Transfer Fees : More than you bargained for

by Judon Fambrough and Harold D. Hunt

“A Texas couple decided to take advantage of the federal tax for first-time homebuyers, and placed a contract on a $200,000 home in a subdivision.  While reviewing the title commitment two weeks before closing, they discovered the residence is subject to a deed restriction requiring them and all future buyers to pay a 1 percent “transfer fee” on the sales price to the property owners’ association (POA) each time the property sells.

The couple has never heard of a transfer fee.  They immediately want to know if such a fee is enforceable.  They wonder why they were not told about the fee before entering into the contract.  More importantly, can they get out of the contract because they were not told earlier?”

What do you think?  Give us your input on this topic.