HOAs & POAs have Too Much Power to Abuse
The public is outraged that s HOAs have more power than counties, including the ability to arbitrarily set fees and fines and force foreclose, and that developers can charge transfer fees each time the homes sell - for 100 years!

HOT supports HOA reform without taking the lead role. Watch this space for a growing collection of articles.

HOA foreclosures skyrocketing

Texas Homeowner Association nightmares and foreclosures are rising

By: Brian Collister (BrianCollister@woaitv.com), WOAI TV, 5/13/10
http://www.woai.com/content/troubleshooters/story/Homeowner-association-foreclosures-skyrocketing/tpydPU_fskmD8S0ceoaxtw.cspx

SAN ANTONIO - You may not know this, but thousands of people in our community are struggling just to feed their family and pay their mortgage.

Even worse, some of those struggling homeowners are now facing foreclosure and it has nothing to do with paying a mortgage. The News 4 WOAI Trouble Shooter uncovered more and more families are actually losing their homes because they cannot afford to pay the homeowners association fees. The number of foreclosures by HOA's is skyrocketing.

We spoke with Tony Goodman, a man who’s losing his home right now because of problems with his homeowners association.

“I'm legally being robbed,” said Goodman.

Like a lot of people these days, Tony was out of work for ten months and struggling to pay his bills. The Lookout Canyon Creek HOA foreclosed on his $165,000 home because he owes the HOA $769. They auctioned off his house on the court house steps this past April because he had not paid them.

When you add in the late fees and attorney fees the total amount he now owes is just over $2,000.

“Although I know it's not really my fault, I feel like I'm failing my wife and my kids and that hurts,” said Goodman.

What’s worse is that Tony is not alone. The number of HOA's seizing homes for late payments is going through the roof. According to Bexar County foreclosure sales records, supplied by rexreport.com, the number of HOA foreclosures has jumped 78% in Bexar County, when you compare 2008 to 2009.

Lawyer Tom Newton is the man behind almost all of San Antonio's HOA foreclosures. News 4 WOAI Trouble Shooter Brian Collister spoke with Newton back in 2007 when he foreclosed on a disabled couple’s home.

Back then, Collister asked the attorney, "You feel comfortable kicking a disabled family out of their home for a few hundred dollars in HOA fees?”

"I feel comfortable in taking those steps necessary to enforce my clients’ legal rights,” Newton answered.

This time around Tom Newton refused to speak with us on camera. However, he did send News 4 WOAI an e-mail about the current spike in HOA foreclosures. Part of that email reads:

"I would point out that HOA’s have bills to pay and obligations to meet during these times, too. People who get foreclosed on by their HOA’s have been given ample written notice and payment plan opportunities, if I have been involved."

Tony tells us Newton did offer him a payment plan but the HOA board refused to accept what he told them he could pay.

“I tried to do the right thing. I tried to enter into a payment plan. It was rejected twice,” Tony explained.

We tried to get Tony's neighbors, who sit on the HOA board, to explain why they wouldn't work with him. But after leaving messages for the HOA president and talking to the management company, we got no response from the board.

So that’s when News 4 WOAI’s Brian Collister showed up to one of the HOA meetings to get an answer. Within minutes of walking in, the HOA’s Vice President, Keith Lindsey, asked Collister to leave. Then he called police. After the police came and explained to the HOA board that it’s not a crime to ask questions, we took this problem to State Representative David Leibowitz.

Leibowitz has filed bills in the past to stop this type of practice, but hasn’t been that successful. But he says he’ll keep trying and plans to take another bill to the legislature next term. He also plans to use Tony’s story, and others, as an example of why there needs to be laws against this.

“I want to change it because I don't think it was ever intended for someone to lose their home over a few hundred dollars in homeowners dues owed as a result of losing their job,” said Leibowitz.

When the legislature meets next year, News 4 WOAI plans to follow the fight to outlaw HOA's from taking your home and let you know what happens.

Update: After getting word that our story would soon be airing, Tony Goodman got some good news. Because of our investigation, Goodman got a letter from his HOA offering to let him make payments to stay in his home.

** A personal note from Brian: I joined my subdivisions HOA board last year. At my first meeting I proposed we never foreclose on any resident for any reason (especially in light of the bad economy) and that we no longer use attorney Tom Newton. None of the other HOA board members would agree to either suggestion.

