Bill Text: PA HB442 | 2011-2012 | Regular Session | Amended

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Bill Title: Prohibiting private transfer fee obligations; and providing for notice and disclosure of existing private transfer fee obligations.

Spectrum: Slight Partisan Bill (Republican 86-29)

Status: (Passed) 2011-06-24 - Act No. 8 [HB442 Detail]

Download: Pennsylvania-2011-HB442-Amended.html

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SENATE AMENDED
PRIOR PRINTER'S NOS. 413, 714, 1040, 1750 PRINTER'S NO. 2083
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 442 Session of2011
INTRODUCED BY HELM, TOEPEL, DEASY, QUINN, BUXTON, SAYLOR, STEVENSON, ADOLPH, BAKER, BARRAR, BEAR, BENNINGHOFF, BOBACK, BOYD, B. BOYLE, BRENNAN, BROOKS, CALTAGIRONE, CARROLL, CAUSER, CHRISTIANA, CLYMER, D. COSTA, COX, CREIGHTON, DAVIS, DAY, DELOZIER, DeLUCA, DENLINGER, DePASQUALE, DiGIROLAMO, DUNBAR, ELLIS, J. EVANS, EVERETT, FABRIZIO, FARRY, FLECK, FRANKEL, GABLER, GEIST, GIBBONS, GILLEN, GILLESPIE, GINGRICH, GRELL, GROVE, HAHN, HANNA, HARHART, HARPER, HARRIS, HEFFLEY, HENNESSEY, HESS, HICKERNELL, HORNAMAN, HUTCHINSON, JOSEPHS, KAUFFMAN, M.K. KELLER, KNOWLES, KORTZ, KOTIK, KRIEGER, LONGIETTI, MAJOR, MANN, MARKOSEK, MARSHALL, MARSICO, MASSER, METCALFE, METZGAR, MICOZZIE, MILLER, MOUL, MURT, MUSTIO, O'NEILL, PEIFER, PICKETT, PRESTON, PYLE, QUIGLEY, RAPP, REED, REESE, REICHLEY, ROAE, ROCK, ROSS, SACCONE, SCAVELLO, SCHRODER, K. SMITH, SONNEY, STERN, STURLA, SWANGER, TALLMAN, TAYLOR, TOBASH, VEREB, VULAKOVICH, WAGNER, WATERS, WATSON, WILLIAMS, RAVENSTAHL, THOMAS, AUMENT, OBERLANDER AND STEPHENS, FEBRUARY 4, 2011
AS AMENDED ON THIRD CONSIDERATION, IN SENATE, JUNE 13, 2011
AN ACT
Amending Title 68 (Real and Personal Property) of the
Pennsylvania Consolidated Statutes, prohibiting private
transfer fee obligations; and providing for notice and
disclosure of existing private transfer fee obligations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 68 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 81
PRIVATE TRANSFER FEE OBLIGATIONS
Sec.
8101. Short title of chapter.
8102. Intent.
8103. Definitions.
8104. Prohibition.
8105. Liability for violation.
8106. Disclosure.
8107. Notice requirements for existing private transfer fee
obligations.
§ 8101. Short title of chapter.
This chapter shall be known and may be cited as the Private
Transfer Fee Obligation Act.
§ 8102. Intent.
The General Assembly finds and declares that the public
policy of this Commonwealth favors the marketability of real
property and the transferability of interests in real property
free of title defects or unreasonable restraints on alienation.
The General Assembly further finds and declares that private
transfer fee obligations violate this public policy by impairing
the marketability and transferability of real property and by
constituting an unreasonable restraint on alienation regardless
of the duration of the obligation to pay a private transfer fee,
the amount of a private transfer fee or the method by which any
private transfer fee is created or imposed. Thus, the General
Assembly finds and declares that a private transfer fee
obligation shall not run with the title to property or otherwise
bind subsequent owners of property under any common law or
equitable principle.
§ 8103. Definitions.
The following words and phrases when used in this chapter
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shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Financial institution." A bank, savings association or
operating subsidiary of a bank or savings association; a credit
union; an association authorized by law to engage in the
mortgage loan business; or an assignee of a mortgage, mortgage
note or other rights of a financial institution.
"Payee." A person that claims the right to receive or
collect a private transfer fee payable under a private transfer
obligation.
"Private transfer fee." A fee or charge payable upon the
transfer of an interest in real property, or payable for the
right to make or accept the transfer, if the obligation to pay
the fee or charge runs with title to the property or otherwise
binds subsequent owners of property, regardless of whether the
fee or charge is a fixed amount or is determined as a percentage
of the value of the property, the purchase price or other
consideration given for the transfer. The following are not
private transfer fees for purposes of this chapter:
(1) Any consideration payable by or on behalf of the
grantee to the grantor for the interest in real property
being transferred, including any subsequent additional
consideration for the property payable by or on behalf of the
grantee based upon any subsequent appreciation, development
or sale of the property, if the additional consideration is
payable on a one-time basis only and the obligation to make
the payment does not bind successors in title to the
property. For the purposes of this paragraph, an interest in
real property may include a separate mineral estate and its
appurtenant surface access rights.
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(2) Any commission payable to a licensed real estate
broker for the transfer of real property pursuant to an
agreement between the broker and the grantor or the grantee,
including, but not limited to, any subsequent additional
commission for that transfer payable by the grantor or the
grantee based upon any subsequent appreciation, development
or sale of the property.
(3) Any interest, charge, fee or other amount payable to
a lender or financial institution pursuant to a mortgage,
deed of trust, lien or security interest in or against real
property, including, but not limited to, any fee payable for
consenting to an assumption of a loan or a transfer of the
real property subject to the mortgage, deed of trust, lien or
security interest or any fee or charge payable for estoppel
letters or certificates and any shared appreciation interest
or profit participation or other consideration payable to the
lender or financial institution.
(4) Any rent, reimbursement, charge, fee or other amount
payable by a lessee to a lessor under a lease, including, but
