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Resale Fees That Only Developers Could Love
By JANET MORRISSEY
REBECCA AND TRENT DUPAIX of Eagle Mountain, Utah, spent a year searching for their dream home. The couple, who have five children, considered 15 to 20 houses before finding “the one.”
They were thrilled when they closed on a $227,000, rock-and-stucco home with five bedrooms and two and a half baths in March 2009.
But four months later, when a local television reporter was doing a story on housing taxes in their subdivision, the Dupaixs discovered that their sales contract included a “resale fee” that allows the developer to collect 1 percent of the sales price from the seller every time the property changes hands — for the next 99 years.
Mrs. Dupaix, 34, says she and her husband had no clue about the fee when they closed on the house. “Of course we were upset,” she says. “We didn’t know about it, and our closer at the title company didn’t know about it.”
Other buyers gutsy enough to venture into the battered housing market in the hope of scoring a bargain might be wise to check the fine print before popping open the Champagne and signing on the dotted line.
A growing number of developers and builders have been quietly slipping “resale fee” covenants into sales agreements of newly built homes in some subdivisions. In the Dupaix contract, the clause was in a separate 13-page document — called the declaration of covenants, conditions and restrictions — that wasn’t even included in the closing papers and did not require a signature.
The fee, sometimes called a capital recovery fee or private transfer fee, has been gaining popularity among companies that have been frantically searching for new ways to gain access to cash in the depressed housing market.
“Developers are desperate,” says David Steffensen, a lawyer and a former developer in Salt Lake City. “They’re facing projects that are upside down” because the property value has fallen below the loan.
http://www.nytimes.com/2010/09/12/bu...l?ref=business
not to be performed within the confines of the title company....
By JANET MORRISSEY
REBECCA AND TRENT DUPAIX of Eagle Mountain, Utah, spent a year searching for their dream home. The couple, who have five children, considered 15 to 20 houses before finding “the one.”
They were thrilled when they closed on a $227,000, rock-and-stucco home with five bedrooms and two and a half baths in March 2009.
But four months later, when a local television reporter was doing a story on housing taxes in their subdivision, the Dupaixs discovered that their sales contract included a “resale fee” that allows the developer to collect 1 percent of the sales price from the seller every time the property changes hands — for the next 99 years.
Mrs. Dupaix, 34, says she and her husband had no clue about the fee when they closed on the house. “Of course we were upset,” she says. “We didn’t know about it, and our closer at the title company didn’t know about it.”
Other buyers gutsy enough to venture into the battered housing market in the hope of scoring a bargain might be wise to check the fine print before popping open the Champagne and signing on the dotted line.
A growing number of developers and builders have been quietly slipping “resale fee” covenants into sales agreements of newly built homes in some subdivisions. In the Dupaix contract, the clause was in a separate 13-page document — called the declaration of covenants, conditions and restrictions — that wasn’t even included in the closing papers and did not require a signature.
The fee, sometimes called a capital recovery fee or private transfer fee, has been gaining popularity among companies that have been frantically searching for new ways to gain access to cash in the depressed housing market.
“Developers are desperate,” says David Steffensen, a lawyer and a former developer in Salt Lake City. “They’re facing projects that are upside down” because the property value has fallen below the loan.
http://www.nytimes.com/2010/09/12/bu...l?ref=business
not to be performed within the confines of the title company....
But a real estate contract should be read top to bottom, I agree. I just think this in no way absolves those who use scumbag tactics to get something for nothing.
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