New Statutes-Transfer Fee Covenants Prohibited.

Keeping you informed. Bought to you by SALTI.

New Chapter 39A Transfer Fee Covenants Prohibited. Effective July 1, 2010. This seems to have been the new scam on real estate. Generally works this way. I as declarant make a private covenant on the deed or with other separate recorded covenants and transfer the land to you. When you sell it a fee of a set amount of money or a percentage of the sale price is a lien to be paid to me until I release it upon receipt of payment and this occurs every time the land is conveyed. NC and 14th other states have now said not so fast, this private covenant impacts marketability as a restraint of alienation and transferability and therefore unenforceable.

"This act is effective when it becomes law and applies to: (i) any transfer fee covenant that is recorded after the effective date of this act; (ii) any lien that is filed to enforce a transfer fee covenant that is recorded after the effective date of this act or purports to secure payment of a transfer fee that is recorded after the effective date of this act; and (iii) any agreement imposing a private transfer fee obligation entered into after the effective date of this act."

The new bill in its entirety may be viewed at Session Law 2010-23 - Transfer Fee Covenants Prohibited.

Notice #100706 - rhp