**The following emails are from Attorney Tom Newton in response to a request for an interview and information about HOA foreclosures:

Thanks, but I decline the interview.

I would point out that HOAs have bills to pay and obligations to meet during these times too. If everyone does not pay their fair share, then the whole community may suffer, and the HOAs will have to default on their payments to their creditors and vendors. Most HOAs need to collect assessments in order to meet budget, as their assessments are often just enough to cover their expenses. Also, there is a four year statute of limitations on debt collection lawsuits and lien foreclosures, so the HOAs are legally required to take action before they lose their rights.

People who get foreclosed on by their HOAs have been given ample written notice and payment plan opportunities, if I have been involved.

Tom L. Newton, Jr.
Attorney at Law
ALLEN, STEIN & DURBIN, P.C.

=========================

Brian-

A few points, in general:
1. Section 209.008(f), Texas Property Code, imposes a cap on legal fees for non-judicial foreclosures at the greater of one-third of the amount of all actual costs and assessments, excluding legal fees, plus interest and costs, or $2,500. The Texas Legislature has decided that fees of up to those amounts are proper and allowed. We always charge far less than the law allows on non-judicial foreclosures.
2. The same amount of legal work is required to collect when the amount owed is $500 as $50,000. The amount owed is just a number, which does not mean less work or fewer hoops for the HOA to jump through when the amount owed is smaller.
3. Why do people not get excited when a multi-billion dollar, taxpayer-bailed out bank like JP Morgan Chase or Bank of America forecloses on six months of unpaid mortgage payments, but they think it is wrong for a non-profit HOA, which is usually funded solely by members' dues, to foreclose on two or three years of assessments? This thought process is not fair, objective or reasonable.
4. Every payment plan proposed to my office is presented to the Board of Directors of each Association for a decision. Please don't give your viewers the false impression that the heartless lawyer makes these decisions. It's their neighbors, who pay their own bills, who get to decide.

Tom L. Newton, Jr.
Attorney at Law
ALLEN, STEIN & DURBIN, P.C.

HOAs forcing sales of homes

Foreclosure filings over unpaid fees start to make mark, rile North Texas residents

By Steve Brown (stevebrown@dallasnews.com), Dallas Morning News, 4/22/2010
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/042210dnbushoaforeclose.3fe7296.html

A growing number of North Texas home foreclosure filings have nothing to do with the usual late mortgage payments.

About 350 Dallas-Fort Worth area homes are facing a forced sale because the owners owe money to homeowners associations or home equity loan holders, local foreclosure filings show.

That accounts for less than 10 percent of the total foreclosure postings for May in the four-county area, but the number of these filings is going up, said George Roddy, president of Addison-based Foreclosure Listing Service.

"Especially from the homeowners associations, we have seen significant increases in postings," said Roddy, whose firm tracks foreclosures in more than a dozen Texas counties. "Historically, these HOA postings have been very low - five years ago, you rarely saw one."

But with thousands of North Texans losing jobs and income, some are falling behind on homeowners association dues.

The HOA debts generally include unpaid dues, fines or special assessments.

"In the past, most of them [the HOAs] sat on it and tried to collect later," Roddy said. "But now they are selling some at auction."

A foreclosure by a homeowners association doesn't include the original debt on the property, so anyone who bought the foreclosed property would still have to negotiate to pay the original mortgage. And the property owner has six months after a forced sale to redeem ownership by paying the HOA debt, Roddy said.

One resident's story

Allen resident Johnny Harris is one of more than 100 D-FW residents who had his home posted for forced sale next month by his HOA after he fell behind on fee payments.

Harris said he owed about $1,000 to the Custer Hill (Allen) Homeowners' Association Inc. and was planning to make good on his payments when he got a letter notifying him of the planned foreclosure.

"I don't think they should have that power," Harris said. "I have resolved my problems, and I always intended to do so.

"I had already made a check out and sent it off when I started getting these lawyer letters," he said. "It really ticks me off."

Judd Austin Jr., the Dallas attorney who filed the foreclosure sale on behalf of the Custer Hill (Allen) Homeowners' Association, said Wednesday that he couldn't immediately confirm that Harris had made good on his debt to the HOA.

