Is it legal for a bank to force the buyer to front HOA transfer fees?

UPDATED: Aug 18, 2011

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Aug 18, 2011Fact Checked

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Is it legal for a bank to force the buyer to front HOA transfer fees?

I am closing on a short sale in about 2 weeks. Even though the bank signed off on paying for HOA transfer fees, they refuse to front the money to the escrow company. The bank wants me to pay for the fee and “reimburse” me once I close. If the closing falls through, I lose the money. Is this legal? Would I have the ability to get out of closing and have my earnest money deposit refunded to me?

Asked on August 18, 2011 California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The concern that I see with the transaction where you are supposed to close on a home subject to a "short sale" in about two weeks is that the bank which owns the property wants you to pay the association transfer fees for the transaction and reimburse you these once the escrow closes is that assuming you have a federally funded loan, the bank's proposal would appear to be a "RESPA" violation.

"RESPA" violations include , but are not limited to hidden fees concerning a real estate transaction. You need to discuss with your real estate agent what could amount to a "RESPA" violation. From what you have written, what the bank is trying to have you do would be illegal.

Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption