Senate Committee Approves Helm’s Disclosure of Private Transfer Fees Legislation
The Senate Urban Affairs and Housing Committee today approved legislation authored by Rep. Sue Helm (R-Susquehanna Township) that would prohibit the charging of private transfer fees and require disclosure of those private transfer fees that exist.
“This fee, relatively new to the real estate market, serves only to provide supplemental income to a third party and can actually prevent a buyer from purchasing a home due to the extra cost, which is often not even revealed until the time of closing,” said Helm. “My legislation ensures that new private transfer fees will be illegal and that existing fees are disclosed during the real estate contract process.”
Private transfer fees, also referred to as resale fees or capital recovery fees, are written into purchase contracts and are levied based on a percentage of the final sale price each time a property changes hands. A typical private transfer fee is 1 percent and remains in place for 99 years. A private transfer fee is not a service or maintenance fee that a resident pays to a homeowner association in a private community.
Helm’s bill has additional consumer-friendly provisions. For example, if disclosure is not made and the buyer discovers the private transfer fee after title to the property has been transferred, the buyer would have the right to recover damages, such as the amount of the private transfer fee and legal expenses.
House Bill 442 is now before the full Senate for consideration. If enacted, Pennsylvania will become the 26th state to prohibit private transfer fees. Nearby, Delaware, Ohio and New Jersey have enacted laws to outlaw these fees.
“A private transfer fee is unfair to everyone and will only hurt a housing market that is on the rebound. What we have found in so many cases is that buyers do not know a thing about the private transfer fee initially. I am glad to see my bill moving toward enactment into law,” said Helm.
State Representative Sue Helm
104th District, Pennsylvania House of Representatives
Contact: Tricia Lehman