Can a Mississippi HOA charge a transfer fee when a homeowner sells the property?

Plain-English summary

Representative Tom Miles asked the AG whether Mississippi's 2019 amendment to § 89-1-69 (the private-transfer-fee ban) prohibited HOA management companies from charging a transfer fee in connection with the sale of a home, where the fee was used to settle outstanding HOA balances and update ownership records.

The AG said the answer was no, with conditions. The 2019 amendment to § 89-1-69 generally voids private transfer fees ("PTFs"): obligations baked into deed restrictions or covenants that require future transferees to pay a fee to the original developer or third party. Those PTFs were typically used by developers to extract a percentage of every future sale, decades after the developer had sold off the original lots. The 2019 reform aimed to eliminate them.

But the statute kept three carve-outs in § 89-1-69(3): fees payable to (a) a property owners' association managing the subdivision (with more than one platted lot, with the right in a recorded covenant); (b) a 501(c)(3) entity, with the right in a recorded covenant; or (c) a governmental entity. So an HOA could still charge a transfer fee, as long as the fee right was in a deed restriction or covenant running with the land filed in the public land records.

The fees the legislator described, used to settle outstanding HOA balances and update ownership records, fit comfortably within the (a) carve-out, assuming the HOA's authority to charge them was in the recorded covenants.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion said for each audience, at the time

For Mississippi homebuyers in 2020

If you bought a home in an HOA, you might be charged a transfer fee at closing. That was lawful if the HOA had reserved the right in the recorded covenants for the subdivision. The fee typically covered the cost of:
- Updating ownership records and resident lists in the HOA database
- Settling any unpaid assessments or fees the seller owed
- Issuing a clearance letter to the title company

Buyers should check the HOA's recorded covenants (available from the chancery clerk's office or the title company's title report) to see if a transfer fee is authorized.

For Mississippi home sellers

Sellers should expect the HOA to require a settlement payment for any outstanding balance before the closing. The transfer fee would generally be paid by the buyer (per HOA convention), but the underlying balance the seller owed had to be resolved.

For HOA management companies

The 2020 framework was that fees were charged through the HOA, not directly through the management company as a separate party. The management company could collect on behalf of the HOA, but the right to charge had to be the HOA's right, anchored in the recorded covenants.

For developers and pre-2019 deed restrictions

The 2019 amendment voided private transfer fees that didn't fit one of the three carve-outs. So pre-existing deed restrictions creating fees payable to the developer, the developer's successors, or third-party assignees became unenforceable. Title companies should not have closed transactions that imposed such voided PTFs.

For real estate attorneys handling closings

The closing checklist needed to verify that any HOA transfer fee was: (1) authorized in recorded covenants; (2) payable to the HOA itself or its managing agent (not a third party); and (3) for a subdivision with more than one platted lot. If any of those conditions was missing, the fee was likely not enforceable.

Common questions

Q: What was the 2019 amendment to § 89-1-69?
A: Mississippi's general ban on private transfer fees (PTFs). The amendment voided deed restrictions and covenants that required transferees to pay a fee to the original developer or other third party at every future sale, with three carve-outs: HOAs, 501(c)(3) entities, and governmental entities. The carve-outs all require the fee right to be in a recorded covenant.

Q: What is a private transfer fee, and why did the legislature ban most of them?
A: A PTF was typically created by the developer at the time of subdivision platting: every future sale of any lot would generate a 1% (or similar) payment to the developer or an assignee, in perpetuity (or for some long term). Critics argued these fees clouded title, complicated closings, and extracted ongoing economic value from properties decades after the developer had sold off the inventory.

Q: Are HOA transfer fees usually big?
A: Not typically. They were often a flat fee (a few hundred dollars) covering administrative work to transfer the homeowner record. Some HOAs in resort or gated communities charged percentages, but most ordinary HOAs charged modest amounts.

Q: How does a buyer find out if there's a transfer fee?
A: Several ways: (1) ask the title company's preliminary title report; (2) review the recorded HOA covenants in the chancery clerk's records; (3) ask the HOA management company directly; (4) check the seller's required disclosures. The fee should appear on the closing statement.

Q: What's a "platted lot"?
A: A piece of land that has been formally divided and recorded on a plat (subdivision map) filed with the county. Section 89-1-69(3)(a) requires the subdivision to contain more than one platted lot, so single-lot "subdivisions" don't qualify.

