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March 19, 2012
The Federal Housing Finance Agency (FHFA) released the final rule on private transfer fees. The final rule is not substantively different than the proposed rule; however, it does include minor changes advocated for by the National Association of REALTORS® (NAR). FHFA removed the 1,000 yard requirement under the direct benefits section of the rule and instead offers a two-tier test. First, fees can be a direct benefit if property is open to the general public and is directly adjacent to the burdened community. Second, transfer fees may apply to more distant properties if said properties are primarily for the benefit of the burdened community. The rule also acknowledges that large developments often have one large homeowners association (HOA) with several smaller HOAs covering discreet subdivisions of the development. Transfer fees may be used to fund both organization types.
NAR generally opposes private transfer fees and has advocated they be prohibited since early 2010. In a series of letters to FHFA, NAR argued that private transfer fees increase the cost of homeownership and do little more than generate revenue for developers or investors and typically provide no benefit to homebuyers. NAR did acknowledge that such fees may be appropriate and supports the exception in the final rule for some organizations, such as homeowners associations, where there is a direct benefit to the homeowner, the fees are reasonable, and there is full disclosure.