relevant sections will help you avoid last-minute disputes and delays.
Section 2.B.1. on Page 2, of the TAR Purchase and Sale Agreement (Version 1/01/2014), states:
“Seller Expenses. Seller shall pay all loans and/or liens affecting the Property, including… fee (if any) to obtain payoff/estoppel letters from any and all associations, mortgage holders, or other liens affecting the property.”
Section 4.E. on page 4 of the TAR Purchase and Sale Agreement (Version 1/01/2012), states:
“Association Fees. Buyer shall be responsible for all homeowner or condominium association transfer fees, related administration fees, capital expenditures/contributions incurred due to the transfer of property and/or like expenses which are required by the association, property management company and/or bylaws, declarations or covenants for the Property (unless otherwise specifically addressed herein and/or unless specifically chargeable to the Seller under applicable bylaws, declarations, and/or neighborhood covenants).”
TAR Attorneys have made clear that their intention in drafting these clauses was to make the Seller responsible for charges arising prior to the closing and the Buyer responsible for charges arising out of the transfer of title. Title companies collect from the Seller unpaid dues, assessments, and charges. We collect from the Buyer pre-paid dues, capital contributions, transfer fees, statement fees, and new assessments.