Who pays closing costs in HOAs? A guide for buyers and sellers

What are closing costs?

Closing costs are the one-time fees and adjustments that buyers and sellers pay at the closing table, on top of the purchase price of the home. For a typical home sale, closing costs can include lender fees, title services, recording charges, and prepayments for taxes or insurance. If you’re buying a home in a homeowners association (HOA), there can also be costs related to resale packages and prorated assessments.

Most of these items appear as line entries on your Closing Disclosure or settlement statement. Each line shows who is paying the charge, the amount, and whether it is a credit or a debit. That document is your road map, so it helps to review it carefully with your closing agent and real estate professional before you sign. It can be tempting to treat closing costs as an afterthought, but they affect your bottom line just as much as the price of the home. Knowing what might be due at closing gives you time to ask questions and negotiate where the contract allows.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members and owners should consult their attorneys to discuss the legal implications of their decisions or actions prior to proceeding.
 

Who pays closing costs in HOAs?

In most HOA communities, buyers and sellers share closing costs based on the purchase contract and any HOA fee schedule. The seller often covers the HOA transfer fee that pays for updating ownership records, plus the resale package that provides governing documents and account information for the buyer.

The buyer usually covers most lender fees and the lender’s title insurance policy, and reimburses the seller for the portion of regular HOA dues that falls after the closing date. Transfer taxes and the owner’s title policy are often handled by local custom or state rules, so in some areas the seller pays them, in others they are a buyer cost, and in some cases they are split. A real estate professional or closing attorney in your market can walk you through the standard approach and how it appears in your contract.
 

Common costs for buyers

Buyers in HOA communities can expect a range of closing costs, with some related to the loan and title work and others connected directly to the association. Your exact list will depend on your lender, your contract, the board of directors, and your HOA documents.

Typical buyer side closing costs may include:

• Lender charges such as origination fees or discount points if you choose to pay for a lower interest rate.
   
• Appraisal and credit report fees if they were not paid earlier in the process.
   
• Lender’s title insurance policy protecting the mortgage company’s interest in the property.
   
• A share of the settlement or escrow fee charged by the closing company.
   
• Recording fees for the deed and mortgage.
   
• Prepaid interest from the closing date through the end of that month.
   
• Initial deposits into tax and insurance escrows if your lender will collect those with your monthly payment.
   
• Prorated HOA dues from the day of closing to the end of the current period, reimbursing the seller for dues they already paid.
   
• Any required working capital or reserve contribution charged to new owners, which helps maintain common areas and fund capital improvement projects.
   
• Move-in fees or elevator reservation fees if your community uses them.

Not every buyer will see every charge on this list, and some may appear under slightly different names.
 

Common costs for sellers

Sellers also carry a meaningful share of the financial load at closing, especially in an HOA where transfer-related services are needed.

Typical seller side closing costs may include:

• Real estate brokerage commission based on your listing agreement.
   
• Owner’s title insurance policy in markets where the seller provides it.
   
• Transfer taxes or stamp duties in areas where sellers pay these government charges.
   
• Outstanding mortgage payoff amounts and related fees.
   
• Any unpaid regular HOA assessments and late charges.
   
• HOA transfer fee for updating ownership records and account information.
   
• HOA disclosure or resale package fee that covers preparing governing documents, financial statements, and account histories for the buyer.
   
• Credits to the buyer for prorated taxes or dues, for periods where the buyer will own the home but the seller has already paid the bill.
   
• Agreed upon repair credits or closing cost credits negotiated during the inspection period.

A seller can keep more control by asking for an estimated net sheet early in the listing process. That document estimates your proceeds after likely closing costs, including HOA-related charges, so you can set realistic expectations and talk with your listing agent about ways to structure the deal.
 

How HOA fees show up at closing

On your settlement statement, there is usually a section for association dues and assessments. There you may see:

• A credit to the seller for dues that were paid in advance for the portion of the billing period after the closing date.
   
• A matching charge to the buyer for the same amount, reflecting the buyer’s reimbursement.
   
• Separate lines for the HOA transfer fee, move-in or move-out fees, and any required contributions to reserves.

If there is a special assessment that has not been paid in full, the contract should state whether the seller will pay it off at closing or whether the buyer will take over the remaining payments. Because each HOA has its own schedule and rules, the numbers you see may differ from a friend’s experience in another community. When something on the statement does not match your contract or your understanding, the best step is to ask your closing agent to walk through the line item and show how it was calculated.
 

About FirstService Residential

At FirstService Residential, we bring decades of experience in supporting condos, townhomes, and single-family HOAs. Our local teams provide expert support backed by the resources of North America’s leading property management company. We listen first, then recommend options that align with your governing documents and budget. From financial management to vendor coordination and 24/7 customer care, you gain a partner that works alongside your board at every step.

Contact a member of our team today to learn more.