S T A T E O F N E W Y O R K
________________________________________________________________________
7358--A
2011-2012 Regular Sessions
I N A S S E M B L Y
May 2, 2011
___________
Introduced by M. of A. MORELLE, P. RIVERA, SIMOTAS, ZEBROWSKI, BENEDET-
TO, REILLY, GALEF, BRONSON, JAFFEE, COOK, LUPARDO, SCHROEDER --
Multi-Sponsored by -- M. of A. ABINANTI, GABRYSZAK, GIBSON, JEFFRIES,
LATIMER, WEISENBERG -- read once and referred to the Committee on
Judiciary -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee
AN ACT to amend the real property law, in relation to prohibiting
private transfer fee obligations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The real property law is amended by adding a new article 15
to read as follows:
ARTICLE 15
PROHIBITION AND DISCLOSURE OF
PRIVATE TRANSFER FEE OBLIGATIONS
SECTION 470. SHORT TITLE.
471. INTENT.
472. DEFINITIONS.
473. PROHIBITION.
474. LIABILITY FOR VIOLATION.
475. DISCLOSURE.
476. NOTICE REQUIREMENTS FOR EXISTING TRANSFER FEE OBLIGATIONS.
S 470. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "PRIVATE TRANSFER FEE OBLIGATION ACT."
S 471. INTENT. THE LEGISLATURE FINDS AND DECLARES THAT THE PUBLIC
POLICY OF THIS STATE FAVORS THE MARKETABILITY OF REAL PROPERTY AND THE
TRANSFERABILITY OF INTERESTS IN REAL PROPERTY FREE OF TITLE DEFECTS OR
UNREASONABLE RESTRAINTS ON ALIENATION. THE LEGISLATURE FURTHER FINDS AND
DECLARES THAT PRIVATE TRANSFER FEE OBLIGATIONS VIOLATE THIS PUBLIC POLI-
CY BY IMPAIRING THE MARKETABILITY AND TRANSFERABILITY OF REAL PROPERTY
AND BY CONSTITUTING AN UNREASONABLE RESTRAINT ON ALIENATION REGARDLESS
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10855-02-1
A. 7358--A 2
OF THE DURATION OF THE OBLIGATION TO PAY A PRIVATE TRANSFER FEE, THE
AMOUNT OF A PRIVATE TRANSFER FEE, OR THE METHOD BY WHICH ANY PRIVATE
TRANSFER FEE IS CREATED OR IMPOSED. THUS, THE LEGISLATURE FINDS AND
DECLARES THAT A PRIVATE TRANSFER FEE OBLIGATION SHALL NOT RUN WITH THE
TITLE TO PROPERTY OR OTHERWISE BIND SUBSEQUENT OWNERS OF PROPERTY UNDER
ANY COMMON LAW OR EQUITABLE PRINCIPLE.
S 472. DEFINITIONS. 1. "TRANSFER" MEANS THE SALE, GIFT, CONVEYANCE,
ASSIGNMENT, INHERITANCE, OR OTHER TRANSFER OF AN OWNERSHIP INTEREST IN
REAL PROPERTY LOCATED IN THIS STATE.
2. "PRIVATE TRANSFER FEE" MEANS A FEE, CHARGE OR ANY PORTION THEREOF,
REQUIRED BY A PRIVATE TRANSFER FEE OBLIGATION AND PAYABLE, DIRECTLY OR
INDIRECTLY, UPON THE TRANSFER OF AN INTEREST IN REAL PROPERTY, OR PAYA-
BLE FOR THE RIGHT TO MAKE OR ACCEPT SUCH TRANSFER, REGARDLESS OF WHETHER
THE FEE OR CHARGE IS A FIXED AMOUNT OR IS DETERMINED AS A PERCENTAGE OF
THE VALUE OF THE PROPERTY, THE PURCHASE PRICE, OR OTHER CONSIDERATION
GIVEN FOR THE TRANSFER. THE FOLLOWING ARE NOT PRIVATE TRANSFER FEES FOR
PURPOSES OF THIS SECTION:
(A) ANY CONSIDERATION PAYABLE BY THE TRANSFEREE TO THE TRANSFEROR FOR
THE INTEREST IN REAL PROPERTY BEING TRANSFERRED, INCLUDING ANY SUBSE-
QUENT ADDITIONAL CONSIDERATION FOR THE PROPERTY PAYABLE BY THE TRANSFER-
EE BASED UPON ANY SUBSEQUENT APPRECIATION, DEVELOPMENT, OR SALE OF THE
PROPERTY, PROVIDED SUCH ADDITIONAL CONSIDERATION IS PAYABLE ON A
ONE-TIME BASIS ONLY AND THE OBLIGATION TO MAKE SUCH PAYMENT DOES NOT
BIND SUCCESSORS IN TITLE TO THE PROPERTY. FOR THE PURPOSES OF THIS
SUBPARAGRAPH, AN INTEREST IN REAL PROPERTY MAY INCLUDE A SEPARATE
MINERAL ESTATE AND ITS APPURTENANT SURFACE ACCESS RIGHTS.
