Associations are allowed to charge move-in, move-out fees, also called "transfer fees" (Corp. Code § 7140(g)) but no more than is necessary to defray the costs for which they are levied. (Civ. Code § 5600.) This restriction does not apply to management companies.
Fee Justification. Associations should be prepared to provide an itemized break-down to support their fees. Reasonable expenses might include the following:
- Copy costs for governing documents (Civ. Code § 4525),
- Copy costs for the financial documents per §5300 (as required by Civ. Code § 4525),
- Copy costs for preliminary list of construction defects provided to members, (Civ. Code § 4525(a)(6)),
- Copy costs for general description of defects the association believes will be corrected or replaced and an estimate of when the defects will be corrected per §6100 (as required by Civ. Code § 4525(a)(7)),
- Copy costs for minutes,
- Document delivery fees,
- Cost to close out old files,
- Cost to set up new files, including emergency information and/or security cards,
- Cost of attorney litigation disclosure letter (if any),
- Fee to change security systems (if any),
- Fee to inspect the property and/or documents for rules violations (Civ. Code § 4525(a)(5)),
- Fee to answer lender forms,
- Fee to answer escrow forms, and
- Fee to certify assessments (Civ. Code § 4525(a)(4)).
Reasonable Approximation. It should be noted that it is probably not possible to establish an exact incremental cost for each element of the transfer fee as it applies to each person against whom the fee is levied. While it may be theoretically possible it is practically impossible. Accordingly, what is needed is a reasonably close relationship between each fee and the cost it is intended to offset. Once a reasonable average has been established that fee can be uniformly applied to all persons who move in and move out of the development. (See Watts v. Oak Shores.)
Burden of Proof. The Courts have allowed transfer fees. (See Fowler v. M&C Mgmt.) Persons challenging the fee have the burden of proving that the challenged fee violates state law. (Dey v. Continental Cent. Credit (2008) 170 Cal.App.4th 721, 727, citing Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1560 ("It is [plaintiffs] burden to demonstrate why the collection fee is illegal, rather than defendants' burden “to justify that it is legal for it to charge a fee for [the] service.”).) The marketplace, not the courts set the amounts. (Brown v. PCM; Berryman v. Merit.)
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