T.Miles - October 5, 2020 - Mississippi Code Annotated Section 29-1-69

550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205 TELEPHONE (601) 359-3680 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. The Honorable Tom Miles October 5, 2020 Page 2 550 HIGH STREET • SUITE 1200 • JACKSON, MISSISSIPPI 39201 POST OFFICE BOX 220 • JACKSON, MISSISSIPPI 39205 TELEPHONE (601) 359-3680 (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