Every week it seems another state outlaws private transfer fees. The latest is Indiana, where governor and possible Republican presidential candidate Mitch Daniels has signed legislation to ban the charges.
Indiana is the 28th state to restrict or outright ban the fees, which have been denounced as nothing more than predatory "Wall Street" resale charges aimed at enriching developers and entities which would package the fees into securities and sell them to investors in the secondary market.
The fees require that a percentage of the final sales price of a home, generally 1%, be paid to a private third party every time the property is sold, typically for 99 years. But they are being fought in every state house in the country and in Washington by a coalition of housing industry groups led by the National Association of Realtors and the American Land Title Association.
"These fees infringe on property rights and may hurt Indiana consumers," said Michael Speedy, the state lawmaker who sponsored the Indiana legislation. "They have no place in the Indiana real estate market. We've made sure that when a homeowner buys a new property, he or she owns that home free and clear."
Besides Indiana, these states have acted to curb the use of private transfer fees: Arizona, Arkansas, California, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Virginia and Washington.
On the federal level, meanwhile, the Federal Housing Finance Agency has proposed a rule that would prevent government-sponsored entities from investing in mortgages with these fees. The comment period has ended on the proposed rule but a final rule has not yet been handed down.