But Austin said that in most cases, homeowners work out a payment plan to meet the obligations.

"The HOA doesn't want to own the property," Austin said.

The fact that Texas law allows a home foreclosure because of unpaid neighborhood association dues rankles many residents.

"This is going on statewide," said Beanie Adolph of Texas Homeowners for HOA Reform Inc. "The horrible truth about HOA foreclosures is that the HOA has no investment or expenditure in the home. This is debt created out of thin air - HOA fines, charges, attorney fees."

[HOT: When a city or county assesses proptery taxes, homeowners have a right to appeal. The same goes for fines. But there's no process to challenge abusive fees, fines and assessments levied by HOAs.]

Each HOA is governed its own bylaws and practices. The HOA foreclosure filings don't have to specify how much is owed, and the amounts vary widely.

State lawmakers are looking into complaints about HOAs. Just this week, a Texas House panel in Austin heard testimony about "egregious" practices by some HOAs, including foreclosures.

Neighborhood associations argue that the economic downturn and housing market slowdown have caused a spike in unpaid fees.

"Yes, this has been an issue for many HOAs and condo associations, especially in areas where the housing market has taken the biggest hit - Florida, Southern California and parts of Arizona and Nevada," said Frank Rathbun, vice president of communications for the Virginia-based Community Associations Institute. "Of course, the recession hasn't helped."

Home equity defaults

The same factors that have contributed to record home foreclosures and late payments have also caused a jump in foreclosure postings for home equity loans.

Almost 250 such filings were made in the D-FW area this month, Foreclosure Listing Service estimates.

"We knew when those loans first came into vogue that it was just a matter of time before this happened," Roddy said. "People were borrowing to pay for a boat or a trip and putting the debt on their house."

Developers aim to attach transfer fee to homes

By Jennifer Hiller, San Antonio Express-News, 3/30/2010
http://www.chron.com/disp/story.mpl/business/6937231.html

[HOT: Can a builder really charge $3,000 transfer fee on each sale of a $300,000 home? Public outrage is off the charts. You MUST read some of the reader comments.]

Here's a new concept in real estate: buy a house and when you go to sell it years later, owe the original developer or builder 1 percent of the sales price.

Freehold Capital Partners, a company started in Texas, is selling developers across the country on a plan that would attach a private transfer fee to homes, allowing developers to profit for generations.

The fee, written into neighborhood restrictions, would encumber the property for 99 years and throw 1 percent of the sale price back to the developer -or his or her estate or another investor - and Freehold each time the home changes hands.

It's an idea that's drawn the attention of some state legislatures and real estate trade organizations, which are fighting to stop the transfer fees from gaining a toehold in the market.

Critics say that such fees could taint entire neighborhoods, making it difficult to sell homes and complicate title records for decades. If the fee is not paid by the seller, a lien is placed on the property and the title becomes muddy.

And then there's the basic question: “What it comes down to is, 20 years later, why is the developer still profiting?” asked Jeremy Yohe, director of communications with the American Land Title Association, the national association for title companies.

Freehold, which started in Austin, compares the transfer fees to mineral rights and calls land development a creative process on par with writing a book.

‘The creative process'

“Just like authors who write books and musicians who write songs that will be enjoyed for generations to come, those who improve property are also engaged in the creative process, and the economics of the transaction should reflect that reality,” a Freehold brochure says.

Freehold says it has signed up developers, including many across Texas, who hold more than $500 billion in residential and commercial property - but it will not name any of them.

Because courthouse property records are filed by owner name, it's difficult to track the company's activities in Texas and know which developers have signed on to the program.

Title companies that have been watching the firm say it's possible that a homeowner could have a transfer fee in a neighborhood covenant and not realize it until the home is resold. Even if a transfer fee were to turn up in a title search, few people read all of the ovenants and restrictions before signing.

A spokesman for Freehold says the company favors clearly disclosing private transfer fees in a standalone document. But in Texas, there's no legal requirement to do so. And under the standard real estate contract in Texas, home buyers agree to accept any restrictions that are common to the subdivision.

The founder

Freehold founder Joe Alderman refused requests for an interview, and spokesman Curtis Campbell would only answer questions by email.

