Coalition to Stop Wall Street Home Resale Fees

Fact: Often unnoticed by homeowners, Private Transfer Fees are inserted into the covenants, conditions and restrictions of a property by private third parties, and require that every time the property is sold for the next 99 years, 1% of the sale price of the property must be paid to an independent third party.  Private Transfer Fees are actually detrimental and predatory in that they require homeowners to pay thousands of dollars to third parties that hold no ownership interest in their property.  In return, homeowners receive nothing but reduced home equity and a harder time selling their home.

Fact: Unlike fees charged by community associations, which are directly funneled back into the community and future infrastructure, these for-profit transfer fees provide no service or benefit to homeowners or the community.  Private Transfer Fees burden the land without providing any direct or indirect benefit to the land. There is no clause in the covenant that requires money to be diverted back into the community. Instead, Private Transfer Fee covenants will reduce the value of the affected land, creating an artificial reduction in the community’s tax base for the benefit of private parties. 

Fact: These for-profit private transfer fees provide no service or benefit to homeowners or their community at large.  Private Transfer Fees are directed to unaffiliated third parties with no vested legal interest in the property.  By the time a developer collects future fees, he will likely have completed the sale on the affected lots and will no longer have a legal interest in the development.  Given that the 1 percent fee can be imposed any number of times, it is misleading to suggest that there is any connection between the fee and the cost of infrastructure.

Fact: Private Transfer Fees increase the cost of homeownership by forcing consumers to pay additional transaction fees when they buy or sell a property. Because a homeowner cannot predict exactly how long he or she will own the land or how much the land will appreciate in that period, a homeowner will be unable to accurately price the impact of the fees and factor that amount into his or her offer. 

When the housing market is depressed, schemes like Private Transfer Fees are attractive to developers who may be seeking ways to recover capital. This does not automatically translate into lower costs to purchase a home. 

Fact: There is a long-standing principle in real estate law that any covenant that burdens the land should also benefit the land. Unlike fees charged by community associations, which are directly funneled back into the community and future infrastructure, these for-profit transfer fees provide no service or benefit to homeowners. With a private transfer fee, none of the fees are retained within the community.  

Fact: Private Transfer Fees have already been restricted in 36 states, the Federal Housing Finance Agency has issued a guidance restricting government-sponsored entities from investing in mortgages with the fees attached, and Members of Congress have introduced legislation to prohibit the collection of the fees. The Coalition to Stop Wall Street Home Resale Fees, which strongly opposes private transfer fees, is composed of a broad group of organizations that includes Consumers Union, Consumers Federation of America, Vote Vets, Property Rights Alliance, Institute for Liberty, among others. More than twenty groups have organized to fight the predatory scheme of private transfer fees.