Community Enhancement Fee

Community Enhancement Fee

Community Enhancement Fee

 

What is a Community Enhancement Fee (CEF)? Known by different names, such as a private transfer fee, community transfer tax and similar sounding names, a CEF is a fee paid at closing when certain homeowners sell their home. The CEF is often found in certain newer planned development communities which have homeowner’s associations (HOA). The fees are collected by the escrow company and paid to the beneficiary of the fee, often the HOA itself.

Who pays the fee and how much is it? It depends what the HOA documents say and whether the seller and buyer negotiate who pays it.

We listed two homes this month and both were part of a HOA that had a CEF. One was in Del Sur (San Diego) and the other was in Eureka Springs (Escondido). These two CEFs are quite different. In Del Sur, the CFE is one-quarter of 1%. So, on an $800,00 home sale, the fee is $2,000. It can be paid by either party and goes to enhance the community of Del Sur, including paying for its many parks, pools, trails and other common areas. Eureka Springs’ CEF is only 1/20 of 1%. So on an $800,000 sale, the fee would be $400. This fee is payable by the seller and goes to fund a local non-profit charity that was established by the developer.

So, be aware of CEFs if you live in a newer home in a planned community. Check your HOA documents to determine if your community has one; and if you sell or buy a home in a CEF community, be prepared to deal with the fee and understand what it goes to and how the fee is paid. No one wants a $2000 surprise at closing!

Del Sur Community Pool and Park

Del Sur Community Pool and Park