PRIOR PRINTER'S NOS. 714, 413

PRINTER'S NO.  1040

  

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, THOMAS, AUMENT AND OBERLANDER, FEBRUARY 4, 2011

  

  

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, MARCH 7, 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 or 

4

operating subsidiary of a bank or savings association; a credit

5

union; an association authorized by law to engage in the

6

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

7

note or other rights of a financial institution.

8

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

9

collect a private transfer fee payable under a private transfer

10

obligation.

11

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

12

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

13

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

14

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

15

binds subsequent owners of property, regardless of whether the

16

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

17

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

18

consideration given for the transfer. The following are not

19

private transfer fees for purposes of this chapter:

20

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

21

grantee to the grantor for the interest in real property

22

being transferred, including any subsequent additional

23

consideration for the property payable by or on behalf of the

24

grantee based upon any subsequent appreciation, development

25

or sale of the property, if the additional consideration is

26

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

27

the payment does not bind successors in title to the

28

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

29

real property may include a separate mineral estate and its

30

appurtenant surface access rights.

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1

(2)  Any commission payable to a licensed real estate

2

broker for the transfer of real property pursuant to an

3

agreement between the broker and the grantor or the grantee,

4

including, but not limited to, any subsequent additional

5

commission for that transfer payable by the grantor or the

6

grantee based upon any subsequent appreciation, development

7

or sale of the property.

8

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

9

a lender or financial institution pursuant to a mortgage,

10

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

11

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

12

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

13

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

14

security interest or any fee or charge payable for estoppel

15

letters or certificates and any shared appreciation interest

16

or profit participation or other consideration payable to the

17

lender or financial institution.

18

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

19

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

20

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

21

to an assignment, subletting, encumbrance or transfer of the

22

lease.

23

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

24

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

25

right of first refusal or first offer to purchase an interest

26

in real property for waiving, releasing or not exercising the

27

option or right upon the transfer of the real property to

28

another person.

29

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

30

amount payable to or imposed by a governmental authority.

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1

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

2

contribution or other amount payable to a homeowners',

3

condominium, cooperative, manufactured home or property

4

owners' association and its agent pursuant to a declaration

5

or covenant or law applicable to the association, including,

6

but not limited to, fees or charges payable for estoppel

7

letters or certificates, including resale certificates,

8

issued by the association or its authorized agent.

9

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

10

contribution or other amount imposed by a declaration or

<--

11

covenant encumbering real property, and payable solely to a

12

nonprofit or charitable organization for the purpose of

13

supporting cultural, educational, charitable, recreational,

14

religious, environmental, conservation or other similar

15

activities., which is imposed by a declaration or covenant

<--

16

encumbering real property and which is payable solely to a

17

nonprofit corporation, charitable association or charitable

18

trust, that:

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(i)  has been in existence for at least two years;

20

and

21

(ii)  holds, on real property subject to the

22

declaration or covenant or on real property included in

23

the same development plan with the real property subject

24

to the declaration or covenant:

25

(A)  an agricultural conservation easement, as

26

defined in section 3 of the act of June 30, 1981

27

(P.L.128, No.43), known as the Agricultural Area

28

Security Law; or

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(B)  a conservation easement, as defined in

30

section 3 of the act of June 22, 2001 (P.L.390,

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1

No.29), known as the Conservation and Preservation

2

Easements Act.

3

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

4

contribution or other amount pertaining solely to the

5

purchase or transfer of a club membership relating to real

6

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

7

any amount determined by reference to the value, purchase

8

price or other consideration given for the transfer of the

9

real property.

10

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

11

removal or extraction of timber, crops or minerals, including

12

oil, gas and water, from real property.

13

"Private transfer fee obligation."  An obligation arising

14

under a declaration or covenant recorded against the title to

15

real property, or under any other contractual agreement or

16

promise, whether recorded, that requires or purports to require

17

the payment of a private transfer fee upon a subsequent transfer

18

of an interest in the real property.

19

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

20

inheritance or other transfer of an ownership interest in real

21

property located in this Commonwealth.

22

§ 8104.  Prohibition.

23

A private transfer fee obligation recorded or entered into in

24

this Commonwealth on or after the effective date of this chapter

25

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

26

on or enforceable at law or in equity against a subsequent

27

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

28

an equitable servitude or otherwise. This section does not mean

29

that a private transfer fee obligation recorded or entered into

30

in this Commonwealth before the effective date of this chapter

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1

is presumed valid and enforceable.

2

§ 8105.  Liability for violation.

