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Transfer Fee Bans - Arkansas



SECTION 1. Arkansas Code Title 18, Chapter 12, Subchapter 1 is amended 20 to add an additional section to read as follows: 

18-12-107. Transfer fee covenants prohibited.

(a) As used in this section:

(1) "Association" means a nonprofit, mandatory-membership organization:  

(A) Comprised of owners of homes, condominiums, units in a 26 horizontal property regime, cooperatives, manufactured homes, or any other 27 interest in real property; and

(B) Created pursuant to declaration, covenant, bill of 29 assurance, master deed, or other applicable law;

(2) "Licensee" means a licensee as defined in § 17-42-103;

(3) "Transfer" means the sale, gift, grant, conveyance, assignment, inheritance, or other transfer of an ownership interest in real 33 property located in this state;

(4)(A) "Transfer fee" means a fee or charge that obligates a 35 transferee or transferor of real property to pay a fee or charge to a third (i) Upon a transfer of an interest in the real property; or (ii) For permitting the transfer.

(B) "Transfer fee" does not include a tax, assessment, fee, or charge imposed by a governmental authority under applicable law; and

(5)(A) "Transfer fee covenant" means a provision in a recorded document or an unrecorded document imposing a transfer fee that purports to run with the land or bind current owners or successors in title to real property located in this state.

(B) "Transfer fee covenant" includes a lien or claim of lien to secure payment of a transfer fee.

(C) "Transfer fee covenant" does not include a provision:

(i) Of a purchase contract, option, mortgage, security agreement, real property listing agreement, or other agreement that obligates a party to the agreement to pay another party to the agreement as  full or partial consideration for the agreement or for a waiver of rights under the agreement an amount determined by the agreement if the amount is:

(a) Payable on a one-time basis only upon the next transfer of an interest in the specified real property and, once paid, shall not bind successors in title to the property;

(b) A loan assumption fee or other fee charged in connection with a transfer by a lender holding or obtaining a lien on the transferred real property; or

(c) A fee or commission paid to a licensee for services rendered in connection with a transfer of the property for which the fee or commission is paid;

(ii) In a deed, memorandum, or other document recorded for the purpose of providing record notice of an agreement described in subdivision (5)(C)(i) of this section;

(iii) Of a document requiring payment of a fee or charge to an association to be used exclusively for the purposes authorized in the document, as long as no portion of the fee is required to be passed through to a third party designated or identifiable by description in the document or another document referenced in the document; or

(iv) Of a document affecting real property thatrequires payment of a fee or charge to an organization described in § 501(c)(3) or § 501(c)(4) of the Internal Revenue Code as it existed on January 1, 2011, to be used exclusively to support:

(a) Cultural, educational, charitable, recreational, environmental, conservational, or other similar activities benefiting the real property; or

(b) The community in which the property is located.

(b)(1) A transfer fee covenant recorded with respect to real propertyin this state after the effective date of this section:

(A) Does not run with the title to the real property; and (B) Is not binding upon or enforceable at law or in equity against: A) Does not run with the title to the

(i) The real property; or

(ii) A subsequent owner, purchaser, or mortgagee of an interest in the real property.

(2) This section does not validate a transfer fee covenant recorded in this state before the effective date of this section.