In response to the company's sales pitch, Texas lawmakers have passed restrictions on private transfer fees, but they are not banned. Some other states have banned such fees outright. [HOT supports an outright ban on private transfer fees.]

The American Land Title Association and the National Association of Realtors wrote model legislation banning private transfer fees that members can present to state lawmakers. This month the trade groups asked the U.S. Department of Housing and Urban Development to clarify that it prohibits the use of private transfer fees on government-insured mortgages.

“It's a limit on property. If you don't pay the fee, the property doesn't transfer, and you don't have clear title,” said Gerry Allen, community outreach manager with the National Association of Realtors. “There's nothing to say that anybody who owns a home can't attach this to their property. You could have a whole chain of these.”

[HOT: So could homeowners add perpetual private transfer fees if they used their creativity to improve their own property with landscape, a pool or interior decorating? We didn't think so, but the argument goes like this... "The developer may have turned raw land into a subdivision with houses, but homeowner improvements turned the house into a home, and improvements by neighbors turned the subdivision into a triving community. Which adds more value?]

Florida, Oregon, Missouri and Kansas have banned transfer fees in recent years. This month, Utah lawmakers banned them and a bill to ban them is pending in Louisiana.

Texas loophole?

Texas law restricts private transfer fees, but says some groups can collect them, including charities, property owner associations or governmental entities. Freehold has interpreted this to mean that if a slice of the transfer fee (5 percent) goes to charity, the developer and Freehold can collect the rest.

After the California Association of Realtors learned about transfer fees, the trade group took the issue to the legislature in 2007.

But developers aligned with environmental groups and affordable housing advocates, promising that a percentage of the fee would help set aside open space or create affordable housing. It proved an unbeatable coalition, and the California real estate agents' group settled for a law that requires clear disclosure of transfer fees.

Freehold was started by Alderman and was based out in Austin before moving its headquarters to New York this year to be at the “heart of the financial markets.”

While the company says it has a patent pending, the U.S. Patent and Trademark Office denied the patent last year and lists the application as “abandoned.”

Campbell said by e-mail that Freehold has filed a continuation patent to pick up the claims of the first patent.

The company name makes reference to English law - “freehold” essentially means outright property ownership.

A few years ago, a predecessor company called Freehold Licensing tried to sell individual homeowners, as well as builders and developers, on the idea of transfer fees.

“Maybe you planted a tree, added on a room, or rehabbed a home ..... ” the Web site said in 2007. “Fifty years from now, when a family is enjoying the property that you improved, and making a profit by selling the property you improved, why shouldn't you benefit? ... ”

[What if property values declined because the land was too far from the City or was threatened by drought or flood or problems due to expansive clay soil? What if a fire destroyed the scenic view? What if homes built there were now viewed as too big or out of date? If there's a perpetual benefit, shouldn't there be a perpetual risk? Oh yeah, that's not the American way... or the Capitalist way.]

Today, Freehold markets to large landholders, not individuals, and says it will create a secondary market for selling the rights to transfer fees.

In the Houston area

The idea is that developers would get money upfront from investors, who would get a 99-year income stream.

The Freehold pitch sounds good to many in the industry who need money now to finance a project.

“It's a phenomenal plan,” said Greg Blume, a Houston-based developer who plans to use transfer fees in the Savannah Plantation development in Brazoria County. “It's just one more way of trying to finance and fund any type of real estate project.”

Selling transfer fee rights to investors would mean a developer could add more amenities to a neighborhood or sell for less than the competition - or both. “It just makes sense,” Blume said. “You can do more for the project and have less debt.”

Blume said developers in the state's major markets are signing up with Freehold. There's no cost, but because there's no secondary market, no one has seen any money.

READER COMMENTS: (selected from over 200 of them!)

boutte wrote:
This sounds like "Steal Estate" instead of real estate?

placidian wrote:
Home ownership... the American Ream.

BenchJocky wrote:
"Free" enterprise at work -- anything to free consumers from their money!

aptlyapropos wrote:
Nice. I buy a house not because of the improvements the previous owner did, but because of the improvements I think I can make. So, after tearing out and paying to replace their poor choice of landscaping, flooring, etc, when I sell my house, I have to pay them for the stuff I took out. Yeah....No.

