Bulletin: KS2010001

Dear Associates:   

Private Transfer Fee Covenants require payment of a fee upon each transfer of real property for periods of up to 99 years.  The payment may be required to be paid to a single person or to an entity, a "trustee" for multiple "beneficiaries" or to several persons.  These covenants may be created in separate documents, included within other documentation or in a deed.

Kansas House Bill No. 2092  (2009) defines a "transfer fee" as a "fee or charge payable upon the transfer of an interest in real property or payable for the right to make or accept such transfer..."  and a "transfer fee covenant" as  "  .... a declaration or covenant purporting to affect real property that requires or purports to require the payment of a transfer fee to the declarant or other person specified in the declaration or covenant or to their successors or assigns, upon a subsequent transfer of an interest in the real property."

HB 2092 provides that: (3) (b) Any transfer fee covenant recorded in this state on or after July 1, 2009, shall not run with the title to real property and is not binding or enforceable at law or in equity against any subsequent owner, purchaser or mortgagee of any interest in real property as an equitable servitude or otherwise. 

[*2]  Sec. 2. (a) On and after the effective date of this act, any transfer fee covenant, as defined in section 1, and amendments thereto, is hereby declared to be against public policy and such covenant shall be void and unenforceable.

(b) The provisions of this section shall apply to any transfer fee covenant in existence on the effective date of this act.   Emphasis added

Guideline:  If your search and examination reflects a recorded Transfer Fee Covenant contact your local Stewart underwriting personnel for guidance.  

HB  2092 specifically excludes the following from a Transfer Fee:

*consideration payable to the grantor for the interest in real property transferred; *commission payable to licensed real estate broker for the transfer under agreement between broker and grantor; *interest, charges, fees payable by a borrower to a lender under a loan secured by mortgage against real property; *rent payable by a lessee to lessor under a lease; *consideration payable to the holder of an option to purchase; *any tax, fee or assessment payable to or imposed by a governmental authority; *any tax, fee, assessment, fine payable to a homeowners', condominium, cooperative, mobile home or property owners' association pursuant to a declaration or covenant applicable  to the association; or *any fee typical to real estate closing costs including escrow, settlement fees or title insurance premiums charged by a title company licensed by the state.

For an Example of a Transfer Fee Covenant, click here. This is only a sample; do not assume that the Transfer Fee Covenant in your chain of title contains the same terms. 

If you have questions relating to this bulletin, please contact your local underwriting personnel or Stewart Legal Services. 

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