On January 28, 2016 the Board of Directors of the Sun City Lincoln Hills Community Association approved a New Owner Cost Assessment Component of $1,500 every time a new owner purchases a home in Sun City Lincoln Hills. This is a fee which is expected to be paid by the buyer. This benefits current owners by not increasing existing HOA dues. New owners will contribute extra funds to be used for maintenance, repairs, and replacement of common areas. The Board of Directors feels this is fair since many existing owners have been contributing to the maintenance of common areas for many years through their regular HOA dues. Normally in a situation where improvements or repairs need to be made the HOA assessment is increased temporarily so each owner equally shares in the costs. This proposal heavily favors existing owners and increases the cost for new owners. I can see the argument that existing owners have been paying for many years for the maintenance of common areas. I can also see the potential argument from new owners that they are paying extra for maintenance on common areas they have never had the opportunity to use and that have fallen into needed repair due to use by existing owners. On February 8, 2016 during a meeting with owners the Board voted to delay the start of this new fee to allow additional time for input and to study the proposed fee.
This is an update on the proposed fee from the Placer County Association of Realtors on February 9, 2016.
Update on Sun City Lincoln Hills Transfer Fee
At the February 8th Special Meeting of the Sun City Lincoln Hills Board of Directors, a vote was passed by that Board to postpone implementation of Resolution 2016.02, which called for the implementation of a Transfer Fee of $1500 on new owners effective March 1st to fund The Community Improvement Fund. The implementation was postponed to allow for further input and study on the proposal. The 2/8/16 meeting was for homeowners/members of the HOA. If you have questions for your clients please direct your inquiries to the Sun City Lincoln Hills Executive Director Chris O’Keefe.
Based on experience with similar fees both existing owners and future buyers should consider the following. The Board wants this fee to be paid by the buyer. For costs associated in the sale of real property all fees can be negotiated. In WestPark Roseville and Fiddyment Farm Roseville there is a 1/2% Real Estate Transfer Fee every time a home is resold. Many believed initially that this fee would be paid by the buyer every time a home sells. This fee is often split evenly between the buyer and seller and I have seen sellers cover 100% of this fee. We are currently in a sellers market. As long as demand is high and inventory is low buyers will be open to paying this proposed fee. Once the market returns to normal or is in a downturn buyers will start asking and even might expect the seller to contribute. Existing owners and potential buyers should be fully aware if this fee is approved that sometime in the future new buyers might start asking for the seller to share in the cost in covering the fee even if the resolution states it is a fee to new buyers. Anyone that has been around real estate long enough will agree that everything is negotiable.
Here is the proposed resolution that was initially approved January 28, 2016.
Resolution 2016.02 of Sun City Lincoln Hills Community Association
The following action was taken at the meeting of the Board of Directors (the “Board”) of Sun City Lincoln Hills Community Association (the ”Association”) held on January 28, 2016, at which a quorum of directors was present.
WHEREAS, The Master Declaration of Covenants, Conditions and Restrictions for Sun City Lincoln Hills (the "Declaration") at Section 4.01(e) permits the Association through its Board of Directors to create Cost Centers for purposes of "the equitable allocation of ... Assessments" under circumstances "whenever it is reasonable to anticipate that any Owner or group of Owners will derive as much as ten percent (10%) more than Owners in general in the value of a common service(s) supplied by the Community Association";
WHEREAS, the Board finds that while existing and former owners have carried the burden of providing a funding mechanism for the repair, maintenance, replacement and enhancement of all existing Common Areas and Common Facilities, when a buyer who has not previously owned a residence in Sun City Lincoln Hills (a “new owner”) purchases a residence in the Sun City Lincoln Hills Development (the “Development”), those new owners get to use and enjoy all of the existing Common Areas and Common Facilities without having to pay any additional fees or surcharges for those benefits;
WHEREAS, the Board finds that the ability of new owners to utilize existing Common Areas and Common Facilities without the payment of any fees disproportionately benefits all new owners within the Development to the disadvantage of existing owners; and
WHEREAS, the Board finds in good faith and upon reasonable inquiry with its certified public accountants and general counsel that it is in the best interests and equitable to the entire membership to create a Cost Center composed of all new owners to create a fund for the repair, maintenance, replacement and enhancement of all Common Areas and Common Facilities.
NOW THEREFORE BE IT RESOLVED, that the Board creates a New Owner Cost Center Assessment Component in the amount of One Thousand Five Hundred Dollars ($1,500) to be imposed on new owners within the Development to help fund future Common Areas and the repair, maintenance, replacement and enhancement of all Common Areas and Common Facilities without a negative impact on ongoing assessments.
BE IT FURTHER RESOLVED, in accordance with Section 4.02(g) of the Declaration, the New Owner Cost Center Assessment Component shall be tracked on a separate budget for the "Owners of Lots that are located within a designated Cost Center…" and prepared in accordance with Section 12.05(b) of the Bylaws.
BE IT FURTHER RESOLVED, that the New Owner Cost Center Assessment Component shall be disclosed by sellers of all properties within the Development and paid to the Association within ten (10) days of a transfer of title in accordance with Civil Code section 4525(a)(4).
BE IT FURTHER RESOLVED, that it is intended that the New Owner Cost Center Assessment Component shall be considered as an exception to transfer fee covenants for purposes of federal lending guidelines as further described in Title 12 Code of Federal Regulations §1228.1.
BE IT FINALLY RESOLVED, that this Resolution shall take effect March 1, 2016 and shall remain in full force and effect until amended or restated by a vote of at least a majority of the Board of Directors.
I hereby certify that:
A. I am the Secretary of the Sun City Lincoln Hills Community Association Board of Directors.
B. The above resolution was approved by the Board of Directors on January 28, 2016.
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