Rant on Private Transfer Fees

Yesterday's post provided a definition of private transfer fees and the rationale of developers who use them.  Here are a few reasons why they are a terrible idea: The fees are supposedly to fund the development's infrastructure elements - the original infrastructure.  Minnesota's freeze/thaw cycle is very tough on exposed elements.  Most infrastructure cannot last even 20 years without needing a major rehab or replacement.  That replacement cost will be borne by either the current homeowners and/or the local government.  So what is this 99 years nonsense? If the development pro forma shows … [Read more...]

A New Way to Screw Real Estate Buyers and Sellers

Private Transfer Fees are a relatively new device in the real estate developer's toolbelt.  A private transfer fee results from a covenant filed in the property records that requires a payment to the original developer each time the lot is sold.  The typical fee is 1%  percentage of the purchase price and the requirement can last as long as 99 years!!!   This covenant creates a lien on the property, so title companies must collect the fee at closing or absorb the cost if they fail to do so. Developers justify the fee by saying it allows them to spread the costs … [Read more...]

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