Joining ranks with 37 other states, South Carolina has outlawed private transfer fees on homes.
Sometimes known as “Wall Street home resale fees,” the levy requires that a percentage of the final sales price of a house must be paid to a private third party every time the property is sold, typically for up to 99 years. Often, unbeknownst to the original buyer, the fee is made part of the covenants that transfer with the house.
Some associations of homeowners use the fees to fund their operations. But at least one private concern centers around builders and developers keeping such fees intact, then bundling them into securities for sale to investors, who would then collect the cash upon each subsequent sale.
Opponents of transfer fees say the practice steals equity from future, unsuspecting sellers, adds unnecessary costs to buyers, and adds another layer of difficulty to an already tough resale process.
“These fees infringe on property rights and hurt South Carolina consumers,” said Rep. Alan Clemmons (D-Horry County), who introduced the measure that Gov. Nikki Haley (R) signed this week. “They have no place in the South Carolina real estate market. We've made sure that when a homeowner buys a new property, he or she owns that home free and clear.”
The 12 states which have yet to ban the fees are: Alaska, Connecticut, Georgia, Kentucky, Massachusetts, New Hampshire, New Mexico, Rhode Island, Vermont, West Virginia, Wisconsin and Wyoming.
