BILL NUMBER: AB 980 CHAPTERED 10/14/07 CHAPTER 689 FILED WITH SECRETARY OF STATE OCTOBER 14, 2007 APPROVED BY GOVERNOR OCTOBER 14, 2007 PASSED THE SENATE SEPTEMBER 11, 2007 PASSED THE ASSEMBLY SEPTEMBER 12, 2007 AMENDED IN SENATE SEPTEMBER 7, 2007 AMENDED IN SENATE AUGUST 31, 2007 AMENDED IN SENATE JULY 17, 2007 AMENDED IN SENATE JULY 5, 2007 AMENDED IN SENATE JUNE 13, 2007 AMENDED IN ASSEMBLY MAY 16, 2007 AMENDED IN ASSEMBLY APRIL 24, 2007 AMENDED IN ASSEMBLY APRIL 10, 2007 INTRODUCED BY Assembly Member Charles Calderon FEBRUARY 22, 2007 An act to add Sections 1098, 1098.5, and 1102.6e to the Civil Code, relating to real estate transfer fees. LEGISLATIVE COUNSEL'S DIGEST AB 980, Charles Calderon. Real estate transfer fees: residential property. Existing law permits various fees to be included in the price of a residential real estate transfer. Existing law requires specified disclosures to be made upon a transfer of residential real property and provides a form for this purpose. This bill would define a transfer fee as a fee payment requirement imposed in any covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of real property that requires a fee be paid upon transfer of the real property, with specified exceptions. The bill would require a receiver of a transfer fee imposed prior to January 1, 2008, as a condition of payment of the fee on or after January 1, 2009, to record, by December 31, 2008, a specified document against the real property in the office of the county recorder in which the real property is located. The bill would, with regard to a transfer fee imposed upon real property on or after January 1, 2008, require the person or entity imposing the transfer fee, as a condition of payment of the fee, to record a specified document describing the transfer fee concurrently with the instrument creating the transfer fee requirement. The bill would require these recorded documents to include information on the amount of the fee and the purpose for which it will be used, among other things. The bill would require a transferor of residential real property subject to transfer fees to make a specified disclosure regarding those fees. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1098 is added to the Civil Code, to read: 1098. 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 (Title 6 (commencing with Section 1350) of Part 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. SEC. 2. Section 1098.5 is added to the Civil Code, to read: 1098.5. (a) For transfer fees, as defined in Section 1098, imposed prior to January 1, 2008, the receiver of the fee, as a condition of payment of the fee on or after January 1, 2009, shall record, on or before December 31, 2008, against the real property in the office of the county recorder for the county in which the real property is located a separate document that meets all of the following requirements: (1) The title of the document shall be "Payment of Transfer Fee Required" in at least 14-point boldface type. (2) The document shall include all of the following information: (A) The names of all current owners of the real property subject to the transfer fee, and the legal description and assessor's parcel number for the affected real property. (B) The amount, if the fee is a flat amount, or the percentage of the sales price constituting the cost of the fee. (C) If the real property is residential property, actual dollar-cost examples of the fee for a home priced at two hundred fifty thousand dollars ($250,000), five hundred thousand dollars ($500,000), and seven hundred fifty thousand dollars ($750,000). (D) The date or circumstances under which the transfer fee payment requirement expires, if any. (E) The purpose for which the funds from the fee will be used. (F) The entity to which funds from the fee will be paid and specific contact information regarding where the funds are to be sent. (G) The signature of the authorized representative of the entity to which funds from the fee will be paid. (b) When a transfer fee, as defined in Section 1098, is imposed upon real property on or after January 1, 2008, the person or entity imposing the transfer fee, as a condition of payment of the fee, shall record in the office of the county recorder for the county in which the real property is located, concurrently with the instrument creating the transfer fee requirement, a separate document that meets all of the following requirements: (1) The title of the document shall be "Payment of Transfer Fee Required" in at least 14-point boldface type. (2) The document shall include all of the following information: (A) The names of all current owners of the real property subject to the transfer fee, and the legal description and assessor's parcel number for the affected real property. (B) The amount, if the fee is a flat amount, or the percentage of the sales price constituting the cost of the fee. (C) If the real property is residential property, actual dollar-cost examples of the fee for a home priced at two hundred fifty thousand dollars ($250,000), five hundred thousand dollars ($500,000), and seven hundred fifty thousand dollars ($750,000). (D) The date or circumstances under which the transfer fee payment requirement expires, if any. (E) The purpose for which the funds from the fee will be used. (F) The entity to which funds from the fee will be paid and specific contact information regarding where the funds are to be sent. (G) The signature of the authorized representative of the entity to which funds from the fee will be paid. (c) The recorder shall only be responsible for examining that the document required by subdivision (a) or (b) contains the information required by subparagraphs (A), (F), and (G) of paragraph (2) of subdivision (a) or (b). The recorder shall index the document under the names of the persons and entities identified in subparagraphs (A) and (F) of paragraph (2) of subdivision (a) or (b). The recorder shall not examine any other information contained in the document required by subdivision (a) or (b). SEC. 3. Section 1102.6e is added to the Civil Code, to read: 1102.6e. If a property being transferred on or after January 1, 2008, is subject to a transfer fee, as defined in Section 1098, the transferor shall provide, at the same time as the transfer disclosure statement required pursuant to Section 1102.6 is provided, an additional disclosure statement containing all of the following: (a) Notice that payment of a transfer fee is required upon transfer of the property. (b) The amount of the fee required for the asking price of the real property and a description of how the fee is calculated. (c) Notice that the final amount of the fee may be different if the fee is based upon a percentage of the final sale price. (d) The entity to which funds from the fee will be paid. (e) The purposes for which funds from the fee will be used. (f) The date or circumstances under which the obligation to pay the transfer fee expires, if any.