 You pay plenty to close on a home. On top of the downpayment, you shell out for an appraisal, title insurance, a survey, recording costs, points on your mortgage, attorney’s fees, and so on. Now imagine tacking on one more fee: a payment to some guy who owned the home 43 years ago. The long-ago owner hasn’t done anything to make your real estate purchase faster, better, or less risky. In fact, he may not even be alive anymore. But you have to pay his estate. And I’m not talking about just a few bucks, either. This add-on can run one percent of the purchase price. In case you don’t have a calculator nearby, that’s a $2,300 hit on a $230,000 home.
Sounds far-fetched, but guess what? That’s exactly the scenario some homebuyers in the U.S. may run into. Not in Texas, though. I’m happy to report that the Texas Legislature just unanimously passed a bill that prohibits this type of private transfer fee.
A private transfer fee is a scheme (many call it a scam) where a person sells his home but files a covenant on the property requiring future transfer fees be paid to the party who filed the covenant. The payment – perhaps one percent of the purchase price – is required every time the property is sold for a defined period, often 99 years. No surprise here – the company setting this up gets a large chunk of the fee. Every time.
As I said, though, not in Texas. At least not after Jan. 1, 2008, if Gov. Perry signs HB 2207, which looks likely. That piece of legislation prohibits private-transfer-fee arrangements and makes any such attempts to create them unenforceable. (There are exceptions for property owners associations, government entities, and 501c3 corporations.) |
Yes, we have state legislators to thank for putting the brakes on this tactic before it ever got up to speed in our state. We can also thank Texas REALTORS® for identifying this issue and working with legislators to make sure consumers won’t face this ridiculous charge when selling or buying real estate in the future. Thousands of Texas REALTORS® from all over the state contacted their representatives and senators to voice their support of HB 2207.
You shouldn’t be surprised that Texas REALTORS® were at the forefront of this issue. REALTORS® have a long history of standing up for homeowners and homebuyers. Yes, what’s good for buyers and sellers is good for real estate brokers and agents. Along those lines, Texas REALTORS® championed many bills during the 80th Texas Legislature that benefit Texas consumers.
Texas REALTORS® were in the thick of new regulations to curb mortgage fraud. REALTORS® also were involved in several steps that begin the process of appraisal reform – though there’s still much work to be done in this area.
Texas REALTORS® also stay on the lookout for proposed laws that would make purchasing homes more expensive – putting homeownership beyond reach for many. When a detrimental idea starts gathering interest, like an ill-advised government-imposed transfer fee or a tax on professional services, REALTORS® mobilize to head it off at the pass.
It’s nice to know there are thousands of REALTORS® in the state looking out for my interests as a homeowner. I appreciate that when someone thinks they can get a piece of the action for a century after they’ve sold their home, there’s a group ready to step up and say, “Not in Texas.”
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