NAILTA has weighed in on the NAIC public hearing concerning private transfer fee covenants. Click here to find out what national title agents think.
Private transfer fee covenants purport to bind subsequent homeowner to pay a 1% fee to the original covenantor on each sale of the property for a period 99 years. Under the common law, in order for a covenant to run with the land, three requirements must be met. First, the parties must intend for it to run with the land. Second, the covenant must “touch and concern” the land. And, third, there must be privity of contract. The second requirement, that the covenant “touches and concerns” the land is lacking with covenants that merely burden a homeowner with a requirement to pay a fee with no contemporaneous benefit to the property.
NAILTA is opposed to these fees and supports any state or federal bill that would prohibit them.