SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

SENATOR YAW, URBAN AFFAIRS AND HOUSING, IN SENATE, AS AMENDED, MAY 4, 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

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.

(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.

(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

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 private transfer fee obligation recorded or entered into

in this Commonwealth before the effective date of this chapter

is presumed valid and enforceable.

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

this section shall be entitled to the return of all deposits

made in 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:

(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

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

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.

Section 2.  This act shall take effect immediately.