PRIOR PRINTER'S NO. 413

PRINTER'S NO.  714

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

442

Session of

2011

  

  

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, J. TAYLOR, TOBASH, VEREB, VULAKOVICH, WAGNER, WATERS, WATSON, WILLIAMS, RAVENSTAHL AND THOMAS, FEBRUARY 4, 2011

  

  

AS REPORTED FROM COMMITTEE ON URBAN AFFAIRS, HOUSE OF REPRESENTATIVES, AS AMENDED, FEBRUARY 16, 2011   

  

  

  

AN ACT

  

1

Amending Title 68 (Real and Personal Property) of the

2

Pennsylvania Consolidated Statutes, prohibiting private

3

transfer fee obligations; and providing for notice and

4

disclosure of existing private transfer fee obligations.

5

The General Assembly of the Commonwealth of Pennsylvania

6

hereby enacts as follows:

7

Section 1.  Title 68 of the Pennsylvania Consolidated

8

Statutes is amended by adding a chapter to read:

9

CHAPTER 81

10

PRIVATE TRANSFER FEE OBLIGATIONS

 


1

Sec.

2

8101.  Short title of chapter.

3

8102.  Intent.

4

8103.  Definitions.

5

8104.  Prohibition.

6

8105.  Liability for violation.

7

8106.  Disclosure.

8

8107.  Notice requirements for existing private transfer fee

9

obligations.

10

§ 8101.  Short title of chapter.

11

This chapter shall be known and may be cited as the Private

12

Transfer Fee Obligation Act.

13

§ 8102.  Intent.

14

The General Assembly finds and declares that the public

15

policy of this Commonwealth favors the marketability of real

16

property and the transferability of interests in real property

17

free of title defects or unreasonable restraints on alienation.

18

The General Assembly further finds and declares that private

19

transfer fee obligations violate this public policy by impairing

20

the marketability and transferability of real property and by

21

constituting an unreasonable restraint on alienation regardless

22

of the duration of the obligation to pay a private transfer fee,

23

the amount of a private transfer fee or the method by which any

24

private transfer fee is created or imposed. Thus, the General

25

Assembly finds and declares that a private transfer fee

26

obligation shall not run with the title to property or otherwise

27

bind subsequent owners of property under any common law or

28

equitable principle.

29

§ 8103.  Definitions.

30

The following words and phrases when used in this chapter

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1

shall have the meanings given to them in this section unless the

2

context clearly indicates otherwise:

3

"Financial institution."  A bank, savings association, an or 

<--

4

operating subsidiary of a bank or savings association; a credit

5

union or; an association authorized by law to engage in the

<--

6

mortgage loan business; assignees or an assignee of a mortgage,

<--

7

mortgage note or other rights of such an a financial 

<--

8

institution.

9

"Payee."  A person that claims the right to receive or

10

collect a private transfer fee payable under a private transfer

11

obligation.

12

"Private transfer fee."  A fee or charge payable upon the

13

transfer of an interest in real property, or payable for the

14

right to make or accept the transfer, if the obligation to pay

<--

15

the fee or charge runs with title to the property or otherwise

16

binds subsequent owners of property, regardless of whether the

17

fee or charge is a fixed amount or is determined as a percentage

18

of the value of the property, the purchase price or other

19

consideration given for the transfer. The following are not

20

private transfer fees for purposes of this chapter:

21

(1)  Any consideration payable by or on behalf of the

22

grantee to the grantor for the interest in real property

23

being transferred, including any subsequent additional

24

consideration for the property payable by or on behalf of the

25

grantee based upon any subsequent appreciation, development

26

or sale of the property, if the additional consideration is

27

payable on a one-time basis only and the obligation to make

28

the payment does not bind successors in title to the

29

property. For the purposes of this paragraph, an interest in

30

real property may include a separate mineral estate and its

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1

appurtenant surface access rights.

2

(2)  Any commission payable to a licensed real estate

3

broker for the transfer of real property pursuant to an

4

agreement between the broker and the grantor or the grantee,

5

including, but not limited to, any subsequent additional

6

commission for that transfer payable by the grantor or the

7

grantee based upon any subsequent appreciation, development

8

or sale of the property.

9

(3)  Any interest, charge, fee or other amount payable to

10

a lender or financial institution pursuant to a mortgage,

11

deed of trust, lien or security interest in or against real

12

property, including, but not limited to, any fee payable for

13

consenting to an assumption of a loan or a transfer of the

14

real property subject to the mortgage, deed of trust, lien or

15

security interest or any fee or charge payable for estoppel

16

letters or certificates and any shared appreciation interest

17

or profit participation or other consideration payable to the

18

lender or financial institution.

19

(4)  Any rent, reimbursement, charge, fee or other amount

20

payable by a lessee to a lessor under a lease, including, but

21

not limited to, any fee payable to the lessor for consenting

22

to an assignment, subletting, encumbrance or transfer of the

23

lease.

