Faculty Publications

Title

Private Transfer Fees: Developer Exploitation or Legitimate Financing Vehicle?

Document Type

Article

Publication Date

2012

Abstract

Private transfer fees are covenants attached to real property that require payment of a fee -- typically stated as 1% of the property's sale price -- upon each resale or transfer of the property and often survive for a period of 99 years. While private transfer fees are a relatively new development in the past ten years, more than eleven million homes are encumbered by these covenants. In order to protect homeowners from these fees, both federal and state regulations have been proposed. However, current legislation can be overly restrictive and ban the use of private transfer fees by homeowner associations and charities. Less restrictive legislation is needed in order to protect legitimate uses of private transfer fees but at the same time protect homeowners from the potential surprise of poorly disclosed private transfer fees.