California Court of Appeals, First District, Third Division
Alameda County No. RG 11600700, Superior Court Hon. Steven A. Brick, Judge.
Counsel for Appellant Fred Fowler et al.: Mike Arias, Mikael H. Stahle, Alfredo Torrijos ARRIAS OZZELLO & GIGNAC, LLP Richard V. Mowery
Counsel for Respondent M&C Association Management Services, Inc. et al.: H. Joseph Escher III, Lily A. North, Amy Thayer, DECHERT LLP
Counsel for Amicus Curiae Community Associations Institute: Kelly G. Richardson, Matt D. Ober J. Andrew Douglas RICHARDSON HARMAN OBER
Plaintiff Fred Fowler, suing on behalf of himself and a putative class of home buyers and sellers, appeals from an adverse judgment entered after the trial court granted a motion for summary judgment in favor of defendants M&C Association Management Services, Inc. and Associations, Inc. (collectively, M&C). Plaintiff’s complaint challenges the imposition of transfer fees upon the sale of homes in residential real estate developments by M&C, a property management company retained by residential homeowners associations, without previously having recorded a notice of the fee as allegedly required by Civil Code section 1098.5, subdivision (b). We conclude, as did the trial court, that no such notice was required and therefore shall affirm the judgment.
In connection with his purchase of a home in Diablo Grande, a common-interest development in Patterson, California, plaintiff was charged a “Transfer Fee” of $125 and a “Foreclosure Transfer Fee” of $100 (collectively, Transfer Fees). These Transfer Fees were imposed by M&C as the managing agent for Diablo Grande’s homeowners association (the HOA). As part of the purchase agreement, plaintiff had agreed to be responsible for all HOA Transfer Fees (and the seller had agreed to pay a certain “processing fee”). The Transfer Fees were imposed by a document labeled “Resale Disclosure Certificate” that was provided to plaintiff prior to the close of escrow; the fees were paid through the escrow account. The fees were charged for processing paperwork, filing documentation, and updating the HOA and M&C records. Plaintiff purchased the property from a bank that had obtained title by a prior foreclosure, giving rise to the two fees since the bank had not notified the HOA of the prior transfer. As with all these uncontroverted facts, it is undisputed that M&C did not record a notice of the Transfer Fees as plaintiff contends is required by section 1098.5, subdivision (b).
Plaintiff’s complaint contains two causes of action, alleging that M&C’s imposition of the Transfer Fees without having recorded the notice required by section 1098.5, subdivision (b) violates both that statute and Business and Professions Code section 17200. Summary judgment was requested and granted on the ground that the Transfer Fees do not constitute “transfer fees” within the meaning of section 1098, so that no recorded notice is required by section 1098.5, subdivision (b). Plaintiff has timely appealed.
Section 1098.5, subdivision (b) provides: “When a transfer fee, as defined in Section 1098, is imposed upon real property on or after January 1, 2008, the person or entity imposing the transfer fee, as a condition of payment of the fee, shall record in the office of the county recorder for the county in which the real property is located, concurrently with the instrument creating the transfer fee requirement, a separate document” entitled “Payment of Transfer Fee Required” that contains specified information, including the amount of the fee.
The definition of a “transfer fee” in section 1098 begins: “A ‘transfer fee’ is any fee payment requirement imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid upon transfer of the real property.” The section continues, however, by stating, “A transfer fee does not include any of the following:” listing nine categories of fees, including: “(g) Assessments, charges, penalties, or fees authorized by the Davis-Stirling Common Interest Development Act (Title 6 (commencing with Section 1350) of Part 4).”
Section 1368, subdivision (c)(1),  part of the Davis-Stirling Common Interest Development Act, in turn provides, with an inapplicable exception: “[N]either an association nor a community service organization or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for... (A) An amount not to exceed the association’s actual costs to change its records....”
The right to impose the Transfer Fees in question without recording the “Payment of Transfer Fee Required” document thus turns on whether those fees are authorized by the Davis-Stirling Common Interest Development Act, specifically by what until January 1, 2014, is section 1368, subdivision (c)(1)(A). The trial court concluded, “The Davis-Stirling Act authorizes transfer fees of the sort that were charged here, a ‘fee in connection with transfer of ...