24

(5)  Any consideration payable to the holder of an option

25

to purchase an interest in real property or the holder of a

26

right of first refusal or first offer to purchase an interest

27

in real property for waiving, releasing or not exercising the

28

option or right upon the transfer of the real property to

29

another person.

30

(6)  Any tax, fee, charge, assessment, fine or other

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1

amount payable to or imposed by a governmental authority.

2

(7)  Any fee, charge, assessment, dues, fine,

3

contribution or other amount payable to a homeowners',

4

condominium, cooperative, manufactured home or property

5

owners' association and its agent pursuant to a declaration

6

or covenant or law applicable to the association, including,

7

but not limited to, fees or charges payable for estoppel

8

letters or certificates, including resale certificates,

9

issued by the association or its authorized agent.

10

(8)  Any fee, charge, assessment, dues, fine,

11

contribution or other amount imposed by a declaration or

12

covenant encumbering real property, and payable solely to a

13

nonprofit or charitable organization for the purpose of

14

supporting cultural, educational, charitable, recreational,

15

religious, environmental, conservation or other similar

16

activities.

17

(9)  Any fee, charge, assessment, dues, fine,

18

contribution or other amount pertaining solely to the

19

purchase or transfer of a club membership relating to real

20

property owned by the member, including, but not limited to,

21

any amount determined by reference to the value, purchase

22

price or other consideration given for the transfer of the

23

real property.

24

(10)  Any payment or other amount due for or upon the

25

removal or extraction of timber, crops or minerals, including

26

oil, gas and water, from real property.

27

"Private transfer fee obligation."  An obligation arising

28

under a declaration or covenant recorded against the title to

29

real property, or under any other contractual agreement or

30

promise, whether recorded, that requires or purports to require

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1

the payment of a private transfer fee upon a subsequent transfer

2

of an interest in the real property.

3

"Transfer."  The sale, gift, conveyance, assignment,

4

inheritance or other transfer of an ownership interest in real

5

property located in this Commonwealth.

6

§ 8104.  Prohibition.

7

A private transfer fee obligation recorded or entered into in

8

this Commonwealth on or after the effective date of this chapter

9

does not run with the title to real property and is not binding

10

on or enforceable at law or in equity against a subsequent

11

owner, purchaser or mortgagee of an interest in real property as

12

an equitable servitude or otherwise. This section does not mean

13

that a private transfer fee obligation recorded or entered into

14

in this Commonwealth before the effective date of this chapter

15

is presumed valid and enforceable.

16

§ 8105.  Liability for violation.

17

A person who records or enters into an agreement imposing a

18

private transfer fee obligation in his favor after the effective

19

date of this chapter shall be liable for the following may be

<--

20

awarded:

21

(1)  the damages resulting from the imposition of the

22

private transfer fee obligation on the transfer of an

23

interest in the real property, including, but not limited to,

24

the amount of any transfer fee paid by a party to the

25

transfer; and

26

(2)  the attorney fees, expenses and costs incurred by a

27

party to the transfer or mortgagee of the real property to

28

recover any private transfer fee paid or in connection with

29

an action to quiet title.

30

Where an agent acts on behalf of a disclosed principal to record

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1

or secure a private transfer fee obligation, liability shall be

2

assessed to the principal, rather than the agent.

3

§ 8106.  Disclosure.

4

(a)  General rule.--A contract for the sale of real property

5

subject to a private transfer fee obligation shall include a

6

provision disclosing the existence of that obligation, a

7

description of the obligation and a statement that private

8

transfer fee obligations are subject to certain restrictions

9

under this chapter. A contract for the sale of real property

10

that does not conform to the requirements of this section shall

11

not be enforceable by the seller against the buyer, nor shall

12

the buyer be liable to the seller for damages under the

13

contract. The buyer under a contract that fails to comply with

14

this section shall be entitled to the return of all deposits

15

made in connection with the sale of the real property.

16

(b)  Recovery upon failure to disclose.--Where a private

17

transfer fee obligation is not disclosed under subsection (a)

18

and a buyer subsequently discovers the existence of the private

19

transfer fee obligation after title to the property has passed

20

to the buyer, the buyer shall have the right to recover may be

<--

21

awarded:

22

(1)  the damages resulting from the failure to disclose

23

the private transfer fee obligation, including, but not

24

limited to, the amount of any private transfer fee paid by

25

the buyer, or the difference between:

26

(i)  the market value of the real property if it were

27

not subject to a private transfer fee obligation; and

28

(ii)  the market value of the real property as

29

subject to a private transfer fee obligation; and

30

(2)  the attorney fees, expenses and costs incurred by

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1

the buyer in seeking the buyer's remedies under this

2

subsection.

3

(c)  Waiver.--A provision in a contract for sale of real

4

property that purports to waive the rights of a buyer under this

5

section shall be void.

6

§ 8107.  Notice requirements for existing private transfer fee

7

obligations.