(B) ANY COMMISSION PAYABLE TO A LICENSED REAL ESTATE BROKER FOR THE
TRANSFER OF REAL PROPERTY PURSUANT TO AN AGREEMENT BETWEEN THE BROKER
AND THE TRANSFEROR OR THE TRANSFEREE, INCLUDING ANY SUBSEQUENT ADDI-
TIONAL COMMISSION FOR THAT TRANSFER PAYABLE BY THE TRANSFEROR OR THE
TRANSFEREE BASED UPON ANY SUBSEQUENT APPRECIATION, DEVELOPMENT, OR SALE
OF THE PROPERTY.
(C) ANY INTEREST, CHARGES, FEES, OR OTHER AMOUNTS PAYABLE BY A BORROW-
ER TO A LENDER PURSUANT TO A LOAN SECURED BY A MORTGAGE AGAINST REAL
PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY FEE PAYABLE TO THE LENDER
FOR CONSENTING TO AN ASSUMPTION OF THE LOAN OR A TRANSFER OF THE REAL
PROPERTY SUBJECT TO THE MORTGAGE, ANY FEES OR CHARGES PAYABLE TO THE
LENDER FOR ESTOPPEL LETTERS OR CERTIFICATES, AND ANY SHARED APPRECIATION
INTEREST OR PROFIT PARTICIPATION OR OTHER CONSIDERATION AND PAYABLE TO
THE LENDER IN CONNECTION WITH THE LOAN.
(D) ANY RENT, REIMBURSEMENT, CHARGE, FEE, OR OTHER AMOUNT PAYABLE BY A
LESSEE TO A LESSOR UNDER A LEASE, INCLUDING, BUT NOT LIMITED TO, ANY FEE
PAYABLE TO THE LESSOR FOR CONSENTING TO AN ASSIGNMENT, SUBLETTING,
ENCUMBRANCE, OR TRANSFER OF THE LEASE.
(E) ANY CONSIDERATION PAYABLE TO THE HOLDER OF AN OPTION TO PURCHASE
AN INTEREST IN REAL PROPERTY OR THE HOLDER OF A RIGHT OF FIRST REFUSAL
OR FIRST OFFER TO PURCHASE AN INTEREST IN REAL PROPERTY FOR WAIVING,
RELEASING, OR NOT EXERCISING THE OPTION OR RIGHT UPON THE TRANSFER OF
THE PROPERTY TO ANOTHER PERSON.
(F) ANY TAX, FEE, CHARGE, ASSESSMENT, FINE, OR OTHER AMOUNT PAYABLE TO
OR IMPOSED BY A GOVERNMENTAL AUTHORITY.
(G) ANY FEE, CHARGE, ASSESSMENT, FINE, OR OTHER AMOUNT PAYABLE TO A
HOMEOWNERS', CONDOMINIUM, COOPERATIVE, MOBILE HOME, OR PROPERTY OWNERS'
ASSOCIATION PURSUANT TO A DECLARATION OR COVENANT OR LAW APPLICABLE TO
SUCH ASSOCIATION, INCLUDING, BUT NOT LIMITED TO, FEES OR CHARGES PAYABLE
FOR ESTOPPEL LETTERS OR CERTIFICATES ISSUED BY THE ASSOCIATION OR ITS
A. 7358--A 3
AUTHORIZED AGENT. NO AMOUNT SHALL BE PAID TO A HOMEOWNERS', CONDOMINIUM,
COOPERATIVE, MOBILE HOME, OR PROPERTY OWNERS' ASSOCIATION FOR THE
PAYMENT TO THE DECLARANT OF THE CONDOMINIUM OR THE CREATOR OF A HOMEOWN-
ERS', COOPERATIVE, MOBILE HOME OR PROPERTY OWNERS' ASSOCIATION, OR THEIR
DESIGNEE.
