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Transfer Fee Bans - Texas

SUBCHAPTER G. CERTAIN PRIVATE TRANSFER FEES PROHIBITED; PRESERVATION OF PRIVATE REAL PROPERTY RIGHTS

Sec. 5.201. DEFINITIONS. In this subchapter:
(1) "Encumbered property" means all property, including the property of a subsequent purchaser, subject to the same private transfer fee obligation.
(2) "Lender" means a lending institution, including a bank, trust company, banking association, savings and loan association, mortgage company, investment bank, credit union, life insurance company, and governmental agency, that customarily provides financing or an affiliate of a lending institution.
(3) "Payee" means a person who claims the right to receive or collect a private transfer fee payable under a private transfer fee obligation and who may or may not have a pecuniary interest in the obligation.
(4) "Private transfer fee" means an amount of money, regardless of the method of determining the amount, that is payable on the transfer of an interest in real property or payable for a right to make or accept a transfer.
(5) "Private transfer fee obligation" means an obligation to pay a private transfer fee created under:
(A) a declaration or other covenant recorded in the real property records in the county in which the property subject to the private transfer fee obligation is located;
(B) a contractual agreement or promise; or
(C) an unrecorded contractual agreement or promise.
(6) "Subsequent owner" means a person who acquires real property by transfer from a person other than the person who is the seller of the property on the date the private transfer fee obligation is created.
(7) "Subsequent purchaser" means a person who purchases real property from a person other than the person who is the seller on the date the private transfer fee obligation is created. The term includes a lender who provides a mortgage loan to a subsequent purchaser to purchase the property.
(8) "Transfer" means the sale, gift, conveyance, assignment, inheritance, or other transfer of an ownership interest in real property.
Added by Acts 2011, 82nd Leg., R.S., Ch. 211 (H.B. 8), Sec. 1, eff. June 17, 2011.

Sec. 5.202. CERTAIN PRIVATE TRANSFER FEE OBLIGATIONS VOID. (a) Except as provided by this subchapter, a private transfer fee obligation created on or after the effective date of this subchapter is not binding or enforceable against a subsequent owner or subsequent purchaser of an interest in real property and is void.
(b) For purposes of this subchapter, the following payments are not considered private transfer fee obligations:
(1) consideration paid by a purchaser to a seller for an interest in real property transferred, including, as applicable, a mineral interest transferred, including additional consideration paid to a seller for the property's appreciation, development, or sale after the interest in the property has been transferred to the purchaser, if the additional consideration is paid only once and that payment does not bind successors in interest to the property to any private transfer fee obligation;
(2) a commission paid to a licensed real estate broker under a written agreement between a seller or purchaser and the broker, including an additional commission for the property's appreciation, development, or sale after the interest in property is transferred to the purchaser;
(3) interest, a fee, a charge, or another type of payment to a lender under a loan secured by a mortgage on the property, including:
(A) a fee payable for the lender's consent to an assumption of the loan or transfer of the property subject to the mortgage;
(B) a fee or charge payable for an estoppel letter or certificate;
(C) a shared appreciation interest or profit participation; or
(D) other consideration payable in connection with the loan;
(4) rent, reimbursement, a fee, a charge, or another type of payment to a lessor under a lease, including a fee for consent to an assignment, sublease, encumbrance, or transfer of a lease;
(5) consideration paid to the holder of an option to purchase an interest in property, or to the holder of a right of first refusal or first offer to purchase an interest in property, for waiving, releasing, or not exercising the option or right when the property is transferred to another person;
(6) a fee payable to or imposed by a governmental entity in connection with recording the transfer of the property;
(7) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment under a declaration or other covenant or under law, including a fee or charge payable for a change of ownership entered in the records of an association to which this subdivision applies or an estoppel letter or resale certificate issued under Section 207.003 by an association to which this subdivision applies or the person identified under Section 209.004(a)(6), provided that no portion of the fee or charge is required to be passed through to a third party designated or identifiable in the declaration or other covenant or law or in a document referenced in the declaration or other covenant or law, unless paid to:
(A) an association as defined by Section 82.003 or 221.002 or the person or entity managing the association as provided by Section 82.116(a)(5) or 221.032(b)(11), as applicable;
(B) a property owners' association as defined by Section 202.001 or 209.002 or the person or entity described by Section 209.004(a)(6); or
(C) a property owners' association as defined by Section 202.001 that does not require an owner of property governed by the association to be a member of the association or the person or entity described by Section 209.004(a)(6);
(8) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment for the transfer of a club membership related to the property;
(9) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment paid to an organization exempt from federal taxation under Section 501(c)(3) or 501(c)(4), Internal Revenue Code of 1986, only if the organization uses the payments to directly benefit the encumbered property by:
(A) supporting or maintaining only the encumbered property;
(B) constructing or repairing improvements only to the encumbered property; or
(C) providing activities or infrastructure to support quality of life, including cultural, educational, charitable, recreational, environmental, and conservation activities and infrastructure, that directly benefit the encumbered property; or
(10) a fee payable to or imposed by the Veterans' Land Board for consent to an assumption or transfer of a contract of sale and purchase.
(c) The benefit described by Subsection (b)(9)(C) may collaterally benefit a community composed of:
(1) property that is adjacent to the encumbered property; or
(2) property a boundary of which is not more than 1,000 yards from a boundary of the encumbered property.
(d) Notwithstanding Subsection (c), an organization may provide a direct benefit under Subsection (b)(9) if:
(1) the organization provides to the general public activities or infrastructure described by Subsection (b)(9)(C);
(2) the provision of activities or infrastructure substantially benefits the encumbered property; and
(3) the governing body of the organization:
(A) is controlled by owners of the encumbered property; and
(B) approves payments for activities or infrastructure at least annually.
(e) An organization may provide activities and infrastructure described by Subsection (b)(9)(C) to another organization exempt from federal taxation under Section 501(c)(3) or 501(c)(4), Internal Revenue Code of 1986, at no charge for de minimis usage without violating the requirements of this section.
Added by Acts 2011, 82nd Leg., R.S., Ch. 211 (H.B. 8), Sec. 1, eff. June 17, 2011.

