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Senate passes bill limiting third‑party transfer fees, allowing HOA recovery for REO sales
Summary
The Utah Senate passed first substitute Senate Bill 161 to prohibit third parties from collecting transfer fees that do not benefit the property, while allowing homeowners associations to recover actual documented costs (capped) when a foreclosed property is sold from bank ownership to a private buyer. The bill includes notice and recording requirements and an immediate effective date with a limited compliance window.
Senators passed first substitute Senate Bill 161 after extended debate over the past practices of placing transfer fees on property and allowing third parties to collect revenue streams unrelated to property maintenance or improvements. Sponsor Senator Madsen said the bill "makes that practice going forward illegal," while preserving transfer fees that "go back into improvement of the property," such as homeowners association (HOA) fees that benefit the land and common facilities.
The bill targets arrangements in which a third party with no present interest in a property continues to collect a fee each time the property is transferred. Senator Madsen told colleagues the bill does not eliminate transfer fees that are designed to benefit the property (for example, CC&Rs tied to homeowners…
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