I 

111TH CONGRESS 

2D SESSION H. R. 6260 

To amend the Real Estate Settlement Procedures Act of 1974 to prohibit 

certain transfer fees and covenants in connection with the sale of real 

property. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2010 

Ms. WATERS (for herself, Mr. SHERMAN, Ms. MOORE of Wisconsin, Mr. CLAY, 

Mr. SIRES, and Mr. MILLER of North Carolina) introduced the following 

bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Real Estate Settlement Procedures Act of 

1974 to prohibit certain transfer fees and covenants in 

connection with the sale of real property. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Homeowner Equity 

5 Protection Act of 2010’’. 


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1 SEC. 2. PROHIBITION ON TRANSFER FEES AND COV2 ENANTS. 

3 (a) PROHIBITION.—The Real Estate Settlement Pro4 cedures Act of 1974 is amended by inserting after section 

5 12 (12 U.S.C. 2610) the following new section: 

6 ‘‘SEC. 13. PROHIBITION ON TRANSFER FEES AND COV7 ENANTS. 

8 ‘‘(a) TRANSFER FEE COVENANTS AFTER EFFECTIVE

9 DATE.—No person shall demand or accept a transfer fee 

10 pursuant to a transfer fee covenant that is recorded in 

11 any State if the transfer for which the transfer fee is im12 posed involves a federally related mortgage loan and such 

13 transfer occurs after the effective date under section 3 of 

14 the Homeowner Equity Protection Act of 2010. No person 

15 shall enforce or seek to enforce any lien purporting to se16 cure the payment of a transfer fee pursuant to a transfer 

17 fee covenant recorded in any State in connection with any 

18 transfer involving a federally related mortgage loan if such 

19 transfer occurs after such effective date. 

20 ‘‘(b) COORDINATION WITH STATE LAW.—No provi21 sion of State law or regulation that imposes more strin22 gent limitations on transfer fees or transfer fee covenants 

23 shall be construed as being inconsistent with this section. 

24 ‘‘(c) DEFINITIONS.—For purposes of this section, the 

25 following definitions shall apply: 


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1 ‘‘(1) COVERED ASSOCIATION.—The term ‘cov2 ered association’ means a nonprofit, mandatory 

3 membership organization comprised of owners of 

4 homes, condominiums, cooperatives, manufactured 

5 homes, or any interest in real property, created pur6 suant to a declaration, covenant, or other applicable 

7 law. 

8 ‘‘(2) STATE.—The term ‘State’ means the 

9 States of the United States, the District of Colum10 bia, the Commonwealth of Puerto Rico, and any 

11 other territory or possession of the United States. 

12 ‘‘(3) TRANSFER.—The term ‘transfer’ means, 

13 with respect to real property, the sale, gift, grant, 

14 conveyance, assignment, inheritance, or other trans15 fer of an interest in the real property. 

16 ‘‘(4) TRANSFER FEE.—The term ‘transfer fee’ 

17 means a fee or charge imposed by a transfer fee cov18 enant, except that such term shall not include any 

19 tax, assessment, fee, or charge imposed by a govern20 mental authority pursuant to applicable laws, regula21 tions, or ordinances. 

22 ‘‘(5) TRANSFER FEE COVENANT.— 

23 ‘‘(A) IN GENERAL.—The term ‘transfer fee 

24 covenant’ means a provision in a document re25 lating to the transfer of specified residential 


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1 real property located in any State and designed 

2 principally for the occupancy of from one to 

3 four families, whether recorded or not and how4 ever denominated, that— 

5 ‘‘(i) purports to run with the land or 

6 bind current owners of, or successors in 

7 title to such real property; and 

8 ‘‘(ii) obligates a transferee or trans9 feror of all or part of the property to pay 

10 a fee or charge to a third person upon 

11 transfer of an interest in all or part of the 

12 property, or in consideration for permitting 

13 any such transfer. 

14 ‘‘(B) EXCLUSIONS.—Such term shall not 

15 include— 

16 ‘‘(i) any provision of a purchase con17 tract, option, mortgage, security agree18 ment, real property listing agreement, or 

19 other agreement that obligates one party 

20 to the agreement to pay the other, as full 

21 or partial consideration for the agreement 

22 or for a waiver of rights under the agree23 ment, an amount determined by the agree24 ment, if such amount— 


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1 ‘‘(I) is payable on a one-time 

2 basis only upon the next transfer of 

3 an interest in the specified real prop4 erty and, once paid, shall not bind 

5 successors in title to the property; 

6 ‘‘(II) constitutes a loan assump7 tion or similar fee charged by a lender 

8 holding a lien on the property; or 

9 ‘‘(III) constitutes a fee or com10 mission paid to a licensed real estate 

11 broker for brokerage services rendered 

12 in connection with the transfer of the 

13 property for which the fee or commis14 sion is paid; 

15 ‘‘(ii) any provision in a deed, memo16 randum, or other document recorded for 

17 the purpose of providing record notice of 

18 an agreement described in clause (i); 

19 ‘‘(iii) any provision of a document re20 quiring payment of a fee, charge, assess21 ment, dues, fine, contribution, or other 

22 amount payable to a covered association 

23 pursuant to a declaration or covenant or 

24 law applicable to such covered association, 

25 including fees or charges payable for estopVerDate Mar 15 2010 01:39 Oct 08, 2010 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6260.IH H6260

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1 pel letters or certificates issued by the cov2 ered association or its authorized agent; or 

3 ‘‘(iv) any provision of a document re4 quiring payment of a fee or charge to an 

5 organization described in paragraph (3) or 

6 (4) of section 501(c) of the Internal Rev7 enue Code of 1986, to be used exclusively 

8 to support cultural, educational, charitable, 

9 recreational, environmental, conservation, 

10 or other similar activities benefitting the 

11 real property affected by the provision or 

12 the community of which the property is a 

13 part. 

14 ‘‘(d) REMEDIES.— 

15 ‘‘(1) PENALTIES.—Any person or persons who 

16 violate this section shall be fined not more than 

17 $10,000 or imprisoned for not more than one year, 

18 or both. 

19 ‘‘(2) JOINT AND SEVERAL LIABILITY; TREBLE

20 DAMAGES.—Any person or persons who violate the 

21 prohibitions or limitations of this section shall be 

22 jointly and severally liable to the person or persons 

23 charged for the transfer fee involved in the violation 

24 in an amount equal to three times the amount of 

25 any such transfer fee involved. 


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1 ‘‘(3) ACTIONS BY SECRETARY AND STATE OFFI2 CIALS.—The Secretary, the Attorney General of any 

3 State, or the insurance commissioner of any State 

4 may bring an action to enjoin violations of this sec5 tion. 

6 ‘‘(4) COURT COSTS AND ATTORNEYS FEES.—In 

7 any private action brought pursuant to this sub8 section, the court may award to the prevailing party 

9 the court costs of the action together with reason10 able attorneys fees.’’. 

11 (b) JURISDICTION OF COURTS.—Section 16 of the 

12 Real Estate Settlement Procedures Act of 1974 (12 

13 U.S.C. 2614) is amended by striking ‘‘or 9’’ each place 

14 such term appears and inserting ‘‘, 9, or 13’’. 

15 SEC. 3. EFFECTIVE DATE. 

16 The amendment made by section 2 shall take effect 

17 upon the expiration of the 90-day period beginning on the 

18 date of the enactment of this Act. 

Æ 


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