Texas Governor Rick Perry signed into law legislation that bans the payment of 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 January 31, 2012. Unless notice is filed and updated every three years, existing transfer fees will be voided.