(H) ANY FEE, CHARGE, ASSESSMENT, DUES, CONTRIBUTION, OR OTHER AMOUNT
IMPOSED BY A DECLARATION OR COVENANT ENCUMBERING A COMMUNITY, AND PAYA-
BLE TO A NOT-FOR-PROFIT OR CHARITABLE ORGANIZATION FOR THE PURPOSE OF
SUPPORTING CULTURAL, EDUCATIONAL, CHARITABLE, RECREATIONAL, ENVIRON-
MENTAL, CONSERVATION, OR OTHER SIMILAR ACTIVITIES BENEFITING THE COMMU-
NITY THAT IS SUBJECT TO THE DECLARATION OR COVENANT.
(I) ANY FEE, CHARGE, ASSESSMENT, DUES, CONTRIBUTION, OR OTHER AMOUNT
PERTAINING TO THE PURCHASE OR TRANSFER OF A CLUB MEMBERSHIP RELATING TO
REAL PROPERTY OWNED BY THE MEMBER, INCLUDING, BUT NOT LIMITED TO, ANY
AMOUNT DETERMINED BY REFERENCE TO THE VALUE, PURCHASE PRICE, OR OTHER
CONSIDERATION GIVEN FOR THE TRANSFER OF THE REAL PROPERTY.
3. "PRIVATE TRANSFER FEE OBLIGATION" MEANS AN OBLIGATION ARISING UNDER
A DECLARATION OR COVENANT RECORDED AGAINST THE TITLE TO REAL PROPERTY,
OR UNDER ANY OTHER CONTRACTUAL AGREEMENT OR PROMISE, WHETHER OR NOT
RECORDED, THAT REQUIRES OR PURPORTS TO REQUIRE THE PAYMENT OF A PRIVATE
TRANSFER FEE TO THE DECLARANT OR OTHER PERSON SPECIFIED IN THE DECLARA-
TION, COVENANT OR AGREEMENT, OR TO THEIR SUCCESSORS OR ASSIGNS, UPON A
SUBSEQUENT TRANSFER OF AN INTEREST IN THE REAL PROPERTY.
S 473. PROHIBITION. A PRIVATE TRANSFER FEE OBLIGATION RECORDED OR
ENTERED INTO IN THIS STATE ON OR AFTER THE EFFECTIVE DATE OF THIS
SECTION DOES NOT RUN WITH THE LAND AND IS NOT BINDING ON OR ENFORCEABLE
AT LAW OR IN EQUITY AGAINST ANY OWNER, PURCHASER, OR MORTGAGEE OF ANY
INTEREST IN REAL PROPERTY AS AN EQUITABLE SERVITUDE OR OTHERWISE. ANY
PRIVATE TRANSFER FEE OBLIGATION THAT IS RECORDED OR ENTERED INTO IN THIS
STATE ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION IS VOID AND UNEN-
FORCEABLE. THIS SECTION SHALL NOT APPLY TO A PRIVATE TRANSFER FEE OBLI-
GATION RECORDED OR ENTERED INTO PRIOR TO THE EFFECTIVE DATE OF THIS
SECTION. THIS SECTION SHALL NOT BE DEEMED TO REQUIRE THAT A PRIVATE
TRANSFER FEE OBLIGATION RECORDED, FILED OR ENTERED INTO IN THIS STATE
BEFORE THE EFFECTIVE DATE OF THIS SECTION IS PRESUMED VALID AND ENFORCE-
ABLE. IT IS THE PUBLIC POLICY OF THIS STATE THAT NO PRIVATE TRANSFER FEE
OBLIGATION SHALL BE VALID OR ENFORCEABLE WHENEVER ENTERED INTO, RECORDED
OR FILED. FURTHERMORE, THIS ARTICLE SHALL NOT VALIDATE ANY PRIVATE
TRANSFER FEE AGREEMENT THAT IS CONTRARY TO THE LAWS OF THIS STATE.
S 474. LIABILITY FOR VIOLATION. ANY PERSON WHO RECORDS OR ENTERS INTO
AN AGREEMENT IMPOSING A PRIVATE TRANSFER FEE OBLIGATION IN THEIR FAVOR
OR IN THE FAVOR OF A THIRD PARTY AFTER THE EFFECTIVE DATE OF THIS
SECTION SHALL BE LIABLE FOR (1) ANY AND ALL DAMAGES RESULTING FROM THE
IMPOSITION OF THE TRANSFER FEE OBLIGATION ON THE TRANSFER OF AN INTEREST
IN THE REAL PROPERTY, INCLUDING, WITHOUT LIMITATION, THE AMOUNT OF ANY
TRANSFER FEE PAID BY A PARTY TO THE TRANSFER, AND (2) ALL ATTORNEYS'
FEES, EXPENSES AND COSTS INCURRED BY A PARTY TO THE TRANSFER OR MORTGA-
GEE OF THE REAL PROPERTY TO RECOVER ANY TRANSFER FEE PAID OR IN
CONNECTION WITH AN ACTION TO QUIET TITLE. WHERE AN AGENT ACTS ON BEHALF
OF A PRINCIPAL TO RECORD OR SECURE A PRIVATE TRANSFER FEE OBLIGATION,
LIABILITY SHALL BE ASSESSED TO THE PRINCIPAL, RATHER THAN THE AGENT.
