Connecticut recently enacted provisions concerning private transfer fees, Senate Bill 859, which redefines private transfer fees and invalidates the practice of imposing private transfer fee obligations against titles of real property. Under the new provisions, any fee payable at the conveyance of an interest in real property or for the right to make/accept such conveyance shall be considered a private transfer fee. However, the definition does not include any consideration paid by a grantee to a grantor for the conveyance of an interest in real property. The same exclusion carries to any subsequent conveyance if such is a one-time charge and the obligation to pay does not bind successors in title. The definition also specifically excludes:

Obligations arising out of a covenant recorded against a title or any promise, whether recorded or not, that requires payment of a private transfer fee upon conveyance of the subject property are private transfer fee obligations. Under the new provisions, no person shall be allowed to impose any private transfer fee obligations after the effective date, as such obligations are now considered void and unenforceable. Any person, having had a private transfer fee obligation imposed on them, may bring a civil action for damages.

  

Contracts encumbered by a private transfer fee obligation, having been imposed before the effective date of this act, must include a statement that discloses the existence of the obligation, a description, and a statement recognizing these provisions’ control. Any contract found in violation is void and unenforceable, and no purchaser shall be liable to the seller for damages. Such purchaser is also entitled to a return of all deposits made in connection with the sale of the subject property. In order for a private transfer fee, imposed before the effective date, to remain valid and enforceable, the person to be paid must record against the title of the subject property, prior to December 31, 2013, a “Notice of Private Transfer Fee Obligation”. The person to be paid may file an amendment to the notice reflecting changes to contact information, so long as he or she includes the recording information of the notice and a description of the property. The original notice must contain specific information, including:

Real property encumbered by a private transfer fee obligation may become unencumbered if the person to be paid failed to comply with the new requirements, or said person failed to respond within 30 days to a written request from a grantor of the subject property for a statement indicating the private transfer fee amount owed. Should the person to be paid fail to respond within the designated time, the grantor must record an affidavit conforming to section 47-12a of the General Statutes, and upon filing, no longer be subject to the obligation. The grantor may then transfer the subject property without paying the fee or passing the obligation along to any successors in title. The affidavit, once filed, will serve as prima facie evidence that the grantor sent a written request and the person to be paid failed to provide the required statement within 30 days.

 

 

Louis Danastorg, J.D., M.B.A. is Associate Counsel and Compliance Specialist at Bankers Advisory, Inc. He is a graduate of Vanderbilt University and earned his Juris Doctor and Masters of Business Administration from Suffolk University. He can be reached at Louis@bankersadvisory.com