WhichWitch wrote:
Horse chips! These "master-planned" communities have maybe half a dozen or so cookie-cutter floor plans. Those same floor plans are used in many other new communities/subdivisions. What "creative process" is involved in that? It's not like these developers are writing the latest Stephen King novel each time they build a house that looks just like the one next door or across the street. They're not doing much of anything new from one subdivision to the next.

FtBendAgent wrote:
The public doesn't realize that Realtors actually invest their money into funds every year that lobby against these transfer fees to protect home buyers and sellers from these practices. If consumers would proactively notify their congress and senate representatives to not allow this practice of transfer fees, it can finally come to an end.

12GaugePump wrote:
Next, the banks will want one percent of the sale price for being the original lender.

5MileHill wrote:
Crud! That's better than a toll road.

Thunder1 wrote:
As mentioned in the article, people don't really know what is hidden in the association covenants and restrictions. They are unaware, even with "bold type notices" that moving into their "dream home" that they are committing to what could be a lifetime financial burden that never ends. Once this new found hidden source of wealth is fully discovered, there will literally be thousands of these concepts everywhere.

bookworm1 wrote:
The issue is that the first time most people see the deed restrictions (which is where this fee would be) is at closing. Not many people think to ask for it before closing and the law only requires that the purchaser be provided one before purchase. And sure you are going to sit down and read the deed restrictions before you sign that you agree to abide by them while everyone else in the room is watching you. It is a beautiful scam (yes, I am being sarcastic).

3v3y wrote:
I like how they compare themselves to artists. Anyone who has seen some of the "land development" in these parts can tell you that they are anything but works of art!! [San Antonio's The Hills of Rivermist is a fine work of art? Read about it.]

Koskipaa wrote:
The assumption that developers "improve" property should not be automatically accepted. In some cases, there is thoughtful treatment of a piece of land. In many other cases, a small energy efficient house that could be repaired but gets bulldozed, and the whole pile is pushed into a landfill at everyone's expense. The new "improved" dirt goes in and floods the neighbors. A new improved (large) house is built with unefficient air conditioned rooms no one will ever use. Just about that time the new improved HCAD flies over in their helicopter and determines all of the surrounding residents will have to pay higher property taxes just because a developer talked about improving while they were thniking about the almighty buck. They want royalties for that?

Nuz wrote:
If the developer gets perpetual transfer fees with each sale, is the developer perpetually liable for potential flooding, sewage, earthquake damage, expansive soil and other problems he "should" have anticipated?

SoutheastGringo wrote:
When you buy a house everyone has their hand out - plumbing, electrical, termite, foundation, etc. inspectors; realestate agents; title companies; bankers; attorneys; HOAs; and various insurance companies for fire & casualty, flood, termite, windstorm, mortgage loan, etc. I think the housing industry must realize they are killing themselves, but it maybe already too late.

Anse2 wrote:
Robert Plant doesn't get paid a royalty when old copies of Led Zeppelin albums get resold at used record shops. I wonder if Kenmore will argue that if their freezer gets resold with that house, then they deserve a royalty, too? Maybe Ford will come out and insist that every time a used F-150 gets sold, they should get a kickback.

feufoma wrote:
That's yet another reason not to live in the soulless developer-controlled "burbs." Darn, my list is getting pretty long!

bobinhouston wrote:
Developers are acting like they are the Government now. [HOT: Actually, developer-controlled HOAs have significantly MORE power than Texas counties, which lack rule making authority and can't require permits or enforce building codes. There's no limits on the fees and fines that HOAs can impose, and there's no appeal process like when the county appraises your property too high.]

jgolf_99 wrote:
"The company name makes reference to English law - 'freehold' essentially means outright property ownership." Isn't this the exact OPPOSITE of outright property ownership? The HOAs already have WAY too much power in Texas... and these morons want to give them MORE? Individual propery ownership has all but disappeared already in this state. I "own" my house, but have to get PERMISSION from my HOA to REPAIR my roof from Ike damage. How does that support the notion of individual property ownership? I can't paint my house the SAME COLOR without first getting permission! I've come to realize that I DON'T OWN MY PROPERTY! The HOA OWNS my property already.

popsy wrote:
You might as well call it a tax. [HOT: Actually a sales tax on homes and investment securities may be good in two respects: (1) it would be a revenue source, and (2) it would encourage long-term investment over short-term speculation.]