S 475. DISCLOSURE. PRIOR TO THE SIGNING BY THE BUYER OF A BINDING
CONTRACT FOR THE SALE OF REAL PROPERTY, THE SELLER SHALL FURNISH TO ANY
PURCHASER A WRITTEN STATEMENT DISCLOSING THE EXISTENCE OF ANY PRIVATE
TRANSFER FEE OBLIGATION. THIS WRITTEN STATEMENT SHALL INCLUDE A
DESCRIPTION OF THE PRIVATE TRANSFER FEE OBLIGATION AND INCLUDE A STATE-
A. 7358--A 4
MENT THAT PRIVATE TRANSFER FEE OBLIGATIONS ARE SUBJECT TO PROHIBITIONS
UNDER THIS SECTION.
S 476. NOTICE REQUIREMENTS FOR EXISTING TRANSFER FEE OBLIGATIONS. 1.
FOR A PRIVATE TRANSFER FEE OBLIGATION IMPOSED PRIOR TO THE EFFECTIVE
DATE OF THIS SECTION, THE RECEIVER OF THE FEE SHALL RECORD, PRIOR TO SIX
MONTHS AFTER THE EFFECTIVE DATE OF THIS SECTION, AGAINST THE REAL PROP-
ERTY SUBJECT TO THE PRIVATE TRANSFER FEE OBLIGATION A SEPARATE DOCUMENT
IN THE COUNTY RECORDS IN WHICH THE REAL PROPERTY IS LOCATED THAT MEETS
ALL OF THE FOLLOWING REQUIREMENTS:
(A) THE TITLE OF THE DOCUMENT SHALL BE "NOTICE OF PRIVATE TRANSFER FEE
OBLIGATION" IN AT LEAST 14-POINT BOLDFACE TYPE;
(B) THE NAMES OF ALL CURRENT OWNERS OF THE REAL PROPERTY SUBJECT TO
THE TRANSFER FEE, AND THE LEGAL DESCRIPTION AND ASSESSOR'S PARCEL NUMBER
FOR THE AFFECTED REAL PROPERTY.
(C) THE AMOUNT, IF THE FEE IS A FLAT AMOUNT, OR THE PERCENTAGE OF THE
SALES PRICE CONSTITUTING THE COST OF THE TRANSFER FEE, OR SUCH OTHER
BASIS BY WHICH THE TRANSFER FEE IS TO BE CALCULATED;
(D) IF THE REAL PROPERTY IS RESIDENTIAL PROPERTY, ACTUAL DOLLAR-COST
EXAMPLES OF THE TRANSFER FEE FOR A HOME PRICED AT TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000), FIVE HUNDRED THOUSAND DOLLARS ($500,000),
AND SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000);
(E) THE DATE OR CIRCUMSTANCES UNDER WHICH THE PRIVATE TRANSFER FEE
OBLIGATION EXPIRES, IF ANY;
(F) THE PURPOSE FOR WHICH THE FUNDS FROM THE PRIVATE TRANSFER FEE
OBLIGATION WILL BE USED;
(G) THE NAME OF THE PERSON OR ENTITY TO WHICH FUNDS ARE TO BE PAID AND
SPECIFIC CONTACT INFORMATION REGARDING WHERE THE FUNDS ARE TO BE SENT;
(H) THE ACKNOWLEDGED SIGNATURE OF THE RECEIVER OF THE FEE; AND
(I) THE LEGAL DESCRIPTION OF THE REAL PROPERTY BURDENED BY THE PRIVATE
TRANSFER FEE OBLIGATION.
2. THE PERSON OR ENTITY TO WHICH THE TRANSFER FEE IS TO BE PAID MAY
FILE AN AMENDMENT TO THE NOTICE OF TRANSFER FEE CONTAINING NEW CONTACT
INFORMATION, BUT SUCH AMENDMENT MUST CONTAIN THE RECORDING INFORMATION
OF THE NOTICE OF TRANSFER FEE WHICH IT AMENDS AND THE LEGAL DESCRIPTION
OF THE PROPERTY BURDENED BY THE PRIVATE TRANSFER FEE OBLIGATION.
