In May, Governor Hickenlooper signed into law Senate Bill 11-234 – Concerning Residential Real Property Transfer Fee Covenants.  The bill is targeted at prohibiting fees payable upon the transfer of residential real property to individuals and entities where such fees do not touch and concern the real property.  The common law likely already prohibited such fees.  Nevertheless, the bill became effective immediately, the General Assembly having determined that such was necessary “for the immediate preservation of the public peace, health and safety.”  Apparently, the General Assembly identified a rising popularity trend for such fees, and it wanted to thwart their growth in Colorado.

The bill does essentially four things.  First, it prospectively prohibits fees payable upon the conveyance of residential real property, except for transfer fees that touch and concern residential real property, including payments to lenders, brokers, lessors, governmental and quasi-governmental entities, homeowner’s associations, and certain non-profit entities.  Second, it narrows the circumstances under which prohibited fees established prior to the effective date of the bill are payable.  Third, it provides penalties for recording documents requiring the payment of such fees.  And fourth, under certain circumstances, it provides a quick mechanism for removing covenants requiring the payment of such fees. 

For a more complete discussion about the bill, please see my Client Alert on the topic.  Any individuals or entities that have either considered or implemented a transfer fee should be aware of the enforceability issues raised by this bill. 

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Jim Johnson assists real estate owners and developers in complex land use and development matters, including disputes regarding entitlement approvals and eminent domain. As part of Jim’s practice, he often represents clients in the acquisition of real property, in securing annexation, zoning, subdivision or other local governmental approvals and in the negotiation of construction and design contracts. Jim’s litigation practice includes representing land owners in Rule 106 actions challenging local government decisions surrounding annexation, zoning and subdivision issues. Jim also represents land owners facing the threat of eminent domain, in pre-condemnation planning, valuation issues and condemnation proceedings.