Private Transfer Fees: The Controversy Continues

October 28, 2010

 What are they?

Private transfer fees, or PTF’s, are under attack all over the United States, and with good reason. Most Real Estate Professionals, as well as most homeowners, agree that PTF’s are just another way to make the process of transferring real property more confusing as well as more costly.  Part of the problem stems from the notion that some homeowners may not know they owe a private transfer fee until they try to sell the property.

What Are Private Transfer Fees?

 PTF’s are usually part of a covenant attached to the property deed that requires the seller to pay 1 percent of the purchase price to a  third-party entity every time the property sells . Every time the property sells. Yes, every time for up to 99 years in some cases. In many of the instances , the seller is totally unaware of the fee until they try and sell their property.

In Pennsyvania,  according to a blog posted by Kim Shindle, Communication Specialist for the Pennsylvania Association of  REALTORS® (PAR) :  ‘”Pennsylvania is ranked eighth in highest estimated closing costs, according to a recent survey…In a $200,000 home sale with a private transfer fee covenant, the homeowner will be responsible for paying an additional $2,000 transfer fee which he may be unaware of. This will further burden the homebuyer in an already challenging economy.”( read more of her article )

In Pennsylvania, Sellers are already paying a 1% transfer tax on top of other closing costs.

The most Private transfer fees are  different from transfer fees imposed by local governments to raise revenue for public services when properties change hands. In a private transfer-fee arrangement, a developer or property owner records a long-term covenant requiring payments to trustees or other private parties every time the property is resold.

There are major objections to these instruments. For one thing they “constitute an unreasonable  restraint of the transferability of real property” – to quote a handout from the PAR.

The effects on the valuation of property is also a valid concern. To read about more concerns and what is going on with the Fannie Mae and Freddie MAC, click on the following link to read an article from the Washington Post, dated Aug 21, 2010/ ( CLick HERE for article by Kenneth HArney, Washington Post )

In Pennsylvania,  there is Legislation pending to ban private transfer fees. The senate has recently passed Senate Bill 1481, and it has been passed to the House. For more information on the current status of Pennsylvania’s fight  you can visit :

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