NJ joins Florida in restricting use of property transfer fees

December 14, 2010 02:52PM

New Jersey has become the 19th state to restrict the use of private transfer fees, a controversial fee which requires a percentage of a home’s sales price be paid to a private third party each time the property is sold, often for up to 99 years, according to National Mortgage News. New Jersey joins Florida and several other states — including
California, Minnesota, Arizona and Texas — who already restrict the use
of the fee. Also called a property transfer fee, the fee kicks in when the builder adds a covenant to the deed of a new home. While the recipient of the money can often be a charity or government agency which provides housing for low-income families, sometimes builders themselves get the funds as pure profit. Community associations are advocates for the fees, which they use to maintain common facilities like roads. But an all-out effort to ban private transfer fees is being led by the National Association of Realtors and the American Land Title Association, which have complained to federal authorities that there is little or no oversight on how the proceeds are disclosed, how they are spent or how long the tax may be imposed. [National Mortgage News]