Senate Study Bill 3181 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON WARNSTADT) A BILL FOR An Act prohibiting the running of a transfer fee covenant with 1 the title to real property. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 6161XC (2) 83 rn/nh

S.F. _____ Section 1. NEW SECTION . 558.48 Transfer fee covenant —— 1 prohibition. 2 1. For purposes of this section, unless the context 3 otherwise requires: 4 a. “Transfer” means the sale, gift, conveyance, assignment, 5 inheritance, or other transfer of ownership interest in real 6 property located in this state. 7 b. (1) “Transfer fee” means a fee or charge payable upon 8 the transfer of an interest in real property, or payable for 9 the right to make or accept a transfer of an interest in real 10 property, regardless of whether the fee or charge is a fixed 11 amount or is determined as a percentage of the value of the 12 property, the purchase price, or other consideration given for 13 the transfer. 14 (2) “Transfer fee” does not include any of the following: 15 (a) Any consideration payable by the transferee to the 16 transferor for the interest in real property being transferred. 17 (b) Any commission payable to a licensed real estate broker 18 for the transfer of real property under an agreement between 19 the broker and the transferee or transferor. 20 (c) Any interest, charges, fees, or other amounts payable 21 by a borrower to a lender under a loan secured by a mortgage 22 against real property, including but not limited to any 23 fee payable to the lender for consenting to an assumption 24 of the loan or a transfer of the real property subject to 25 the mortgage, any fees or charges payable to the lender for 26 estoppel letters or certificates, and any other consideration 27 allowed by law and payable to the lender in connection with the 28 loan. 29 (d) Any rent, reimbursement, charge, fee, or other amount 30 payable by a lessee to a lessor under a lease, including but 31 not limited to any fee payable to the lessor for consenting 32 to an assignment, subletting, encumbrance, or transfer of the 33 lease. 34 (e) Any consideration payable to the holder of an option to 35 -1- LSB 6161XC (2) 83 rn/nh 1/ 3

S.F. _____ purchase an interest in real property or the holder of a right 1 of first refusal or first offer to purchase an interest in real 2 property for waiving, releasing, or not exercising the option 3 or right upon the transfer of the property to another person. 4 (f) Any tax, fee, charge, assessment, fine, or other amount 5 payable to or imposed by a governmental authority. 6 c. “Transfer fee covenant” means a declaration or covenant 7 purporting to affect real property which requires or purports 8 to require the payment of a transfer fee to the declarant or 9 other person specified in the covenant or declaration, or to 10 their successors or assigns, upon a subsequent transfer of an 11 interest in the real property. 12 2. A transfer fee covenant shall not run with the title to 13 real property and is not binding on or enforceable at law or in 14 equity against any subsequent owner, purchaser, or mortgagee 15 of any interest in the real property as an equitable servitude 16 or otherwise. Any lien purporting to secure the payment of a 17 transfer fee under a transfer fee covenant state on or after 18 July 1, 2010, is void and unenforceable. 19 EXPLANATION 20 This bill prohibits the running of a transfer fee covenant 21 with the title to real property. 22 The bill defines a transfer fee to mean a fee or charge 23 payable upon the transfer of an interest in real property, 24 or payable for the right to make or accept a transfer of an 25 interest in real property, regardless of whether the fee or 26 charge is a fixed amount or is determined as a percentage 27 of the value of the property, the purchase price, or other 28 consideration given for the transfer. The bill defines 29 a transfer fee covenant to mean a declaration or covenant 30 purporting to affect real property which requires or purports 31 to require the payment of a transfer fee to the declarant or 32 other person specified in the covenant or declaration, or to 33 their successors or assigns, upon a subsequent transfer of an 34 interest in real property. 35 -2- LSB 6161XC (2) 83 rn/nh 2/ 3

S.F. _____ The bill provides that a transfer fee covenant shall not 1 run with the title to real property and is not binding on or 2 enforceable at law or in equity against any subsequent owner, 3 purchaser, or mortgagee of any interest in real property. The 4 bill states that any lien purporting to secure the payment of a 5 transfer fee under a transfer fee covenant after July 1, 2010, 6 is void and unenforceable. 7 The bill specifies various types of consideration, 8 commissions, interests, charges, fees, rent, reimbursement, 9 taxes, assessments, or fines that do not constitute a transfer 10 fee and would accordingly not be subject to the prohibition. 11 -3- LSB 6161XC (2) 83 rn/nh 3/ 3