S T A T E   O F   N E W   Y O R K
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                                 5203--A
    Cal. No. 1079

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               May 3, 2011
                               ___________

Introduced  by  Sens.  LIBOUS, ADDABBO, DeFRANCISCO, MARTINS, RITCHIE --
  read twice and ordered printed, and when printed to  be  committed  to
  the  Committee on Judiciary -- reported favorably from said committee,
  ordered to first and  second  report,  ordered  to  a  third  reading,
  amended  and  ordered  reprinted,  retaining its place in the order of
  third reading

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.
              

                                                           LBD10855-03-1

S. 5203--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

S. 5203--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-

S. 5203--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

S. 5203--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.