If you are buying a home in Sun Lakes Arizona or any active adult retirement community, you will see a homeowner association addendum with a capital improvement or capital reserve fee. Many of our clients ask that that fee covers and who is responsible for paying the fee.
What is the Capital Improvement Fee?
A capital improvement fee or capital reserve fee is a specific dollar amount the homeowner association charges when a home is sold. The fee varies by community, but typically is equal to one year of homeowner dues. In Sun Lakes, the fee can range from $1268.00 to $1775.00 for 2016. The fee is earmarked to go into the capital improvement fund to pay for future capital improvements in the community. Each community has their own rules that govern the fund and how money is used. It is a good practice to find out what the HOA charges and to ask about the balance and how money has been utilized in the past.
Who pays the Capital Improvement Fee?
Normally, the buyer pays the capital improvement fee as it is an expense for future capital improvements that will benefit the buyer. It can be a negotiable expense, but the seller has no motivation to pay any of the costs of the capital improvement fee since they will not realize any benefit. In some instances the fee can be waived. In IronOaks at Sun Lakes for example, homeowners receive a one time exemption if they are selling a home in IronOaks and moving into another home within the same community. The homeowner must provide a request in writing and the HOA will respond in writing granting the exemption if it applies.
For more information on buying homes in Sun Lakes, Arizona or questions about the capital improvement fee contact Sun Lakes AZ Real Estate specialist Becky Kolb with The Kolb Team at 480-809-5759.