Residents of Avalon at Seven Meadows should be aware that their new management company Arrow Community Management is now charging a $675 cap fee on all sales as part of an amendment to the Avalon covenants recorded in December 2009. The developer apparently threw in the surprise charge when the community was turned over to residents a few years ago.
The $675 back-door transfer charges are a bit surprising, because the fee has not shown up on previous sales. I've sold several properties in Avalon in the past few years, and none of the settlement statements reflected a cap fee. I asked Arrow to point out the clause in the restrictions which allowed the fee, and was pointed to section 5.3 of the declaration...
Cap fees such as this were an issue in recent legislation contained in HB-8 which was enacted earlier this summer. HB-8 was proposed to limit hidden revenue streams to developers and other third-party interests. Not surprisingly, HOA management lobbyists managed to include exemptions in the bill to protect their hidden revenue streams built into HOA covenants.
New rules will require HOAs and their management companies to disclose their deed restrictions to the public next year, but it is still up to home buyers and their agents to dig through those covenants and title commitments to see what hidden charges might be lurking. Cap fees like the ones in Bridgeland (0.5%) and Towne Lake (1.0%) are no doubt catching many buyers and sellers by surprise when they get to the closing table.
It's unfortunate that HOA's and their management companies don't do a better job of disclosure, but when you have crony capitalists like like John Carona (owner of Associa Inc.) masquarading as impartial legislators, the mess we have in Texas is not surprising.
