Gov. Bill Haslam signed into law a bill that bans private transfer fees on home sales, joining Tennessee with 35 other states that have taken similar measures.
“These fees infringe on property rights and hurt Tennessee consumers,” State Sen. Lowe Finney, D-Jackson, who sponsored the senate bill, said in a prepared statement. “They have no place in the Tennessee real estate market.”
Local leaders said that Manhattan-based Freehold Capital Partners is leading the push to add these fees to home purchase contracts.
The fees require that a percentage of the final sale price of the home be paid to a private third party every time the property is sold, usually for 99 years, lawmakers said.
Freehold wants to then sell the right to collect these fees on Wall Street.
According to Freehold’s website, the fees result in lower sales prices, closing costs and monthly interest payments for consumers.
But Tennessee officials said that the fees aren’t beneficial for customers.
“The governor and legislature stood up for homeowners by protecting consumers from these predatory fees,” Tennessee Land Title Association President Mark Rosser said. “This bill is an important step in enhancing consumer protections, safeguarding the real estate market and protecting our property rights system in Tennessee.”
Local home builder Jay Bell said that he doesn’t have much experience with these sorts of fees and that they are rare in the Chattanooga area.
He was aware of the fees before this new law and said he thought it was an “underhanded” way to continue making money.
The bill is the latest in a series of government actions to limit the fees.
Tennessee joins Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia and Washington in restricting the fees.
Nationally, the Federal Housing Finance Agency has issued a proposed rule that would prevent government-sponsored entities from investing in mortgages with these fees.