Private transfer fee

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Private Transfer Fees (also known as Reconveyance Fees, Capital Recovery Fees, Residential Transfer Fees, and Transfer Fee Covenants) are a fee charged by US developers and paid by homeowners that are inserted into home sale contracts. The fees are filed in the public record, run anywhere from 20 years to perpetuity, and require up to a 1% fee to be paid at the final closing of a property each time the property sells, by either the buyer or seller.


Developers claim that fees help pay for infrastructure and improvement costs. Critics argue that Private Transfer Fees simply act as an additional burden on homeowners and increase the costs of home ownership, while costing them home equity. Proponents say that Private Transfer Fees make home ownership more affordable by spreading infrastructure costs across the future owners.

How it works[edit]

The 1% fee is inserted into a home contract and is paid by the seller or the buyer at the time of closing. The 1% fee is paid every time the property changes hands, often for 99 years.

Proponents claims that the Private Transfer Fee Covenant is fully disclosed in the public record, often as a stand-alone document. Critics disagree and claim that the fees are hidden.


The Federal Housing Finance Agency recently issued a guidance[1] prohibiting Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from investing in mortgages with private transfer fees.

The following states have restricted the use of private transfer fees, including Arizona, California, Delaware, Florida, Hawaii, Iowa, Illinois, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, North Carolina, Ohio, Oregon, Texas, and Utah. California, for instance, passed favorable legislation that sets forth certain disclosure requirements for such covenants.