Private transfer fees differ from property taxes because they are assessed on real property when ownership of the property is transferred between parties. These taxes are used in many areas to fund programs designed to preserve rapidly depleting open spaces in commercial or residential areas, and to fund housing programs for low-income residents.
Since 2010, private transfer fees have been panned on newly constructed properties new disclosure requirements were put into place for existing properties where the fees were already in place. This was legislation initiated by NJ REALTORS®.
In 2011, the FHFA submitted a proposed rule to the Federal Register addressing comments on a previous proposal that limits Fannie Mae, Freddie Mac and federal home loan banks from authorizing mortgages on properties with a private transfer fee (PTF) attached to the property. The new proposal bans the use of PTFs, with an exception for fees paid to homeowners associations, condominiums and cooperatives.
The National Association of REALTORS® has generally been against private transfer fees, which increase the cost of homeownership and do little more than generate revenue for developers or investors and typically provide no benefit to homebuyers. However, NAR acknowledges that such fees may be appropriate for some organizations, such as homeowners associations, where there is a direct benefit to the homeowner, the fees are reasonable, and there is full disclosure. NAR also supports an exception for existing properties with private transfer fees. If existing properties are not excepted many homeowners will be unable to sell their homes, which could result in further disruption in real estate markets. These comments have all been previously submitted to the Federal Housing Finance Agency.