Bulletin: TX2022002

Dear Associates:

The Company continues to be faced with questions on transactions wherein a private transfer fee has been recorded, purporting to create a lien, charge and/or assessment on the property. The recording is generally in the form of an instrument executed by the developer and generally requires the payment of 1% of the sales price of the property upon each transfer of the property. We have addressed these fees in other bulletins set out below.

In response to attempts to monetize private transfer fees, the Texas Legislature created a 3-year notice requirement to continue or renew private transfer fees. Some claimants have kept up with the notice requirements and continue to aggressively enforce their rights.  Other claimants have not continued the refiling of the notice requirements.  In some cases, developers have attempted to rescind the fees. The recipient of the fees sometimes disputes the rescission. The validity and enforceability of the private transfer fees may be disputed; however, the Company requires adequately addressing the private transfer fee.

If a document creating or referencing a private transfer fee is recorded on the property, an exception must be taken. Such exceptions are set out below. With a proper exception, we would not require collection or payment of the fee; however, if the exception is not acceptable to the buyer or lender or if you obtain a payoff covering past conveyances and the current conveyance, please contact a Texas Underwriter for additional guidance.

Owner's Policy:
Covenants, Conditions and Restrictions, set forth in instrument recorded under File Nos. _____ of the Real Property Records of _____ County, Texas, together with transfer fees set forth therein. This instrument includes provisions purporting to create a lien or charge on the Land payable upon each transfer of the Land. Notwithstanding any Covered Risk, policy provision, or endorsement to the contrary, this policy does not insure against and excepts all loss or damage due to the failure to pay any fees, amounts, or assessments: (a) on any prior transfers of Title, (b) on the current conveyance of Title, and (c) on any future transfers of Title. (Owner’s Policy Only)

Loan Policy:
Covenants, Conditions and Restrictions, set forth in instrument recorded _____ of the Real Property Records of _____ County, Texas, together with transfer fees set forth therein. This instrument includes provisions purporting to create a lien or charge on the Land payable upon each transfer of the Land. Notwithstanding any Covered Risk, policy provision, or endorsement to the contrary, this policy does not insure against and excepts all loss or damage due to the failure to pay any fees, amounts, or assessments: (a) on any prior transfers of Title, (b) on the current conveyance of Title, and (c) on any future transfers of Title, and (d) a lack or loss of priority of the Lien of the Insured Mortgage to any lien securing the payment of such fees, amounts, or assessments. (Loan Policy Only)

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.