“April 10th: Realtors at the Capitol; Private Transfer Fees”
Last Thursday, realtors from all over the state made their yearly trek to Hartford. The idea behind the yearly event is to let our state legislators know how we, as a group, feel about prospective legislation. Since everyone knows the housing recover in Connecticut is fragile, I will discuss, in several posts, the issues we fought for on your behalf under the umbrella of “Do no Harm to Housing”.
SB 859-Banning Private Transfer Fees
“Private transfer fees” require that purchasers in certain developments pay a one time flat fee to the developer or investor every time the property is sold. An example of this is the one time fee of $1500 every buyer must pay to Heritage Village, when they purchase. In defense of the Village, these payments have been used to pay for line items that other developments would have imposed a special assessment for, such as roofs and siding. There has never been a special assessment in the Village.
CAR, the CT Association of Realtors Support this bill because we feel these are hidden charges that hinder property ownership.
What the bill says:
Bans any private transfer fee obligation entered into or recorded after the bill’s effective date (effective upon passage). The bill emphasizes that any such obligation would be void and unenforceable.
Grandfathers but requires clear disclosure to buyers of private transfer fee obligations recorded or entered into before the bill’s effective date.
Allows charges (like condominium association assessments) that are legitimately reinvested into the property for the benefit of all owners or payable to tax-exempt community betterment (like property improvements).
These private transfer fees aren’t easy to find in the condo documents and can be an unpleasant surprise to owners when they go to sell. The Transfer Fee can extend over 99 years, so a longer title search is critical.
The revenue streams are often securitized to help certain developers and Wall Street financiers, not the development, itself.
Private transfer fees have been banned in 42 states and the Federal Housing Finance Agency has banned their GSE’s like Fannie Mae and Freddie Mac from purchasing mortgages in developments having the types of transfer fee covenants this bill would prohibit.
Next time, I’ll tell you about HB 6160 so stay tuned.