Sec. 5.203. NOTICE REQUIREMENTS FOR CONTINUATION OF EXISTING PRIVATE TRANSFER FEE OBLIGATIONS. (a) A person who receives a private transfer fee under a private transfer fee obligation created before the effective date of this subchapter must, on or before January 31, 2012, file for record a "Notice of Private Transfer Fee Obligation" as provided by this section in the real property records of each county in which the property is located.
(b) Multiple payees of a single private transfer fee under a private transfer fee obligation must designate one payee as the payee of record for the fee.
(c) A notice under Subsection (a) must:
(1) be printed in at least 14-point boldface type;
(2) state the amount of the private transfer fee and the method of determination, if applicable;
(3) state the date or any circumstance under which the private transfer fee obligation expires, if any;
(4) state the purpose for which the money from the private transfer fee obligation will be used;
(5) notwithstanding Subsection (b), state the name of each payee and each payee's contact information;
(6) state the name and address of the payee of record to whom the payment of the fee must be sent;
(7) include the acknowledged signature of each payee or authorized representative of each payee; and
(8) state the legal description of the property subject to the private transfer fee obligation.
(d) A person required to file a notice under this section shall:
(1) refile the notice described by this section not earlier than the 30th day before the third anniversary of the original filing date described by Subsection (a) and within a similar 30-day period every third year thereafter; and
(2) amend the notice to reflect any change in the name or address of any payee included in the notice not later than the 30th day after the date the change occurs.
(e) A person who amends a notice under Subsection (d)(2) must include:
(1) the recording information of the original notice filed as required by this section; and
(2) the legal description of the property subject to the private transfer fee obligation.
(f) If a person required to file a notice under this section fails to comply with this section:
(1) payment of the private transfer fee may not be a requirement for the conveyance of an interest in the property to a purchaser;
(2) the property is not subject to further obligation under the private transfer fee obligation; and
(3) the private transfer fee obligation is void.
Added by Acts 2011, 82nd Leg., R.S., Ch. 211 (H.B. 8), Sec. 1, eff. June 17, 2011.

Sec. 5.204. ADDITIONAL COMPLIANCE REQUIREMENT: TIMELY ACCEPTANCE OF FEES PAID UNDER EXISTING PRIVATE TRANSFER FEE OBLIGATIONS. (a) The payee of record on the date a private transfer fee is paid under a private transfer fee obligation subject to Section 5.203 must accept the payment on or before the 30th day after the date the payment is tendered to the payee.
(b) If the payee of record fails to comply with Subsection (a):
(1) the payment must be returned to the remitter;
(2) payment of the private transfer fee may not be a requirement for the conveyance of an interest in the property to a purchaser; and
(3) the property is not subject to further obligation under the private transfer fee obligation.
Added by Acts 2011, 82nd Leg., R.S., Ch. 211 (H.B. 8), Sec. 1, eff. June 17, 2011.

Sec. 5.205. DISCLOSURE OF EXISTING TRANSFER FEE OBLIGATION REQUIRED IN CONTRACT FOR SALE. A seller of real property that may be subject to a private transfer fee obligation shall provide written notice to a potential purchaser stating that the obligation may be governed by this subchapter.
Added by Acts 2011, 82nd Leg., R.S., Ch. 211 (H.B. 8), Sec. 1, eff. June 17, 2011.

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