FHFA Reconsiders Flip Tax/Transfer Fee Ban Reversal of Fortunes for Co-ops, Condos & HOAs

 After receiving over 4,200 comments on a proposal that would have eliminated  flip taxes and transfer fees in co-ops, condos and HOA communities, the Federal  Housing Finance Authority (FHFA) has reconsidered its position and will allow  cooperatives, condominiums, homeowner associations and certain tax-exempt  organizations to continue to use the private transfer fee proceeds to benefit  their properties.  

 Private transfer fees—typically one percent of the sale price or higher as specified in the original  governing documents—are fees paid when a condo or co-op unit is resold. They are paid from the  purchaser to one of four groups: (1) the community association, (2) tax-exempt  groups that provide a direct benefit to HOA owners, (3) tax-exempt groups that  don’t provide a direct benefit to HOA owners (like the Sierra Club), or (4)  third-party developers or investors. Private transfer fees that do not directly  benefit a subject property, (i.e., those paid to developers, investors or third  parties) would be barred, according to the proposed rule.  

 Concern from REBNY, FNYHC,

 CAI and Others

 The original proposal announced in August 2010 provoked an outcry nationwide  from supporters of cooperatives, condominiums and homeowner associations, where  flip taxes and transfer fees typically go back to the community to help  maintain the housing.  

 Addressing the concerns raised by the Real Estate Board of New York (REBNY) and  its members, the proposed FHFA rule announced Feb. 1, 2011 is a relief to  co-ops, condos and HOAs. The proposed ruling would have had a crippling impact  on property sales throughout New York City.  

 “Barring lending in buildings with a flip tax would have had devastating  consequences for New York City’s residential sales market,” said Steven Spinola, REBNY president. “We’re thrilled that as a result of our efforts, buildings with a flip tax are now  exempt from the FHFA’s proposed ruling.”  

Read More...

Related Articles

Why Transfer Fees?

The Potential Value for Your Building or HOA

An Unusual Assessment

Mitigating Losses from Casualties

Q&A: Do we have to pay a flip tax?

Q&A: Do we have to pay a flip tax?