MANAGEMENT COMPANY
ESCROW FEES

In a 2007 case, the Court of Appeal ruled that management companies are allowed to make a profit on transfer fees charged in escrows.

Plaintiff argued that management companies violate the law when they charge excessive document fees and transfer fees whenever a home or condominium is sold. Plaintiff claimed that Civil Code §1368(c) prohibits associations (and their managing agents) from charging a fee greater than their actual cost to reproduce documents or to transfer title records:

neither an association . . . or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title . . . except for . . . An amount not to exceed the association's actual costs to change its records.

The court disagreed. It pointed out that the statute prevents associations from charging extra fees, not managing agents. The court commented that competitive forces, not the statute, will constrain a vendors' fees and charges. Berryman v. Merit Property Management, Inc.

This ruling is similar to a 2005 case involving collection fees.

Updated 8/9/2008