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A coalition group in the Cincinnati real estate industry is requesting the government to impose a ban on a new type of fees that is levies on property transaction. According to the group, this fee unfairly trims down the equity of the homeowners and property owners and instead diverts the funds to the original developers of the property. The group which is led by the American Land Title Association and the National Association of Realtors has recommended Timothy Geithner, the US Treasury Secretary to use the agency for protection of consumers created by recent financial reform legislation to outlaw what is called the capital recovery fees.

This capital recovery fees also called re-conveyance fees is inserted by property developers into agreements that govern subdivisions (many with Cincinnati OH homes for sale) that are recently built and also commercial developments in real estate. These agreements require property owners to pay an extra 1% of the selling price to the original developers of the property whenever the property changes hands for the next 99 years. This kind of fees has long been levied by municipalities that charge the fees to recoup subsidies on private development projects and also to raise revenues. However, the private transfer fees is relatively unheard of.

One of the first firms to take an initiative in the market to levy this fee is the Freehold Capital Partners, a firm based from New York and founded by Joseph Alderman who is a developer from Texas. The firm enters agreements with home builders and commercial developers to levy the fees and has been doing it since 2007. According to the company’s claims it has 600 billion of real estate projects which have included such fees. Although Wall Street remains skeptical of the number, Freehold is reluctant to disclose the names of its clients.

New home market in 2010 according to the National Association of Home Builders is worth 94.5 billion dollars. The private transfer fees was levied even before Freehold emerged on the scene. Between 2001 and 2006, Lennar Corp. another home builder built the fees while selling about 13000 homes in California. 3.8 million dollars were generated by funds from the fees which were added by Lennar to the funds of the Lennar Charitable Housing Foundation. According to Freehold the next step is to add securities backing the income stream generated by the fees. According to them this will give property developers some upfront cash to go ahead with projects.

Tags: cincinnati oh homes for sale, cincinnati real estate, fight the resale fee for homes, resale fee for homes

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