3. IF THE RECEIVER OF THE FEE FAILS TO COMPLY FULLY WITH SUBDIVISION
ONE OF THIS SECTION, THE TRANSFEROR OF ANY REAL PROPERTY BURDENED BY THE
PRIVATE TRANSFER FEE OBLIGATION MAY PROCEED WITH THE CONVEYANCE OF ANY
INTEREST IN THE REAL PROPERTY TO ANY TRANSFEREE AND IN SO DOING SHALL BE
DEEMED TO HAVE ACTED IN GOOD FAITH AND SHALL NOT BE SUBJECT TO ANY OBLI-
GATIONS UNDER THE PRIVATE TRANSFER FEE OBLIGATION. IN SUCH EVENT, THE
REAL PROPERTY THEREAFTER SHALL BE CONVEYED FREE AND CLEAR OF SUCH TRANS-
FER FEE AND PRIVATE TRANSFER FEE OBLIGATION.
4. SHOULD THE RECEIVER OF THE FEE FAIL TO PROVIDE A WRITTEN STATEMENT
OF THE TRANSFER FEE PAYABLE WITHIN THIRTY DAYS OF THE DATE OF A WRITTEN
REQUEST FOR THE SAME SENT TO THE ADDRESS SHOWN IN THE NOTICE OF TRANSFER
FEE, THEN THE TRANSFEROR, ON RECORDING OF THE AFFIDAVIT REQUIRED UNDER
SUBDIVISION FIVE OF THIS SECTION, MAY CONVEY ANY INTEREST IN THE REAL
PROPERTY TO ANY TRANSFEREE WITHOUT PAYMENT OF THE TRANSFER FEE AND SHALL
NOT BE SUBJECT TO ANY FURTHER OBLIGATIONS UNDER THE PRIVATE TRANSFER FEE
OBLIGATION. IN SUCH EVENT THE REAL PROPERTY SHALL BE CONVEYED FREE AND
CLEAR OF THE TRANSFER FEE AND PRIVATE TRANSFER FEE OBLIGATION.
5. AN AFFIDAVIT STATING THE FACTS ENUMERATED UNDER SUBDIVISION SIX OF
THIS SECTION SHALL BE RECORDED IN THE OFFICE OF THE COUNTY CLERK AND
RECORDER IN THE COUNTY IN WHICH THE REAL PROPERTY IS SITUATED PRIOR TO
OR SIMULTANEOUSLY WITH A CONVEYANCE PURSUANT TO SUBDIVISION FOUR OF THIS
A. 7358--A 5
SECTION OF REAL PROPERTY UNBURDENED BY A PRIVATE TRANSFER FEE OBLI-
GATION. AN AFFIDAVIT FILED UNDER THIS SUBDIVISION SHALL STATE THAT THE
AFFIANT HAS ACTUAL KNOWLEDGE OF, AND IS COMPETENT TO TESTIFY TO, THE
FACTS IN THE AFFIDAVIT AND SHALL INCLUDE THE LEGAL DESCRIPTION OF THE
REAL PROPERTY BURDENED BY THE PRIVATE TRANSFER FEE OBLIGATION, THE NAME
OF THE PERSON APPEARING BY THE RECORD TO BE THE OWNER OF SUCH REAL PROP-
ERTY AT THE TIME OF THE SIGNING OF SUCH AFFIDAVIT, A REFERENCE (BY
RECORDING INFORMATION) TO THE INSTRUMENT OF RECORD CONTAINING THE
PRIVATE TRANSFER FEE OBLIGATION AND AN ACKNOWLEDGMENT THAT THE AFFIANT
IS TESTIFYING UNDER PENALTY OF PERJURY.
6. WHEN RECORDED, AN AFFIDAVIT AS DESCRIBED IN SUBDIVISION FIVE OF
THIS SECTION SHALL CONSTITUTE CONCLUSIVE EVIDENCE THAT:
(A) A REQUEST FOR THE WRITTEN STATEMENT OF THE TRANSFER FEE PAYABLE IN
ORDER TO OBTAIN A RELEASE OF THE FEE IMPOSED BY THE PRIVATE TRANSFER FEE
OBLIGATION WAS SENT TO THE ADDRESS SHOWN IN THE NOTIFICATION; AND
(B) THE ENTITY LISTED ON THE NOTICE OF TRANSFER FEE FAILED TO PROVIDE
THE WRITTEN STATEMENT OF THE TRANSFER FEE PAYABLE WITHIN THIRTY DAYS OF
THE DATE OF THE NOTICE SENT TO THE ADDRESS SHOWN IN THE NOTIFICATION.
S 2. This act shall take effect immediately.