Midtown’s Interpretation of HOA Fees Related to the Updated TREC Condo Contract & HOA Addendum

Due to the increasing prevalence of disputes related to HOA fees, we would like to take the opportunity to clarify Midtown’s interpretation of the updated TREC Residential Condominium Contract, Section 12 A (3) and the TREC Addendum Subject to Mandatory Membership in a Property Owners Association, C.

According to the updated contract and addendum, deposits and reserves are no longer a separate fee group to be paid by the buyer. Instead, all costs, including reserves and working capital, (but excluding regular, periodic maintenance fees, assessments, and dues) are now part of Section 12 A (3)  or Paragraph C and are to be paid for by the seller except the amount negotiated between buyer and seller that is written in as shown below:

From TREC Residential Condominium Contract, Section 12 A (3)

From TREC Addendum Subject to Mandatory Membership in a Property Owners Association, C

Midtown interprets the following examples of HOA fees to be included as Section 12 A (3) or Paragraph C, to be paid by Buyer up to the negotiated amount per contract with the Seller responsible for the remaining:

• Working Capital
• Reserves
• Transfer Fees
• Account Set Up Fee
• HOA Entry Fee
• Pool or Fob Fee
• Garage Tag
• Foundation Fees
• Community Endowment Fees

And Midtown interprets the following does not fall under Paragraph C, as they are regular, periodic maintenance fees, assessments, and dues to be paid by the Buyer:

• Advanced Assessments or Initial Assessments

To ensure transparency and agreement on the allocation of HOA fees, Midtown will send an email providing a clear description of the allocation of each fee for mutual approval by both agents at the time that we send out the resale certificate. We will ask both agents to agree with the split at that time so we can finalize numbers with the lender.

Reach out to our team today with any additional questions.

To learn more about How to Avoid HOA Disputes, read out latest article here.