§ 1098 – “Transfer Fee” Defined

A “transfer fee” is any fee payment requirement imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid upon transfer of the real property. A transfer fee does not include any of the following:

(a) Fees or taxes imposed by a governmental entity.

(b) Fees pursuant to mechanics’ liens.

(c) Fees pursuant to court-ordered transfers, payments, or judgments.

(d) Fees pursuant to property agreements in connection with a legal separation or dissolution of marriage.

(e) Fees, charges, or payments in connection with the administration of estates or trusts pursuant to Division 7 (commencing with Section 7000), Division 8 (commencing with Section 13000), or Division 9 (commencing with Section 15000) of the Probate Code.

(f) Fees, charges, or payments imposed by lenders or purchasers of loans, as these entities are described in subdivision (c) of Section 10232 of the Business and Professions Code.

(g) Assessments, charges, penalties, or fees authorized by the Davis-Stirling Common Interest Development Act (Part 5 (commencing with Section 4000) of Division 4) or by the Commercial and Industrial Common Interest Development Act (Part 5.3 (commencing with Section 6500) of Division 4).

(h) Fees, charges, or payments for failing to comply with, or for transferring the real property prior to satisfying, an obligation to construct residential improvements on the real property.

(i) Any fee reflected in a document recorded against the property on or before December 31, 2007, that is separate from any covenants, conditions, and restrictions, and that substantially complies with subdivision (a) of Section 1098.5 by providing a prospective transferee notice of the following:

1. Payment of a transfer fee is required.
2. The amount or method of calculation of the fee.
3. The date or circumstances under which the transfer fee payment requirement expires, if any.
4. The entity to which the fee will be paid.
5. The general purposes for which the fee will be used.

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