Politics & Government

Fontana Legislation Prohibiting Private Transfer Fees Moves From Committee

Preventing private transfer fees is a consumer protection issue, according to Fontana. The legislation passed the Senate last session, but wasn't taken up by the House before the session ended.

Last Wednesday, the Senate Urban Affairs & Housing Committee took up Senate Bill 353 (SB 353), my legislation that would prohibit private transfer fees from being imposed in Pennsylvania. The bill was unanimously reported from the committee and I am hopeful that it will be considered by the full Senate in the very near future.

Private Transfer Fees are also known as resale fees or capital recovery fees and allow the developer or builder of a home (or in some cases, a commercial property) to collect one percent (or more) of the sales price from the seller every time the property changes hands for the next 99 years. It is a new tool being used by companies (developers and builders) seeking new ways to gain access to cash in the depressed housing market. 

This is a consumer protection issue. In some states, a declaration of covenants, conditions and restrictions isn’t included in the closing papers and doesn’t even require a signature. Essentially, someone with no ownership stake or interest can continue to collect revenue off of a property that they may have built up to 99 years ago.

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Opponents believe that it exploits an already complex real estate transaction and think that it could also hurt real estate values in the future if buyers are reluctant to purchase properties that have a fee attached.  Other negative consequences of the PTF include the fact that it takes equity from consumers, can cost consumers money when the home is sold, will depress home prices, has no positive impact on an assessment, creates an additional disincentive to sell or purchase property in a depressed housing market, reduces transparency for buyers, creates lien issues for lenders, and increases the risk of title claims.

This legislation was also introduced in the last legislative session as Senate Bill 1481 and was unanimously passed by the Senate. Unfortunately, it was not considered by the House before the end of the legislative session.  The bill is supported by the PA Association of Realtors, the PA Land Title Association, the Community Associations Institute and the PA Bankers Association.

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