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Financial Services Law Insights and Observations

South Carolina Bans Transfer Fee Covenants

Lending

On February 1, South Carolina enacted legislation that deems any transfer fee covenant recorded after February 1, 2012, to be non-binding and non-enforceable. Generally, a transfer fee covenant is a deed provision that requires a current owner or successor in title to pay a fee to the owner who added the covenant to the property each time the property is transferred. Covenants recorded before February 1 remain valid and enforceable only if a Notice of Transfer Fee Covenant is filed by July 30, 2012 in each county in which the real property subject to the transfer fee covenant is located. The Notice must contain information such as (i) how the transfer fee covenant is calculated, (ii) actual dollar-cost examples for a home priced at $250,000, $500,000, and $750,000, (iii) how and if the transfer fee covenant expires, and (iv) instructions and contact information concerning the payment of the fee required by the transfer fee covenant.