A private transfer fee (PTF) is typically created when a developer or homeowner decides to attach a covenant to the title of the home. This covenant, the PTF covenant, attaches the PTF to the real property. These covenants require payment of a fee—typically stated as one percent of the property's sale price—upon each resale or transfer of the property and often survive for a period of ninety-nine years. The recipients or owners of the PTF (PTF beneficiaries) can be almost anyone, including property developers, PTF developers, home owner associations (HOA), private investors, state governments, and non-profit charities. Usually, the PTF payment is designated to a trust in which a trustee retains a portion of the fee for expenses and pays the remainder of the fee to the PTF beneficiaries. Are PTFs a form of financial exploitation by developers or a reasonable financing vehicle? Proponents of PTF covenants argue that PTFs are financial instruments designed to spread out housing development costs and lower the costs of homeownership. Their opponents argue that PTFs lower housing values, surprise homebuyers with extra fees, create unreasonable restraints on alienation, and impair the marketability of tide.* PTFs can surprise potential homebuyers even when the PTF covenant is recorded and clearly identified;buyers often do not know that the property they are buying has a PTF convent until the closing. [ABSTRACT FROM AUTHOR] Copyright of Villanova Law Review is the property of Villanova University School of Law and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Burke T. Ward & Jamie P. Hopkins,
Private Transfer Fees: Developer Exploitation or Legitimate Financing Vehicle,
Vill. L. Rev.
Available at: http://digitalcommons.law.villanova.edu/vlr/vol56/iss5/5