HARRISBURG, March 2, 2011 – Legislation introduced by state Sen. Wayne D. Fontana to prohibit the future use of private transfer fees in Pennsylvania passed the Senate today by a unanimous vote. It now goes to the House of Representatives for consideration.
“I am proud to have sponsored this bill and am very glad to see it move so quickly through our Chamber,” Fontana said. “This is a true consumer protection bill which 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.”
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 18 states acting to ban the practice, one acting to require additional disclosure requirements while six other states are considering similar bills.
Senate Bill 353 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.
“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 and look forward to quick action by the House of Representatives.”
SB 353 is supported by the PA Association of Realtors, the PA Land Title Association, the PA & Delaware Valley Chapter of the Community Associations Institute and the PA Bankers Association.