Texas Property Code 5.202 – Certain Private Transfer Fee Obligations Void
(a) Except as provided by this subchapter, a private transfer fee obligation created on or after the effective date of this subchapter is not binding or enforceable against a subsequent owner or subsequent purchaser of an interest in real property and is void.
(b) For purposes of this subchapter, the following payments are not considered private transfer fee obligations:
(1) consideration paid by a purchaser to a seller for an interest in real property transferred, including, as applicable, a mineral interest transferred, including additional consideration paid to a seller for the property’s appreciation, development, or sale after the interest in the property has been transferred to the purchaser, if the additional consideration is paid only once and that payment does not bind successors in interest to the property to any private transfer fee obligation;
(2) a commission paid to a licensed real estate broker under a written agreement between a seller or purchaser and the broker, including an additional commission for the property’s appreciation, development, or sale after the interest in property is transferred to the purchaser;
(3) interest, a fee, a charge, or another type of payment to a lender under a loan secured by a mortgage on the property, including:
(A) a fee payable for the lender’s consent to an assumption of the loan or transfer of the property subject to the mortgage;
(B) a fee or charge payable for an estoppel letter or certificate;
(C) a shared appreciation interest or profit participation; or
(D) other consideration payable in connection with the loan;
(4) rent, reimbursement, a fee, a charge, or another type of payment to a lessor under a lease, including a fee for consent to an assignment, sublease, encumbrance, or transfer of a lease;
(5) consideration paid to the holder of an option to purchase an interest in property, or to the holder of a right of first refusal or first offer to purchase an interest in property, for waiving, releasing, or not exercising the option or right when the property is transferred to another person;
(6) a fee payable to or imposed by a governmental entity in connection with recording the transfer of the property;
(7) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment under a declaration or other covenant or under law, including a fee or charge payable for a change of ownership entered in the records of an association to which this subdivision applies or an estoppel letter or resale certificate issued under § 207.003 by an association to which this subdivision applies or the person identified under § 209.004(a)(6), provided that no portion of the fee or charge is required to be passed through to a third party designated or identifiable in the declaration or other covenant or law or in a document referenced in the declaration or other covenant or law, unless paid to:
(A) an association as defined by § 82.003 or 221.002 or the person or entity managing the association as provided by § 82.116(a)(5) or 221.032(b)(11), as applicable;
(B) a property owners’ association as defined by § 202.001 or 209.002 or the person or entity described by § 209.004(a)(6); or
(C) a property owners’ association as defined by § 202.001 that does not require an owner of property governed by the association to be a member of the association or the person or entity described by § 209.004(a)(6);
(8) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment for the transfer of a club membership related to the property;
(9) dues, a fee, a charge, an assessment, a fine, a contribution, or another type of payment paid to an organization exempt from federal taxation under Section 501(c)(3) or 501(c)(4), Internal Revenue Code of 1986, only if the organization uses the payments to directly benefit the encumbered property by:
(A) supporting or maintaining only the encumbered property;
(B) constructing or repairing improvements only to the encumbered property; or
(C) providing activities or infrastructure to support quality of life, including cultural, educational, charitable, recreational, environmental, and conservation activities and infrastructure, that directly benefit the encumbered property; or
(10) a fee payable to or imposed by the Veterans’ Land Board for consent to an assumption or transfer of a contract of sale and purchase.
Terms Used In Texas Property Code 5.202
- Contract: A legal written agreement that becomes binding when signed.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Population: means the population shown by the most recent federal decennial census. See Texas Government Code 311.005
- Property: means real and personal property. See Texas Government Code 311.005
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
(c) The benefit described by Subsection (b)(9)(C) may collaterally benefit:
(1) a community composed of:
(A) property that is adjacent to the encumbered property; or
(B) property a boundary of which is not more than 1,000 yards from a boundary of the encumbered property; or
(2) with respect to a payment to a school for educational activities, property not described by Subdivision (1) if the encumbered property is located within:
(A) the school’s assigned attendance zone; and
(B) a county with a population of more than 650,000 that is adjacent to two counties, each of which has a population of more than 1.8 million.
(d) Notwithstanding Subsection (c), an organization may provide a direct benefit under Subsection (b)(9) if:
(1) the organization provides to the general public activities or infrastructure described by Subsection (b)(9)(C);
(2) the provision of activities or infrastructure substantially benefits the encumbered property; and
(3) the governing body of the organization:
(A) is controlled by owners of the encumbered property; and
(B) approves payments for activities or infrastructure at least annually.
(e) An organization may provide activities and infrastructure described by Subsection (b)(9)(C) to another organization exempt from federal taxation under Section 501(c)(3) or 501(c)(4), Internal Revenue Code of 1986, at no charge for de minimis usage without violating the requirements of this section.