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1. How much is the transfer fee?

One percent (1%) of the gross sales price.

2. Who pays the transfer fee?

The Covenant provides that the Seller shall pay the fee. However, a Buyer and Seller can agree otherwise.

3. Should the transfer fee appear on the HUD-1 closing statement?

Yes. See example.

4. Where should payment be sent?

Covenant Clearinghouse
P.O. Box 6193
Round Rock, TX 78683-6193

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5. What happens if a transfer fee is not paid?

The unpaid fee generally will be secured by a superior lien against the property (which may be a violation of a lender’s closing instructions), and will accrue default interest until paid.

6. Does every transfer of title require a transfer fee?

No. Generally speaking, a transfer of title between spouses, a sale to a government entity, a transfer of title in connection with foreclosure, and other exemptions described in the Declaration of Covenant are exempt from payment of the fee. (The foregoing is a general description. Please refer to the covenant that imposes the fee, particularly the exemptions under section 6.)

7. Does a short sale require payment of the transfer fee?


8. Does a Deed in Lieu require payment of the transfer fee?

Typically, yes. A Deed in Lieu of foreclosure does not meet the criteria for waiver of the fee in connection with foreclosure. However, if foreclosure proceedings have been filed, then a Deed in Lieu executed after the filing of the foreclosure proceedings would be an exempt transaction, and no fee required.

9. What are the most common title company mistakes in closing a transaction with a private transfer fee?

In general, closings occur smoothly. However, the most common mistake is failing to carry the encumbrance though from the original metes and bounds description (common to instruments filed by developers in the early stage of development) through subsequent plats.

Another common mistake is failing to contact us before relying on a purported release, which may not satisfy all requirements of the encumbrance instrument.

10. Will the property always be encumbered by the fee?

No. The covenant, and requirement to pay the fee, typically expires in 99 years.

11. 99-years seems excessive. Why so long?

Statistically a given property will sell 7-10 times during a 99 year period, generating just 7%-10% in total fees over the 99-year life of the assessment. This assessment is payable only at the time of sale (not annually) and is one of the lowest expenses a homeowner will incur. The funds not only reimburse developers for expenses such as streets, utilities and other improvements, but a portion of the fee also goes back into the community, providing long-term sustainable funding that is expected to reach billions of dollars.

12. How do we know whether or not there are any unpaid fees?

We can help identify any unpaid fees. Simply fill out the inquiry form.

13. What is an Estoppel Certificate, and do we need one?

An Estoppel Certificate is a document provided by us, and which generally serves to cut off liability for fees due and unpaid prior to the date of the Estoppel Certificate. It is not required.

14. How do we obtain an Estoppel Certificate?

Upon request, we will mail an Estoppel Certificate, in recordable form. If you desire for an Estoppel Certificate to be sent by overnight mail, you must provide us with a prepaid label. Otherwise, all documents will be mailed regular mail.

15. We are a non-profit organization that received a payment from Covenant Clearinghouse. Why did we receive this payment, and what are our obligations?

A portion of every transfer fee is remitted to a non-profit. This provision is embedded into every Declaration of Covenant we administer, and provides long-term funding for clean air, clean water, the environment, community services and other public benefits to the community from which the funds originated. If you are a non-profit and have received a check from Covenant Clearinghouse, these funds are tendered to you without restriction.