|Over the last 2 years there has been a strong push across the country to ban private transfer fees and finally this week Pennsylvania has joined the majority having banned such a covenant this past week. PA has just become the 36th state to ban private transfer fees. Gov. Corbett signed HB 442 into law.||
Gov. Tom Corbett (center) signs HB 442 into law which creates the prohibition of Private Transfer Fees
Private transfer fees are much different from locally enforced transfer taxes commonly used to raise revenue for public services when properties change hands. In private transfer-fee arrangements, a developer or seller of property records a long-term covenant mandating payments to trustees or other private parties every time the property is resold. And example would be a covenant that attaches to the deed of a property that forces the seller to pay 1 percent of the purchase price to a private third-party entity every time the property sells over the next 99 years. This creates an often hidden closing cost to many unsuspecting homeowners averaging thousands of dollars.
“This is a win for Pennsylvania consumers,” said Diana Sabol, PLTA’s immediate past president. “These private transfer fee covenants could have cost home buyers thousands of dollars in additional closing fees and made it impossible for many to purchase a home. PLTA is grateful to both Sen. Fontana and Rep. Helm for their dedication to protecting the consumer and home ownership in Pennsylvania.”
“Private transfer fees were unfair to the home buyer and home seller and would have only hurt the real estate industry, which is trying to make a recovery,” said Helm. “As a real estate broker, I know first-hand that most home buyers were unaware this fee even existed.”
The elimination of private transfer fees is a big win in PA especially with many consumers purchasing homes with out the use of an attorney. I have seen way to many times buyers not really understand some of the limitations or restrictions on their purchase. As always and even with such items like private transfer fees being prohibited I always strongly suggest every buyer to consult an attorney to at least review both the purchase agreement and title insurance commitment.