NotmeUS wrote:
This is the kind of BS that kills American spending. Going to buy a car isn't even a fun experience anymore. You leave the lot feeling like you just got violated and had to pay for the displeasure. When you go to close on your house and have already made all the arrangements to move in, you are confronted with several hours of paper signing. You leave that ordeal wondering what the heck you signed because you can't remember if you gave away your first born in the deal on page 1 or 900.

My point is that making these big purchases used to be exciting and something that was looked forward to. Now, for anybody who has gone through it, it is simply now a bad chore! This is what happens when money becomes more important than values and morals. This company needs a serious correction! [So do our laws.]

socpar wrote:
I have no horse in this race, but logic tells me that the developers should market this from a perspective that it encourages developers (and owners, if they end up getting a fee from future sales) to build and maintain better homes. Think about it, if you can get some fee, say 1% from every sale of a property, for the remainder of your life, you would want that home to have as high a resale value as possible. This would include the surrounding properties as well. If this were the case, maybe we would have less shoddy construction, and also, less ghetto, and more safe, nice looking, neighborhoods.
[Don't count on it.]

kicker wrote:
When is anyone going to stick up for the consumer? We're getting hammered left and right and our State Legislators look the other way. Remember this when it's time to vote. [HOT: That's what we're here for. Please support us.]

Sicnarf wrote:
Carry that idea forward and ask why shouldn't the carpenter, electrician et al get a percentage too for as long as the house stands?

govlaw wrote:
There is nothing “creative” about building a subdivision full of energy gobbling McMansions that require their owners to take a 2 hour commute to work. Just wait, they'll package these "rights" into transfer-fee-backed derivatives and sell them to your pension fund as an investment. This is the kind of creativity that contributes absolutely nothing to society except that it continues the redistribution of wealth upward from those that really create it to those at the top who sit by and do nothing.

stormkite wrote:
Some will rob you with a six-gun, and some with a fountain pen." [The guy with a gun risks going to jail while the guy with the pen risks nothing. That's white collar crime for ya.]

BrainWashedLiberal wrote:
Do not buy ANY Production Tract Home from ANY Production Tract Home Builder. Most of the Production Tract Home Builders in the Harris & Galveston County areas are sacrificing way to much quality in their construction - both in labor and materials. Before you buy ANY new home that was built by a Production Tract Home Builder, check their ratings first, and also demand that they "Amend the Buy Sell Agreement" to give you more rights as a consumer. The new home "Arbitration Boards" are kangaroo courts for consumer disputes. If they refuse to amend the Buy Sell Agreement, WALK (NO, RUN) AWAY!

FtBendAgent wrote:
This fee is imposed by the DEVELOPER, not the BUILDERS. Typically builders purchase lots from the developers in these communities to build thier homes. The builders have no choice or recieve benefits of this transfer "tax." This tax exists in other states around the country and can be ELIMINATED here if you let your Political Representatives know we do not want this. Last year did you know if you used your vehicle for business it would have been taxed, but Realtors lobbied against the reoccurring bill proposal and finally killed it with language so it would never come up again? Be proactive if you are against it. Make your voice heard beyond a message board. [HOT is giving Texas homeowners a voice in the legislative process on issues like this.]

theysaidwhat wrote:
But this is capitalist innovation at its finest. Why let government interfere in the market? You guys sound like socialists.

johnhstn1 wrote:
Fair is fair. If they want a 99 year transfer fee, then I think they should also warranty the house for the same number of years.

45caliber wrote:
Another bad idea. When I buy something, it is mine. If I'm paying for something that isnt' mine, then that is rent - and I don't rent.

Spinelli wrote:
I love these type of stories that really show how much all of us have in common, regardless of political affiliation. The vast majority of us have similar lives, income and experiences. Now if the collective middle class could stand behind some real issues, the career politicians would be very, very afraid.

RU12 wrote:
Most politicians and judges love money more than they love this country. For those who need proof just look around you. Look at all of the things the Gov. is doing to us every day that just 20 years ago most of us said could never happen, no not in America! This will become law one day because certain people will make a fortune from it and then pass some of it under the table to our lawmakers.

