Calif. Civil Code §1098.5
Amended by A. B. 1139
Effective date: January 1, 2018

Documents recording a lien against residential real estate for private transfer fees created after February 18, 2011 are to contain, in at least 14-point boldface font, the following text:

The Federal Housing Finance Agency and the Federal Housing Administration are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a “direct benefit” to the real property encumbered by the covenant. As a result, if you purchase such a property, you or individuals you want to sell the property to may have difficulty obtaining financing.

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Editor’s note — Private transfer fees are not homeowner association fees or transfer taxes. Private transfer fees are a specific kind of fees imposed by developers over a period of time specified in the recorded document establishing the fees. The fees are paid to the developer each time the property is transferred for the duration of the established period.

The Federal Housing Finance Agency (FHFA) and the Federal Housing Administration (FHA) are prohibited from purchasing or insuring mortgages used to purchase properties encumbered by private transfer fees when the collection of the fees does not show a direct benefit to the encumbered property.