Pennsylvania has just become the 36th state to ban private transfer fees. Gov. Tom Corbett today signed HB 442 into law, becoming Act 8 of 2011.
Private transfer fees are part of a covenant attached to a property deed 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. These fees cost unsuspecting homeowners thousands of dollars in additional closing costs.
“This is a victory for Pennsylvania home buyers and home sellers. These private transfer fee covenants could have made it extremely difficult for Pennsylvanians to purchase and sell a home,” said PAR President Guy A. Matteo, GRI, SRES. “PAR is grateful to both Sen. Wayne Fontana (D-Allegheny) and Rep. Sue Helm (R-Dauphin) for their dedication to protecting home ownership in Pennsylvania,” Matteo added.
“This is a consumer protection law that ensures that home buyers do not get more than they bargained for when buying a new home. In some states, this obligation isn’t even included in the closing papers and doesn’t require a signature, yet allows a person with no ownership interest in the property to continue to collect revenue,” said Fontana.
“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.”
Along with Sen. Fontana and Rep. Helm, who introduced legislation to prohibit private transfer fees in the commonwealth, PAR also worked with the PA Land Title Association fighting these fees for nearly a year.
A national coalition of organizations called the Coalition to Stop Wall Street Home Resale Fees is also fighting to prohibit these fees. The coalition includes: the National Association of Realtors® (NAR), American Land Title Association, Consumers Union and the Consumer Federation of America.