3

A person who records or enters into an agreement imposing a

4

private transfer fee obligation in his favor after the effective

5

date of this chapter may be awarded:

6

(1)  the damages resulting from the imposition of the

7

private transfer fee obligation on the transfer of an

8

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

9

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

10

transfer; and

11

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

12

party to the transfer or mortgagee of the real property to

13

recover any private transfer fee paid or in connection with

14

an action to quiet title.

15

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

16

or secure a private transfer fee obligation, liability shall be

17

assessed to the principal, rather than the agent.

18

§ 8106.  Disclosure.

19

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

20

subject to a private transfer fee obligation shall include a

21

provision disclosing the existence of that obligation, a

22

description of the obligation and a statement that private

23

transfer fee obligations are subject to certain restrictions

24

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

25

that does not conform to the requirements of this section shall

26

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

27

the buyer be liable to the seller for damages under the

28

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

29

this section shall be entitled to the return of all deposits

30

made in connection with the sale of the real property.

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1

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

2

transfer fee obligation is not disclosed under subsection (a)

3

and a buyer subsequently discovers the existence of the private

4

transfer fee obligation after title to the property has passed

5

to the buyer, the buyer may be awarded:

6

(1)  the damages resulting from the failure to disclose

7

the private transfer fee obligation, including, but not

8

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

9

the buyer, or the difference between:

10

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

11

not subject to a private transfer fee obligation; and

12

(ii)  the market value of the real property as

13

subject to a private transfer fee obligation; and

14

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

15

the buyer in seeking the buyer's remedies under this

16

subsection.

17

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

18

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

19

section shall be void.

20

§ 8107.  Notice requirements for existing private transfer fee

21

obligations.

22

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

23

of a private transfer fee obligation imposed prior to the

24

effective date of this chapter shall record, within six months

25

after the effective date of this chapter, against the real

26

property subject to the private transfer fee obligation, a

27

separate document in the office of the recorder of deeds for

28

each county in which the real property is located that complies

29

with all of the following requirements:

30

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

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1

Private Transfer Fee Obligation" in at least 14-point

2

boldface type.

3

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

4

amount, or the percentage of the sales price constituting the

5

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

6

private transfer fee is to be calculated.

7

(3)  If the real property is residential property, actual

8

dollar cost examples of the private transfer fee for a home

9

priced at $250,000, $500,000 and $750,000.

10

(4)  The date or circumstances under which the private

11

transfer fee obligation expires, if any.

12

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

13

transfer fee obligation will be used.

14

(6)  The name of the payee and specific contact

15

information regarding where the funds are to be sent.

16

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

17

representative of the holder.

18

(8)  The legal description of the real property

19

purportedly burdened by the private transfer fee obligation.

20

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

21

claims the right to receive or collect a private transfer fee

22

under a private transfer fee obligation, those persons or

23

entities shall designate a single person or entity as the

24

payee for purposes of that private transfer fee obligation.

25

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

26

notice of private transfer fee containing new contact

27

information, but the amendment must contain the recording

28

information of the notice of private transfer fee which it

29

amends and the legal description of the real property burdened

30

by the private transfer fee obligation.

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1

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

2

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

3

property burdened by the private transfer fee obligation may

4

proceed with the conveyance of any interest in the real property

5

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

6

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

7

obligations under the private transfer fee obligation. In such

8

event, the private transfer fee obligation shall become null and

9

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

10

the private transfer fee and private transfer fee obligation.

11

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

12

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

13

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

14

convey an interest in the real property to a grantee without

15

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

16

any further obligations under the private transfer fee

17

obligation. In such event, the private transfer fee obligation

18

shall become null and void and the real property shall be

19

conveyed free and clear of the private transfer fee and private

20

transfer fee obligation.

21

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

22

Should a payee fail to provide a written statement of the

23

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

24

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

25

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

26

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

27

real property to a grantee without payment of the private

28

transfer fee and shall not be subject to any further obligations

29

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

30

private transfer fee obligation shall become null and void and

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1

the real property shall be conveyed free and clear of the

2

private transfer fee and private transfer fee obligation.

3

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

4

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

5

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

6

situated prior to or simultaneously with a conveyance pursuant

7

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

<--

8

private transfer fee obligation. An affidavit filed under this

9

subsection shall state that the affiant has actual knowledge of,

10

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

11

shall include the legal description of the real property

12

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

13

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

14

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

15

reference by recording information to the instrument of record

16

containing the private transfer fee obligation and an

17

acknowledgment that the affiant is testifying under penalty of

18

perjury.

19

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

20

subsection (f) shall constitute prima facie evidence that

21

either:

22

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

23

in the respects stated in the affidavit; or

24

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

25

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

26

the notice of private transfer fee and the payee failed to

27

provide the written statement of the private transfer fee

28

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

29

address shown in the notification.

30

Section 2.  This act shall take effect immediately.

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