AB 1139 (Reyes). Real property: transfer fees: notices.

disclosure

Would require a notice describing potential prohibitions on federal financing (e.g. FHA loans) for properties encumbered by deed-based transfer fees.

Current Status: Pending

FindHOALaw Quick Summary:

Existing law requires the receiver of a deed-based transfer fee (e.g. association recreation fees), on and after January 1, 2009, to record specified information in the chain of title.  Certain fees in a document recorded against the property on or before December 31,  2007, are not transfer fees if a prospective purchaser is given notice that describes specified characteristics of the fee.  This information must be set forth in a single document.  This bill would amend Civil Code Section 1098 to require the document to also include a notice describing potential prohibitions on federal financing for property encumbered by a private transfer fee that does not provide a direct benefit to the property. Existing law specifies that when a transfer fee is imposed upon real property on or after January 1, 2008, the person or entity imposing the transfer fee, as a condition of payment of the fee, must record a separate document meeting specified requirements. Among other things, that document must contain the title “Payment of Transfer Fee Required” in at least 14-point boldface type and include names of all current owners of the real property subject to the fee, and the legal description and assessor’s parcel number for the affected property, and the fee amount.

**UPDATE: On March 23, 2017, the proposed text of AB 1139 was changed to amend Civil Code Section 1098.5 to require that a document, for private transfer fees created on or after February 8, 2011, to contain a notice in at least 14-point boldface type disclosing certain information, including that federal housing agencies are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a direct benefit to real property encumbered, and that if a person purchases such a property, that person may have difficulty obtaining financing:

(H) For private transfer fees created on or after February 8, 2011, the following notice in at least 14-point boldface type:
The Federal Housing Finance Agency and the Federal Housing Administration are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a “direct benefit” to the real property encumbered by the covenant. As a result, if you purchase such a property, you or individuals you want to sell the property to may have difficulty obtaining financing.

To read the current text of AB 1079, click here to the view the bill’s page on the California Legislature’s website. FindHOALaw will continue to track AB 10179 as it progresses through the Legislature. 

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View more info on AB 1079
from the California Legislature's website