Property Ownership
What is a 'private transfer fee covenant' (deed covenant) and its legal status in Delaware?
AA deed provision requiring payment of a fee to a private party every time the property is sold — controversial in many states; Delaware has enacted legislation limiting enforcement of private transfer fee covenants✓ Correct
BA government transfer fee assessed on every property deed recorded
CA deed restriction preventing property transfer without HOA approval
DA covenant requiring transfer of the property to a specific beneficiary upon death
Explanation
Private transfer fee covenants require a payment (typically 1% of sale price) to a private third party each time the property transfers. They can last decades and encumber title. Many states, including Delaware, have enacted legislation that restricts or prohibits enforcement of future private transfer fee covenants. Buyers should review title for any such covenants.
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