8

(a)  Notice of private transfer fee obligation.--The payee 

<--

9

holder of a private transfer fee obligation imposed prior to the

<--

10

effective date of this chapter shall record, within six months

11

after the effective date of this chapter, against the real

12

property subject to the private transfer fee obligation, a

13

separate document in the office of the recorder of deeds for

14

each county in which the real property is located that complies

15

with all of the following requirements:

16

(1)  The title of the document shall be "Notice of

17

Private Transfer Fee Obligation" in at least 14-point

18

boldface type.

19

(2)  The amount, if the private transfer fee is a flat

20

amount, or the percentage of the sales price constituting the

21

cost of the private transfer fee, or other basis by which the

22

private transfer fee is to be calculated.

23

(3)  Examples If the real property is residential

<--

24

property, actual dollar cost examples of the private transfer

25

fee for a home priced at $250,000, $500,000 and $750,000.

26

(4)  The date or circumstances under which the private

27

transfer fee obligation expires, if any.

28

(5)  The purpose for which the funds from the private

29

transfer fee obligation will be used.

30

(6)  The name of the payee and specific contact

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1

information regarding where the funds are to be sent.

2

(7)  The acknowledged signature of the payee holder, or a

<--

3

representative of the payee holder.

<--

4

(8)  The legal description of the real property

5

purportedly burdened by the private transfer fee obligation.

6

(9)  Where there is more than one person or entity who

7

claims the right to receive or collect a private transfer fee

8

under a private transfer fee obligation, those persons or

9

entities shall designate a single person or entity as the

10

payee for purposes of that private transfer fee obligation.

11

(b)  Amendment.--The payee may file an amendment to the

12

notice of private transfer fee containing new contact

13

information, but the amendment must contain the recording

14

information of the notice of private transfer fee which it

15

amends and the legal description of the real property burdened

16

by the private transfer fee obligation.

17

(c)  Failure to file notice.--If a payee fails to file the

18

notice required under subsection (a), the grantor of real

19

property burdened by the private transfer fee obligation may

20

proceed with the conveyance of any interest in the real property

21

to any grantee and in so doing shall be conclusively deemed to

22

have acted in good faith and shall not be subject to any

23

obligations under the private transfer fee obligation. In such

24

event, the private transfer fee obligation shall become null and

25

void and the real property shall be conveyed free and clear of

26

the private transfer fee and private transfer fee obligation.

27

(d)  Defective notice.--If a payee records a materially

<--

28

defective or misleading notice under subsection (a), then a

<--

29

grantor, on recording of an affidavit under subsection (f), may

30

convey an interest in the real property to a grantee without

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1

payment of the private transfer fee and shall not be subject to

2

any further obligations under the private transfer fee

3

obligation. In such event, the private transfer fee obligation

4

shall become null and void and the real property shall be

5

conveyed free and clear of the private transfer fee and private

6

transfer fee obligation.

7

(e)  Failure to provide statement of private transfer fee.--

8

Should a payee fail to provide a written statement of the

9

private transfer fee payable within 30 days of the date of a

10

written request for the same sent to the address shown in the

11

notice of private transfer fee, then a grantor, on recording of

12

an affidavit under subsection (f), may convey an interest in the

13

real property to a grantee without payment of the private

14

transfer fee and shall not be subject to any further obligations

15

under the private transfer fee obligation. In such event, the

16

private transfer fee obligation shall become null and void and

17

the real property shall be conveyed free and clear of the

18

private transfer fee and private transfer fee obligation.

19

(f)  Affidavit.--An affidavit stating the facts enumerated in

20

subsection (g)(1) or (2) shall be recorded in the office of the

21

recorder of deeds for each county in which the real property is

22

situated prior to or simultaneously with a conveyance pursuant

23

to subsection (d) or (e) of real property unburdened by a

24

private transfer fee obligation. An affidavit filed under this

25

subsection shall state that the affiant has actual knowledge of,

26

and is competent to testify to, the facts in the affidavit and

27

shall include the legal description of the real property

28

burdened by the private transfer fee obligation, the name of the

29

person appearing by the record to be the owner of the real

30

property at the time of the signing of the affidavit, a

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1

reference by recording information to the instrument of record

2

containing the private transfer fee obligation and an

3

acknowledgment that the affiant is testifying under penalty of

4

perjury.

5

(g)  Effect of affidavit.--An affidavit filed under

6

subsection (f) shall constitute prima facie evidence that

7

either:

8

(1)  the payee has failed to comply with subsection (a)

9

in the respects stated in the affidavit; or

10

(2)  a request for the written statement of the private

11

transfer fee was sent to the payee at the address shown on

12

the notice of private transfer fee and the payee failed to

13

provide the written statement of the private transfer fee

14

payable within 30 days of the date of the notice sent to the

15

address shown in the notification.

16

Section 2.  This act shall take effect immediately.

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