Gov. Rick Perry signed into law legislation that bans private transfer fees to developers. With Perry’s signature, Texas joins 33 other states in banning or restricting private transfer fees.
A transfer fee is a percentage of a property’s sales price — typically 1 percent — that is remitted to a property’s original developer each time it sells.
Although not common in Texas, transfer fees are seen as a means to improve cash flow in down markets. The bill passed unanimously in the Texas Senate and 142-1 in the Texas House. Under the new legislation, new private transfer fees will not be allowed. Developers who have existing fees on properties must file a notice of the obligation in county property records by Jan. 31, 2012. Unless notice is filed and updated every three years, existing transfer fees will be voided.