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Are Assessments, Fines and Legal Fees due from the Seller to an HOA due from the Buyer on Closing?

Hi Dennis,
I am a new board member. Management gives us a financial statement package every month and the board members noticed there $2,000+ in assessments and late fees, a few fines, from a prior owner. The prior owner sold and closed on the Lot in March 2019. So what are the rules in this case? Is the new owner responsible to pay the past-due assessments, late fees, or fines of the prior owner? If so, when? At the closing? Who gets the check? Thanks.

1 Response

  1. Dennis Legere

    Mike;

    The association is required by law to provide the closing agency a true and accurate accounting of the current owners account to the HOA . The current owner is required to close out and true up that account unless he/she has negotiated a separate arrangement with the buyer. If the association failed to provide the true and accurate accounting to the closing agent than those liens and assessment are extinguished under ARS 33-1807 and cannot be made a liability to the buyer. While i’m not an attorney it looks to me like someone dropped the ball and did not provide the closing agent a complete accounting of unpaid fees from the buyer. Without a better understanding of the specifics on the specifics of the individual case, i can only answer in generalities.
    Generally with a true and complete accounting of what the seller owes the association the association is paid out of the proceeds of the sale by the title agency. As mentioned earlier where the buyer and seller directly negotiated a different payment scheme. But in either case the association is made whole via the closing agent.
    If that did not happen then the association has lost any rights to that debt, if they attempt to collect that debt from the buyer the buyer would have cause of action against the association or the seller or both based on failure to comply with ARS 33-1807 and 1806.

    Hopefully this helps.
    Dennis

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