Bill Introduced To Ban Home Resale Fees
from the no-sale dept
For a while now, we've been covering attempts by some banker-types to get housing developers to add a resale fee to homes so that if and when you resell your house, you have to pay a percentage of the sale price back to the developer. Of course, the real plans is for the main company behind this plan, Freehold Capital Partners, to securitize and sell off these fees, giving developers a chunk of money upfront. As with any such thing, what this really does is drive down the value of your home and make it more difficult to sell. And, these terms are often slipped in with little to no notice.A bunch of states have banned these fees, but now a federal bill has been introduced in the House to ban such things nationwide, as a predatory transfer fee. I'm not sure an overall ban makes sense, but at the very least, these sorts of deals (and their serious implications) should be made clear to home buyers well before they decide to purchase a house.
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Filed Under: fees, home development, resale fees
Companies: freehold capital partners
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Now in that situation it would be reasonable and work where the ban should come in is to restrict how far out the fees can apply. The fee should only be allowed to apply to the original purchaser and end there also the fee should be explicit and upfront.
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As for houses; As long as the buyer has a free choice,As long as there are alternative houses on the market that do not have this resale contract I can not see much problem.
Though it is hard to see the advantage to the seller , could it be because vendor arranged fiance to the sub-prime has become a dearer and harder to get?
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If it's being "snuck in there" and it's fraud, then we already have laws against fraud.
If it's not fraud, then why should it be illegal?
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In more TechDirty terms, it's a legal loophole that limits your rights on something you own, like DRM or like your typical walled-garden variety devices.
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It's not a legal loophole, it's a contract made between two willing parties. If the parties are not willing, it's fraud. We have laws against fraud.
A home developer generally has no monopoly over homes. If this bargain is unacceptable to people, then the market will correct it because nobody will buy homes with such a clause in the contract. They will instead go across the street to another developer and buy a home without it. If people do freely enter into such a bargain, then that's what the market wants, and therefore it's what people deserve and should be encouraged.
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As is pointed out many times on Techdirt, the market isn't about what you deserve, it's about what you can get. If they can get it, good for them.
If you don't want a house with these restrictions, don't buy a house with these restrictions. Want to profit from like-minded people? Go get some land, buy some wood, build some houses, and sell them outright.
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But such laws *are* required, and this bill would make a good addition to them.
Also FYI, most people on TechDirt don't believe that unchecked profiteering is necessarily a good thing. If "the market isn't about what you deserve, it's about what you can get", then even ACS:Law's extortion practices would have credence...
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If you can charge extra for T-shirts just because they are "official" why not this? My landlord is "unchecked profiteering" because I get no equity for all the rent I pay. We should outlaw that too!
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It's one thing to charge extra for official t-shirts, and a completely different thing to ask for money every time the t-shirt is resold (also, ew!).
Btw, as philosophically sound as a *completely* free market may sound on paper, I am not a huge fan of the idea. Some regulation is definitely required to keep things from blowing up, and consumer protection laws are needed to protect the people who are caught in the middle of the all the cutthroat capitalism/competition.
And as for your landlord, he's not transferring ownership of the property to you, so he doesn't owe you equity by any stretch of the imagination.
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It's all about the context - isn't it?
And ... isn't it fraud if the fee is hidden? Oh, it's not hidden, because they tell you about it at closing - you know, when it would cost you more to back out than just pay the fee.
Yeah, that should be illegal.
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That and builders don't have any politicians in their pocket like the big label companies.
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Ownership is unconditional. If I pay full price for something, it's mine. I can use it however I want without any restrictions from the original creator. That includes selling it without paying them a cent.
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Nip this one in the bud...
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I would consider it to be fraud (or fraud in the inducement) since it is quite often not agreed to up front, nor even disclosed in the traditional paperwork.
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Help me understand these.
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Help me understand these.
Alfred places a clause in the sale of the property to Bert saying when Bert Sells a % of the price gets paid to Alfred.
That "should" be legal, as long as its in writing in the contract signed etc (real property, not consumer goods / eula junk). Bert knows this when he bought and would have paid a lower price.
