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Reconveyance Fees

Realtor with Front Street Realty and Mortgage in Mission Viejo

As a real estate agent in south Orange County for nearly a decade, I take issue with Steven Greenhut's column on what he calls "transfer taxes," otherwise known as reconveyance financing or community enhancement fees ["A stealth tax on homeowners," Commentary, March 12].

I have seen firsthand how this system is a fair and equitable private-sector solution that brings great benefits to homeowners and entire communities. I'm strongly opposed to the efforts by the California Association of Realtors in sponsoring Senate Bill 670 (Correa), which would abolish reconveyance financing altogether. Not only would SB670 punitively add significant costs to consumers of new homes, it would take away an important financing tool that funds many community improvements.

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Washington Post

Freehold maintains that its transfer-fee covenants are good for consumers and good for cash-strapped builders. Curtis Campbell, a spokesman for the firm, said in an e-mail that "private transfer fees represent an adaptation in how to pay for development costs" incurred by builders "at a time when funding is not available" to them on "reasonable terms."

Freehold's system allows developers and builders to recoup some of their infrastructure costs -- project amenities, environmental protection and land-use requirements imposed by local governments -- without lumping them onto the price paid by the first buyer of a house.

By creating future revenue streams -- which builders can monetize upfront by selling to investors -- the plan allows developers to sell houses for lower prices than they otherwise could, Campbell said.

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