Does a Playa Vista Sale Add a One-Time Fee at Closing, and Who Pays It?

Yes. Many homes in Playa Vista carry a one-time fee that comes due when the home is resold, separate from the HOA dues and separate from the county's transfer tax. It is set by a recorded covenant called a Community Enhancement Fee Agreement. As the developer and the Ballona Wetlands Conservancy described it in a 2010 letter to federal housing regulators, the covenant calls for 0.75% of the gross sales price at the close of escrow on each resale, and it binds the owner who is selling.

So under the covenant's own terms, the obligation sits with the seller. What a buyer and seller agree to in their contract can shift the cost between them, but only if it is written in. At First Key Pacific, I want both sides of a Playa Vista sale to see this number before anyone signs, not on the closing statement.

The fee traces back to a lawsuit over the land Playa Vista was built on. The case, Friends of Ballona Wetlands v. California Coastal Commission, ended in a settlement and a stipulated judgment. According to the 2010 letter, that judgment required the developer to set up a way for the community to pay for upkeep of a restored wetland area forever.

The answer was a covenant recorded on each home as it was built. The money supports the Ballona Wetlands Conservancy, a California nonprofit formed to operate and maintain what the letter calls the Ballona Wetlands Improvements: a 51-acre natural stormwater treatment system and wildlife habitat, made up of a riparian corridor and a freshwater marsh, in and next to the community.

The letter also explains the thinking. Paying for the wetland through a resale fee kept that cost out of the monthly assessments that the master association, Playa Vista Parks and Landscape Corporation, collects. In other words, it moved a cost that would otherwise sit in everyone's monthly dues to a one-time cost paid when a home sells.

Because it is a percentage of the sale price, the dollar amount moves with the price. At the rate described in the 2010 letter, the math is simple. On a $1,000,000 sale, 0.75% is $7,500. On a $1,500,000 sale, it is $11,250. That is why a seller should not plan around a flat figure they heard from a neighbor. Their number depends on their own sale.

A few details from the 2010 letter are worth knowing:

• It is not a lien. The covenant does not attach to the property or to the sale proceeds. It is a promise that runs with the land and binds each owner, personally, to pay when they resell.
• Some transfers are exempt. The covenant states that a transfer through foreclosure of a mortgage, or a deed given in place of foreclosure, does not trigger the fee.
• It tracks the transfer tax. In practice, the fee applies to the same transfers on which the documentary transfer tax is owed.

That letter is from 2010. The recorded document on the specific home is what controls today, so always confirm the current terms on the property you are buying or selling.

California has two rules that keep a fee like this from being a surprise.

A recorded notice with the details

Under Civil Code section 1098.5, a transfer fee must be backed by a separate recorded document titled Payment of Transfer Fee Required. It lists the current owners, the legal description, and the parcel number. It states the fee as a flat amount, a percentage of the sale price, or a method of calculation. It also states when the requirement ends, if ever, what the money is used for, and who receives it.

A seller disclosure with the transfer disclosure statement

Civil Code section 1102.6e can also require the seller of a home subject to a transfer fee to give the buyer an additional disclosure along with the transfer disclosure statement. When it is required, that disclosure must say a fee is required, the amount at the asking price if it is based on price, that the final amount may differ when the price changes, who receives the money, what it is used for, and when the obligation ends, if it does.

If you are buying, read this disclosure next to the preliminary title report. The recorded notice will usually show up there too. This guide to reading a California disclosure package walks through the rest of that stack.

Start with the covenant. It binds the selling owner, and the 2010 letter describes the fee as a closing cost of sellers. That is the starting point for any negotiation over who covers it.

A contract can still change who covers it. A buyer might agree to share it to win a home with several offers. A seller might ask the buyer to pay it in exchange for a lower price or another concession. Either way, the agreement has to be in writing in the purchase contract or a signed addendum. A verbal understanding does not move a line on the escrow statement.

Here is how I handle it on each side:

• Sellers: I ask escrow and title to confirm the fee early and put it on your estimated net sheet before we price the home. If you want to read that sheet line by line, this walkthrough on reading your net sheet explains each cost.
• Buyers: I check the disclosure and the title report before we write, and I make sure the offer says clearly who pays it. If the seller asks you to cover it, we treat it like any other cost and weigh it against the price.

Playa Vista has more than one kind of community cost, and they are easy to mix up. This one is paid once, at resale. The master association dues are paid every month. A special tax for public facilities can appear on the yearly county property tax bill. Each one comes from a different document and goes to a different place.

If you are budgeting to buy, keep them in separate lines so nothing gets counted twice or missed. This piece on what Playa Vista HOA dues pay for covers the monthly side, and this one on the special tax line on the county bill covers the yearly side. For the full picture of what a buyer pays at closing, see closing costs for buyers in California.

If you are thinking about selling a Playa Vista home or making an offer on one and want the real numbers laid out in one place, send me a note here. No pressure, just real answers. I'm here when you're ready.