Q: Is the fee due even if I'm just gifting the property to a family member?
A: Probably yes. The statute defines "conveyance of real property" broadly to include "a conveyance or other transfer of an interest or estate in real property." Gifts, sales, and most other transfers would trigger a properly enacted HOA transfer fee.

Background and statutory framework

Mississippi's 2019 amendment to § 89-1-69 was part of a national wave of state-level PTF reform. By the late 2010s, more than 40 states had restricted or banned private transfer fees. The model legislation, championed by the American Land Title Association and Realtor groups, focused on developer-imposed PTFs that would survive in the chain of title for decades. The carve-outs for HOAs, 501(c)(3)s, and governments were typical: those entities had legitimate ongoing roles in the affected properties.

The Mississippi statute's three carve-outs all condition validity on the right being "evidenced by a deed restriction or covenant running with the land filed in the public land records." This is the standard recording rule: only fees disclosed in the public record are enforceable, so a buyer can find them with a title search.

The statute defines "property owners' association" with three elements: (a) it represents the owners of property in a subdivision; (b) its membership consists primarily of property owners covered by the dedicatory instrument; and (c) it manages or regulates the subdivision for the owners' benefit. Most ordinary HOAs in Mississippi meet all three.

The opinion does not separately address condominium associations, which are governed by a different statutory framework (Title 89, Chapter 9), but the carve-out language is broad enough that condo association transfer fees in a development with more than one platted lot would likely qualify on similar reasoning.

Citations and references

Statutes:
- Miss. Code Ann. § 89-1-69, ban on private transfer fees with carve-outs for HOAs, 501(c)(3)s, and governmental entities
- Miss. Code Ann. § 89-1-69(3)(a), HOA transfer-fee carve-out (subdivision with more than one platted lot, recorded covenant)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2021/01/T.Miles_October-5-2020-Mississippi-Code-Annotated-Section-89-1-69.pdf

Original opinion text

October 5, 2020

The Honorable Tom Miles
State Representative, District 75
807 Highway 35 South
Forest, Mississippi 39074

Re: Mississippi Code Annotated Section 89-1-69

Dear Representative Miles:

The Office of the Attorney General has received your request for an official opinion.

Question Presented

Does Mississippi Code Section 89-1-69, as amended during the 2019 Legislative Session, prohibit HOA management companies from charging a purchaser a transfer fee in connection with a sale, in order to provide the balance, if any, owed by the seller and to transfer the property ownership records in the HOA documents?

Brief Response

Pursuant to Section 89-1-69, a subdivision's property owner's association may charge a "fee in connection with a future transfer of the property," but only in the manner "evidenced by a deed restriction or covenant running with the land filed in the public land records."

Applicable Law and Discussion

Section 89-1-69 provides:

(1) In this section, "property owners' association" means an incorporated or unincorporated association that:
(a) Is designated as the representative of the owners of property in a subdivision;
(b) Has a membership primarily consisting of the owners of the property covered by the dedicatory instrument for the subdivision; and
(c) Manages or regulates the subdivision for the benefit of the owners of property in the subdivision.

(2) A deed restriction or other covenant running with the land applicable to the conveyance of real property that requires a transferee of real property or the transferee's heirs, successors, or assigns to pay a declarant or other person imposing the deed restriction or covenant on the property or a third party designated by a transferor of the property a fee in connection with a future transfer of the property is prohibited. A deed restriction or other covenant running with the land that violates this section or a lien purporting to encumber the land to secure a right under a deed restriction or other covenant running with the land that violates this section is void and unenforceable. For purposes of this section, a conveyance of real property includes a conveyance or other transfer of an interest or estate in real property.

(3) This section does not apply to a deed restriction or other covenant running with the land that requires a fee associated with the conveyance of property in a subdivision that is payable to:
(a) A property owners' association that manages or regulates the subdivision or the association's managing agent if the subdivision contains more than one (1) platted lot and the right to collect a fee in connection with a future transfer of the property is evidenced by a deed restriction or covenant running with the land filed in the public land records;
(b) An entity organized under Section 501(c)(3), Internal Revenue Code of 1986 if the entity has a right to collect a fee in connection with a future transfer of the property evidenced by a deed restriction or covenant running with the land filed in the public land records; or
c) A governmental entity.

Miss. Code Ann. § 89-1-69 (emphasis added to show language added by 2019 legislative amendment). Accordingly, a subdivision's property owner's association may charge a "fee in connection with a future transfer of the property," but only in the manner "evidenced by a deed restriction or covenant running with the land filed in the public land records." Miss. Code Ann. § 89-1-69(3)(a).

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General