WYOMING NEWS SERVICE, Cheyenne, WY – With real estate values still low in most of the country, a new investment device has surfaced, and a coalition of consumer groups and real estate industry organizations is sounding an alarm. “Private transfer fee covenants” being placed on homes by investors and developers require a percentage of the final sale price to be paid to a private third party every time the property is sold – for up to 99 years.
Kurt Pfotenhauer is with the American Land Title Association. He says his organization is joining the coalition's call for the Wyoming legislatures to take action, and for a federal ban.
Pfotenhauer claims that buyers don't understand this new financial product being attached to properties, and some aren't even finding out about the fees until they go to sell their home. He calls the resale fees damaging to homeowners and homebuyers, as well as the real estate market overall.
So far, sixteen states have restricted the resale fees, and HUD won't insure loans that have the fees attached.
The coalitions is delivering a letter to U.S. financial officials on the same issue this week. Companies backing the fees promote them as a way to reimburse developers for infrastructure expenses. The fees are also pitched as a steady cash stream and a product that can be sold to other investors, and packaged for Wall Street.