Lancaster PA Real Estate Blog

I was reading through the September Issue of Realtor Magazine and came across a disturbing article about the rise of what is innocently called "private transfer taxes".  The article details the fight going on California, particularly in Placer County, over the right of builders/sellers to append special transfer fees to the property deed, which would have to paid in perpetuity to a certain party!

The parties involved in the Realtor Magazine article are the Sierra Club and Audubon Society.  They made a deal with a developer/builder that, in return for forging these fees into the development's deeds, they would back off on pressuring the builder over whatever enviromental concerns they might have.  The kicker is that the builder will cover the first fee paid by the initial homeowner...talk about a rude surprise to the 2nd, 3rd buyers and so on!

These fees are apparently not an isolated occurrence, and are beginning to show up in other states.  Incredibly, the Realtors Association found that there were no laws on the books to regulate such private manipulation of the deed.  CAR is working with the California Legislature to try to do something about that.  Of course, the parties involved represent VERY powerful lobbying blocs which will work to dampen a legislative solution.

Meanwhile, the potential for these "private transfer taxes" is pretty staggering, wouldn't you agree?  Fees are reported to be as high as 1.75% of the purchase price.  Hey, I'll attach a payment to my 401K to my deed, so that everyone who buys my home will help my retirement!  Folks, there's nothing legally standing in the way of such an eventuality. Apparently a company in Florida has already started to help property owners attach 1% fees to their homes, in order to receive the income EACH time the home is sold.

One key figure in the Placer County mess was quoted as saying "without being regulated, private transfer fees will spread through the country like wildfire."