not limited to, any fee payable to the lessor for consenting
to an assignment, subletting, encumbrance or transfer of the
lease.
(5) Any consideration payable to the holder of an option
to purchase an interest in real property or the holder of a
right of first refusal or first offer to purchase an interest
in real property for waiving, releasing or not exercising the
option or right upon the transfer of the real property to
another person.
(6) Any tax, fee, charge, assessment, fine or other
amount payable to or imposed by a governmental authority.
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(7) Any fee, charge, assessment, dues, fine,
contribution or other amount payable to a homeowners',
condominium, cooperative, manufactured home or property
owners' association and its agent pursuant to a declaration
or covenant or law applicable to the association, including,
but not limited to, fees or charges payable for estoppel
letters or certificates, including resale certificates,
issued by the association or its authorized agent.
(8) Any fee, charge, assessment, dues, fine,
contribution or other amount, which is imposed by a
declaration or covenant encumbering real property and which
is payable solely to a nonprofit corporation, charitable
association or charitable trust, that:
(i) has been in existence for at least two years;
and
(ii) holds, on real property subject to the
declaration or covenant or on real property included in
the same development plan with the real property subject
to the declaration or covenant:
(A) an agricultural conservation easement, as
defined in section 3 of the act of June 30, 1981
(P.L.128, No.43), known as the Agricultural Area
Security Law; or
(B) a conservation easement, as defined in
section 3 of the act of June 22, 2001 (P.L.390,
No.29), known as the Conservation and Preservation
Easements Act.
(9) Any fee, charge, assessment, dues, fine,
contribution or other amount pertaining solely to the
purchase or transfer of a club membership relating to real
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property owned by the member, including, but not limited to,
any amount determined by reference to the value, purchase
price or other consideration given for the transfer of the
real property.
(10) Any payment or other amount due for or upon the
removal or extraction of timber, crops or minerals, including
oil, gas and water, from real property.
"Private transfer fee obligation." An obligation arising
under a declaration or covenant recorded against the title to
real property, or under any other contractual agreement or
promise, whether recorded, that requires or purports to require
the payment of a private transfer fee upon a subsequent transfer
of an interest in the real property.
"Transfer." The sale, gift, conveyance, assignment,
inheritance or other transfer of an ownership interest in real
property located in this Commonwealth.
§ 8104. Prohibition.
A private transfer fee obligation recorded or entered into in
this Commonwealth on or after the effective date of this chapter
does not run with the title to real property and is not binding
on or enforceable at law or in equity against a subsequent
owner, purchaser or mortgagee of an interest in real property as
an equitable servitude or otherwise. This section does not mean <--
that a A private transfer fee obligation recorded or entered <--
into in this Commonwealth before the effective date of this
chapter is presumed valid and enforceable, provided that it <--
complies with the provisions of sections 8106 (relating to
disclosure) and 8107 (relating to notice requirements for
existing private transfer fee obligations) and all other
applicable law.
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§ 8105. Liability for violation.
A person who records or enters into an agreement imposing a
private transfer fee obligation in his favor after the effective
date of this chapter may be awarded liable for the following: <--
(1) the damages resulting from the imposition of the
private transfer fee obligation on the transfer of an
interest in the real property, including, but not limited to,
the amount of any transfer fee paid by a party to the
transfer; and
(2) the attorney fees, expenses and costs incurred by a
party to the transfer or mortgagee of the real property to
recover any private transfer fee paid or in connection with
an action to quiet title.
Where an agent acts on behalf of a disclosed principal to record
or secure a private transfer fee obligation, liability shall be
assessed to the principal, rather than the agent.
§ 8106. Disclosure.
(a) General rule.--A contract for the sale of real property
subject to a private transfer fee obligation shall include a
provision disclosing the existence of that obligation, a
description of the obligation and a statement that private
transfer fee obligations are subject to certain restrictions
under this chapter. A contract for the sale of real property
that does not conform to the requirements of this section shall
not be enforceable by the seller against the buyer, nor shall
the buyer be liable to the seller for damages under the
contract. For purposes of this section, "buyer" shall include <--
all subsequent buyers and "seller" shall include payees. The
buyer under a contract that fails to comply with this section
shall be entitled to the return of all deposits made in
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connection with the sale of the real property.
(b) Recovery upon failure to disclose.--Where a private
transfer fee obligation is not disclosed under subsection (a)
and a buyer subsequently discovers the existence of the private
transfer fee obligation after title to the property has passed
to the buyer, the buyer may be awarded:
(1) the damages resulting from the failure to disclose
the private transfer fee obligation, including, but not
limited to, the amount of any private transfer fee paid by
the buyer, or the difference between:
(i) the market value of the real property if it were
not subject to a private transfer fee obligation; and
(ii) the market value of the real property as
