Gov. Beverly Perdue earlier this month signed Senate Bill 35, an act that bans what’s known as transfer fee covenants that can follow the title of a property for decades. North Carolina has become the 15th state to prohibit the practice, according to the Coalition to Stop Wall Street Home Resale Fees, the main national group campaigning against the practice.
The fees come about by adding language to home purchase contracts requiring that a percentage of the sales price be paid to the original owner of real estate each time the property is sold, typically over a period of 99 years, the coalition reports.
“These corporate owners are then attempting to securitize the right to collect these fees and sell them to enrich Wall Street investors. Meanwhile, the fees steal equity from homes, and force homeowners to pay a large fee when selling their property,” the coalition argues.
The transfer fee covenants haven’t become a standard practice, said Andrew Lewis, a spokesman for the Washington, D.C.-based coalition. But opponents of the fees say they want to halt the practice before it becomes more commonplace, Lewis said.
Perdue signed the legislation after it was passed by the N.C. General Assembly, which is wrapping up the 2010 session this week at the State Legislative Building in Raleigh.
“I just felt like it was something that would be good public policy, that you shouldn’t have to pay that fee forever. Every time you transfer, if you’ve got to pay another fee, that does add to what a person is going to pay,” said Sen. Katie Dorsett, D-Guilford.
A spokesman for a Raleigh-based advocacy group praises the enactment of the bill to ban transfer fee covenants.
“It’s a deceitful practice, and one that’s not been common in the real estate markets in the United States historically. It hurts consumers and real estate values,” said Alfred Ripley, counsel for housing and consumer affairs for the N.C. Justice Center.
pjohnson@hpe.com | 888-3528
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