Bert sells the property to Charlie and has to pay his dues.
IF Bert does include a clause in his contract saying that Charlie has to pay % to Alfred - again it should be allowed, its in the contract as signed. Charlie knows this and would have paid a lower price.
Now if Bert does NOT include a clause in the sale contract with Charlie: Charlie should never be able to get sued over Alfred loosing money. Charlie's only contract is with Bert - and as long as there were mortgages on the property registered by Alfred then Charlie is in the clear (IANAL).
If Alfred wants to get trigger happy with the lawyers he could go after Bert - but thats as far as it should go. No legislation required.
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Re: Help me understand these.
The older TechDirt story Mike linked to says:
"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."
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Re: Help me understand these.
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disclosure!
Point is, with full disclosure, this could put people who would otherwise not be able to afford a home, into said home. Still there should be a requirement to make sure buyers fully understand the future implications.
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Nope, the other very real result will be that every developer will add those clauses creating a market where there is nowhere else to go.
Besides that fee is not the result of work done, but a parasitic approach to business, it will be outlawed because not even politicians like to be fooled, it affects their houses too, their families and others.
People can't produce more land, people can't go to other places if they have roots somewhere, people can't just choose developers, there are not that many and they would all collude to do the same things because this is free money, will they reduce the value of the property, will it add value to it? no but every time someone do a reform and the value goes up the developer without expending any resources will get a cut from others work that is just immoral and so is copyright from which the concept came from, nobody likes parasites and they have a real disgust for them when it is about their money.
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Banning makes sense...
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This is only re-introducing part of the feudal system
http://en.wikipedia.org/wiki/Socage
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the electrician?
the plumber?
the landscapers?
the guys who leveled the ground?
the painter??
the movers????
shouldn't they all get a cut????
no the shouldn't, they were paid to a job, and should NOT get paid when you sell your home to someone else. its an entitlement mindset, something for nothing
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The concept of "Sale" is Being Eliminated
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Don't you understand that they're all entitled? Each and every blessed one of them back to the guy that built the first mud hut somewhere in Africa?
Now that's how it's supposed to work. None of this freehold crud that's mucking up the system and makes companies lay awake at night dreaming up new ways to separate you from your money.
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Musicians get paid repeatedly for jobs they've already been paid for.
Actors get paid repeatedly for jobs they've already been paid for.
Writers get paid repeatedly for jobs they've already been paid for.
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Puh-lease
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Of course...
Somehow, I dont think it would be very easy to enforce such a law, the fee people would say that the people should have known about the fees, how can the buyer contest?
Therefore, an overall ban is basically the only way to do it.
My ideal situation would be an overall ban, with some allowances when everyone is informed of the fees.
"You cant do it unless you do it this way"
is much more comfortable to me than
"You can always do it unless you do it this way"
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Way to many lawyers .... with to much time on their hands ...
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Remember
Who's equity is it? If you buy something you should own it. Not this BS.
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The most telling features are: it's new, and ADDED.
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Distasteful, but not Wrong
I'll exercise my right to vote with my dollar, however, and I'll be damned if I ever buy a house with such a clause.
Personal responsibility is out of fashion, I suppose.
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Re: Distasteful, but not Wrong
And while they are at it they should also ban declarations of covenants, conditions and restrictions that are not part of the original contract that do not require signature acceptance to be part of the contract.
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Re: Re: Distasteful, but not Wrong
Hence, me: As long as they are up front about the fee (which apparently they aren't)
"Public interest" is also very a broad term, and pretty much can be used to encompass anything you want it to. Will the unintended consequences of legislation be in the "public interest" too?
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No wonder the world economy has hit rock-bottom.
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What would happen?
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Federal officials interjecting themselves into purely state contractual matters is quite troubling indeed, leading almost certainly to a future challege on federalism grounds.
It is bad enough that the federal government is attempting to insinuate itself into all aspects of our daily lives, and even worse when it attempts to displace state law where no federal question is even presented.
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