subject to a private transfer fee obligation; and
(2) the attorney fees, expenses and costs incurred by
the buyer in seeking the buyer's remedies under this
subsection.
(c) Waiver.--A provision in a contract for sale of real
property that purports to waive the rights of a buyer under this
section shall be void.
§ 8107. Notice requirements for existing private transfer fee
obligations.
(a) Notice of private transfer fee obligation.--The holder
of a private transfer fee obligation imposed prior to the
effective date of this chapter shall record, within six months
after the effective date of this chapter, against the real
property subject to the private transfer fee obligation, a
separate document in the office of the recorder of deeds for
each county in which the real property is located that complies
with all of the following requirements:
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(1) The title of the document shall be "Notice of
Private Transfer Fee Obligation" in at least 14-point
boldface type.
(2) The amount, if the private transfer fee is a flat
amount, or the percentage of the sales price constituting the
cost of the private transfer fee, or other basis by which the
private transfer fee is to be calculated.
(3) If the real property is residential property, actual
dollar cost examples of the private transfer fee for a home
priced at $250,000, $500,000 and $750,000.
(4) The date or circumstances under which the private
transfer fee obligation expires, if any.
(5) The purpose for which the funds from the private
transfer fee obligation will be used.
(6) The name of the payee and specific contact
information regarding where the funds are to be sent.
(7) The acknowledged signature of the holder, or a
representative of the holder.
(8) The legal description of the real property
purportedly burdened by the private transfer fee obligation.
(9) Where there is more than one person or entity who
claims the right to receive or collect a private transfer fee
under a private transfer fee obligation, those persons or
entities shall designate a single person or entity as the
payee for purposes of that private transfer fee obligation.
(b) Amendment.--The payee may file an amendment to the
notice of private transfer fee containing new contact
information, but the amendment must contain the recording
information of the notice of private transfer fee which it
amends and the legal description of the real property burdened
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by the private transfer fee obligation.
(c) Failure to file notice.--If a payee fails to file the
notice required under subsection (a), the grantor of real
property burdened by the private transfer fee obligation may
proceed with the conveyance of any interest in the real property
to any grantee and in so doing shall be conclusively deemed to
have acted in good faith and shall not be subject to any
obligations under the private transfer fee obligation. In such
event, the private transfer fee obligation shall become null and
void and the real property shall be conveyed free and clear of
the private transfer fee and private transfer fee obligation.
(d) Defective notice.--If a payee records a materially
defective or misleading notice under subsection (a), then a
grantor, on recording of an affidavit under subsection (f), may
convey an interest in the real property to a grantee without
payment of the private transfer fee and shall not be subject to
any further obligations under the private transfer fee
obligation. In such event, the private transfer fee obligation
shall become null and void and the real property shall be
conveyed free and clear of the private transfer fee and private
transfer fee obligation.
(e) Failure to provide statement of private transfer fee.--
Should a payee fail to provide a written statement of the
private transfer fee payable within 30 days of the date of a
written request for the same sent to the address shown in the
notice of private transfer fee, then a grantor, on recording of
an affidavit under subsection (f), may convey an interest in the
real property to a grantee without payment of the private
transfer fee and shall not be subject to any further obligations
under the private transfer fee obligation. In such event, the
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private transfer fee obligation shall become null and void and
the real property shall be conveyed free and clear of the
private transfer fee and private transfer fee obligation.
(f) Affidavit.--An affidavit stating the facts enumerated in
subsection (g)(1) or (2) shall be recorded in the office of the
recorder of deeds for each county in which the real property is
situated prior to or simultaneously with a conveyance pursuant
to subsection (c), (d) or (e) of real property unburdened by a
private transfer fee obligation. An affidavit filed under this
subsection shall state that the affiant has actual knowledge of,
and is competent to testify to, the facts in the affidavit and
shall include the legal description of the real property
burdened by the private transfer fee obligation, the name of the
person appearing by the record to be the owner of the real
property at the time of the signing of the affidavit, a
reference by recording information to the instrument of record
containing the private transfer fee obligation and an
acknowledgment that the affiant is testifying under penalty of
perjury.
(g) Effect of affidavit.--An affidavit filed under
subsection (f) shall constitute prima facie evidence that
either:
(1) the payee has failed to comply with subsection (a)
in the respects stated in the affidavit; or
(2) a request for the written statement of the private
transfer fee was sent to the payee at the address shown on
the notice of private transfer fee and the payee failed to
provide the written statement of the private transfer fee
payable within 30 days of the date of the notice sent to the
address shown in the notification.
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Section 2. This act shall take effect immediately.
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