Crisco Wins Committee Nod for Bill to Regulate Real Estate Transfer Fees
March 11, 2011 – (RealEstateRama) — State Senator Joseph J. Crisco, Jr. (D-Woodbridge), Senate chair of the legislature’s Insurance and Real Estate Committee, today praised committee approval of a bill meant to prohibit ‘private transfer fees’ in Connecticut. The relatively new financing plan, already restricted or subject to outright bans in 19 states, amounts to a private sector conveyance fee, adding undue cost to the sale of property, Senator Crisco said.
The practice stipulates that a percentage of an agreed-upon sale price be paid to the original corporate owner of a property each and every time it is sold. Developers will oftentimes then sell that income stream to investors in exchange for a one-time, up-front payment.
“I’m quite concerned about the implications of these private transfer fees, which have the potential to upend an already staggered real estate market in Connecticut,” Senator Crisco said. “Looking past the negative impact it could have on overall real estate sales, it could completely disrupt business for title search companies and the secondary mortgage market with unforeseen liens and other problems.”
Senator Crisco said the Federal Housing Finance Agency (FHFA) is also considering the issue at the national level because of the manner in which private transfer fees ‘encumber’ mortgages.
“In addition to complicating the financial side of so many future real estate transactions, there is also the worrisome lack of transparency in these arrangements and the last thing a homebuyer needs is a last-minute surprise about an additional, hidden fee owed to a previous owner,” Senator Crisco said. “I would much rather find a way to help developers arrange the long-term financing they say they need without burying these de facto conveyance fees into a sale and then insisting a long line of future owners keep paying them.”
Senator Crisco said representatives from the Connecticut Association of Realtors and the Connecticut Bankers Association are among those who oppose private transfer fees and testified at a March 8 public hearing in support of HB6510. With today’s approval by the Insurance and Real Estate Committee, the bill now advances to the Calendar of the House of Representatives.
