Would you be willing to pay the original builder a fee when you resell your home? That's an obligation some developers are trying to slap on homeowners in their communities.
Many condo and townhouse dwellers are already familiar with the "flip tax," more formally known as a resale fee. Typically calculated as a percentage of the sale price, it's a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association's homeowners.
But in some new developments, homebuilders are including in contracts a 1% fee to be paid to them every time the house is sold -- for 99 years. And the money doesn't go for improvements or upkeep: It's just money in the builders' pockets.
That has the real estate industry and consumer protection groups up in arms.
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Comment by:
Ross Wolf (#028231) Entered on: 2010-08-25 04:11:48
The 1% fee home builders are demanding they be paid every time the house is sold -- for 99 years will cost home sellers more than 1%. Historically, home sellers try to reduce the listing/selling broker's commission to make up such costs. That generally results in reducing brokers' incentive to show their property. Consequently causing home sellers to drop their asking price to get buyers and brokers interested in their property. Lenders will have to consider the 1% fee as a primary lien against a property's equity when making mortgages to subsequent buyers.