Dave10318 wrote:
My company builds new and renovates homes. I will never be a part of this. It is just not right in my opinion and I am a construction company owner. I try to make as much money possible but once we close on the deal it is done.
[HOT: Reputable builders are of like mind and should support legislation to ban this pactice.]

Bruce99 wrote:
Talk about adding insult to injury - They get the 1% even if you lose money on the sale of the house!!! Kind of sounds like sales tax on a vehicle. No matter how many times it changes hands the state gets their share. I wonder how much money the state makes off used car sales? A $30,000 car could, over it's lifetime, bring in sales taxes well in excess of $100,000 in sales depending on how many times it changes hands.

Tejanocito wrote:
Nothing new under the Sun! Lived in Maryland where they have something called Land Rents. [same in Hawaii] When you buy a home you do not get the land. Instead each year you pay rent on it. After twenty or 30 years yopu can buy the land or keep on renting. In Texas we have MUDs a similar concept where developers do not pay impact fees for utilities. We just keep on paying MUD fees forever. Supposed to make housing initialy cheaper but we pay thru the nose in the long run.

VetMom wrote:
A painter does not receive anything after the first sale of a piece of artwork; a writer does not get anything if you sell a book you previously bought; a mucician does not benefit if a CD or LP is resold. Developers are trying to put a long-term scam into effect. This is absolutely scandalous. It is robbery into the 4th and 5th generation. The legislature needs to kill it quickly, before it gets a foothold.

CrimsonSky wrote:
Why sell something just once when you can sell it again and again? (end sarcasm). I wonder how many of the developers who have signed up with Freehold have bothered to tell their buyers,"Hey guys BTW, when you buy your house, you pay me and (you're going to love this next part) when you sell it you get to pay me again!! Isn't that wonderful?" My guess is none.

wenplan wrote:
Interesting article by Ms. Hiller. I have one problem with it. She does not clarify the difference between a builder and developer. A developer buys the land, runs the regulatory traps, prepares the land (drainage, streets, creates lots) and usually prepares the deed restrictions before selling the lots to a builder or builders. Builders build homes, driveways and sidewalks. Some builders also engage in developing but they are still two different functions. Concerning the issue at hand, because most home buyers do not read the deed restrictions before they buy a home, they will not realize that this is being done to them so govt. (you know that evil force that most conservatives hate) should step in and prevent it from happening.
[HOT: So signing a sales agreement with a builder could lock you into a 99 year commitment with the developer?]

ron327 wrote: [LONG POST]
If you go to the website of the outfit that came up with this, Freehold Capital Partners, you will see, the way they set up these transactions, title companies collect the funds at closing, and send the money to Freehold, which then administers the funds. You can bet Freehold is going to charge a substantial fee for that administration. Freehold more than any other entity is going to make money off this.

(a) The legislature partially addressed the mater in Property Code Section 5.017, but it left loopholes for Freehold to exploit. First, it only prohibits the Buyer from having to pay the fee, so that means the fee is paid by the seller. Second it has an exception for fees if they are paid to a 501(c)(3), so Freehold decided to make a part, a small part, of the fees payable to a 501(c) (3) on the theory they can collect the whole thing.

(b) A deed restriction or other covenant running with the land applicable to the conveyance of residential real property that requires a transferee of residential real property or the transferee's heirs, successors, or assigns to pay a declarant or other person imposing the deed restriction or covenant on the property or a third party designated by a transferor of the property a fee in connection with a future transfer of the property is prohibited. A deed restriction or other covenant running with the land that violates this section or a lien purporting to encumber the land to secure a right under a deed restriction or other covenant running with the land that violates this section is void and unenforceable. For purposes of this section, a conveyance of real property includes a conveyance or other transfer of an interest or estate in residential real property.

(c) This section does not apply to a deed restriction or other covenant running with the land that requires a fee associated with the conveyance of property in a subdivision that is payable to:
(1) a property owners' association that manages or regulates the subdivision or the association's managing agent if the subdivision contains more than one platted lot;
(2) an entity organized under Section 501(c)(3), Internal Revenue Code of 1986; or
(3) a governmental entity.