Report Title:

Fees

Description:

Prohibits transfer fee covenants in real property transactions.

HOUSE OF REPRESENTATIVES	H.B. NO.	1383
TWENTY-FIFTH LEGISLATURE, 2009
STATE OF HAWAII

A BILL FOR AN ACT

relating to fees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that sound public policy favors the marketability of real property free of title defects or unreasonable restraints on alienation.  The legislature further finds that transfer fee covenants violate this public policy by impairing the marketability and transferability of real property and by constituting an unreasonable restrain on alienation regardless of the duration of such covenants or the amount of such transfer fees, and do not run with the title to the property or bind subsequent owners of the property under common law or equitable principles.

     The purpose of this Act is to prohibit transfer fee covenants.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

“Chapter

transfer fee covenants

§    -A   Definitions.  "Transfer" means the sale, gift, conveyances, assignment, inheritance, or other transfer of an ownership interest in real property located in the State.

     "Transfer fee" means a fee or charge required by a transfer fee covenant and payable upon the transfer of a interest in real property, or payable 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 transfer fees for purposes of this chapter:

(1)  Any consideration payable by the grantee to the grantor for the interest in real property being transferred, including any subsequent additional consideration for the property payable by the grantee based upon any subsequent appreciation, development, or sale of the property, including a separate mineral estate and its appurtenant surface access rights.

(2)  Any commission payable to a licensed real estate broker for the transfer of real property pursuant to an agreement between the broker and the grantor or the grantee, including any subsequent additional commission for that transfer payable by the grantor or the grantee based upon any subsequent appreciation, development, or sale of the property.

(3)  Any interest, charges, fees, or other amounts payable by a borrower 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, and any fees or charges payable to the lender for estoppel letters or certificates.

     (4)  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.

     (5)  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.

     (6)  Any tax, fee, charge, assessment, fine, or other amount, payable to or imposed by a governmental authority.

     (7)  Any fee, charge, assessment, fine, or other amount payable to a homeowners', condominium, cooperative, 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 authorized agent.

     (8)  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 prices, or other consideration given for the transfer of the real property.

     (9)  Any payment required pursuant to an environmental covenant.

     "Transfer fee covenant" means a declaration or covenant recorded against the title to real property means a declaration or covenant recorded against the title to real property which 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.

§    -B   Transfer fee covenants; prohibited.   A transfer fee covenant recorded in this state on or after July 1, 2009, does not run with the title to real property and is not binding on 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.  Any liens purporting to secure the payment of a transfer fee under a transfer fee covenant that is recorded in this state on or after July 1, 2009, are void and unenforceable.  This section shall not be construed in such a way as to presume that transfer fee covenants or liens recorded in this state prior to July 1, 2009 are valid and enforceable.

     SECTION 3.  This Act shall take effect upon its approval.

INTRODUCED BY:

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