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Some Condo Associations Gouging Applicants with Illegal Fees, Leading to Financial Losses, Lawsuits

Some Condo Associations Gouging Applicants with Illegal Fees, Leading to Financial Losses, Lawsuits

Condominium Fees Are Legally Capped

In some states, condominium associations are charging more than the legal limit on condominium fees in connection with unit transfers, applications, and tenant screening fees. For example, the limit in the state of Florida is $100 and there are mounting reports of consumer gouging regarding what is actually being charged. Every state is different. Be sure you are not being overcharged for your condominium fees.

Parker Waichman LLP is a national law firm with decades of experience representing clients in numerous class action lawsuits and is investigating potential lawsuits and class action lawsuits on behalf of individuals who have suffered losses due to illegal apartment and condominium overcharges that are associated with transfer of a condo unit or for application for a condo unit. The firm continues to offer free legal consultations to residents of any state, including Florida, who were charged illegally high condo fees, as well as other residents who believe they were overcharged for condo transfer fees.

Charging Excessive Condominium Fees is Illegal

A transfer fee is related to the sale, lease, or transfer of a condominium unit. The Florida Condominium Act does permit a fee to be charged, but the fee is legally capped at $100.

According to a Florida statute, for instance, concerning transfer fees, "No charge shall be made by the association or any body thereof in connection with the sale, mortgage, lease, sublease, or other transfer of a unit unless the association is required to approve such transfer and a fee for such approval is provided for in the declaration, articles, or bylaws. Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant." The fees include charges associated with applications, background checks, screening, and move-in fees and must be clearly stated in a condominium's governing documents. Also, married couples are to be treated as one person for a total of $100 and associations are not permitted to charge dependent children or people who are renewing their leases.

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In Florida, a Miami Herald investigation initiated by a realtor in the state revealed that condominium associations state-wide are overcharging consumers for high application fees that violate state law. Associations may charge individuals applying to buy or rent a unit up to $100 per person. This is a nonrefundable fee that covers interview, background, and credit check costs. A review of lease and purchase applications found that many people are being charged fees that exceed the legal limit and reports indicate amounts range anywhere from $125 to $625.

Some associations have also been found to be adding on move-in and other charges that may cost upwards of hundreds of dollars. At some condominiums that permit pets, residents may also be paying fees of $100 or more. And, in half of the condominium listings reviewed-crossing all socioeconomic lines-application fees well exceeded $100, according to The Miami Herald investigation.

Ali Bustamante, a professor at Florida International University told The Miami Herald that, "High application fees are potentially discriminatory by crowding out low-income and low-middle-income renters who can't afford to put down $300 fees... . It's a huge foot on the scale." He added that, "... the property owners have all the leverage." Some condo associations have been accused of singling out foreign buyers for higher fees to cover the purported added costs of a background check on an individual who lived overseas.

Homeowners associations differ from condo associations and are permitted to charge whatever amount they see fit for planned communities of single family homes. Condo associates may also legally assess fees for estoppel letters and mortgage questionnaires, The Miami Herald pointed out. An estoppel letter is a written statement of facts mandated by a lender of a third-party in a real estate transaction to determine outstanding amounts that may affect the settlement of the loan. Estoppel letters are used in a variety of mortgage negotiations and formats may change based on circumstances. The letter typically establishes loan terms, amounts, or balances due that are known by the third party; offsets or rights claimed by the third party; and representations made to create the loan to the borrower on which the lender is relying.

Lawsuits are beginning to be brought over excessive application and move-in fees over allegations that the fees violate state law. In the most recent case-just one of many expected-involves a man who alleges he was charged $625 in non-refundable fees after he signed a lease at a unit in 2016, according to The Miami Herald. According to the lawsuit, the fee was itemized as for $100 for a background check. $175 for a so-called "administrative review," $125 for registration, and $225 in move-in fees. He said, "I questioned it at the time, but it's not like you really have a choice.... They say you pay it or you don't move in." The lawsuit also indicates that the fees constitute a violation of the state's Deceptive and Unfair Trade Practices Act.

Property management companies say the law does allow for charges exceeding $100, if the charges originate with a third party and not the association and also argue that background checks are more expensive since the cap was put in place in 1990. Legal experts told The Miami Herald that the statute is clear and associations are essentially extorting applicants. Also, the state division of Condominiums, Timeshares and Mobile Homes confirmed that the $100 transfer cap is meant to cover all non-refundable fees for background checks, registration, move-in, pets, elevator use, and other charges requested by condominium boards and their representatives. The rules are not applicable to homeowners' associations and rental apartments.

Legal Help for Individuals Who Have Been Overcharged for Condo Fees

If you or someone you know suffered financial losses due to overcharged condominium fees-transfer fee, application fee, or a tenant screening fee-you may have valuable legal rights. For more information, call one of our experienced attorneys today at 1-800-YOURLAWYER (1-800-968-7529).


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