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FONTANA LAUDS SENATE VOTE ON PRIVATE TRANSFER FEE LEGISLATION

FONTANA LAUDS SENATE VOTE ON PRIVATE TRANSFER FEE LEGISLATION

 HARRISBURG, October 14, 2010 – Legislation introduced by state Sen. Wayne D. Fontana to prohibit the future use of private transfer fees in Pennsylvania passed the Senate today and now goes to the House of Representatives for consideration.
 
“This is a true consumer protection bill,” Fontana (D-Allegheny) said.  “In some states, this obligation isn’t even included in the closing papers and doesn’t require a signature, letting a person with no ownership interest in the property continue to collect revenue from it for up to 99 years.”
 
A private transfer fee is also known as a resale fee or a capital recovery fee and allows the developer or builder of a home to collect 1 percent (or more) of the sales price from the seller every time the property changes hands for the next 99 years.  To date, private transfer fees have been seen in 43 states, with 17 states acting to ban the practice, one acting to require additional disclosure requirements while four other states are considering similar bills.  In August, a real estate financing firm announced that it had partnered with a developer in Pennsylvania on a $250 million project.  On a federal level, the U.S. Department of Housing & Urban Development has ruled that it will not insure mortgages on properties that include the transfer fees and the Federal Housing Finance Agency is also considering a similar proposal.  
 
Senate Bill 1481 would ban all new private transfer fees, allow for remedies if private transfer fees are imposed, require the full disclosure of existing private transfer fees, establish a process to free the property of an obligation and require persons entitled to such a fee to register with the county Recorder of Deeds.
 
The legislation passed the Senate unanimously by a vote of 49-0.
 
The Brookline lawmaker said he is working with his House colleagues to move the legislation quickly through that chamber to the governor’s desk before the end of the legislative session.
 
“We have a responsibility to protect our residents from obligations such as this one that they may know nothing about or do not realize until it’s too late,” Fontana said.  “I am extremely grateful to my colleagues and leadership in the Senate for their work in moving this issue forward.”
 
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