Bulletin: MO2010001

Date:
February 09, 2010
To:
All Missouri Issuing Offices
RE:
Transfer Fee Covenants

Dear Associates: 

Private Transfer Fee Covenants require payment of a fee upon each transfer of real property for periods of up to 99 years.  The payment may be required to be paid to a single person or to an entity, a "trustee" for multiple "beneficiaries" or to several persons.  These covenants may be created in separate documents, included within other documentation or in a deed.

RSMo 442.558 (2008) defines a "Transfer fee" as a fee or charge payable upon the transfer of an interest in real property, or payable for the right to make or accept such transfer..." and a "Transfer fee covenant" as " (3) a declaration or covenant purporting to affect real property which requires or purports to require the payment of a transfer fee to the declarant or other person specified in the declaration or covenant or to their successors or assigns upon the subsequent transfer of an interest in the real property."

RSMo 442.558.2. provides that "A transfer fee covenant recorded in this state on or after September 1, 2008, shall not run with the title to real property and is not binding on or enforceable at law or in equity against any subsequent owner, purchaser, or mortgagee of any interest in real property as an equitable servitude or otherwise.  Any lien purporting to secure the payment of a transfer fee under a transfer fee covenant recorded in this state on or after September 1, 2008, is void and unenforceable."

Guideline:  If your search and examination shows a Transfer Fee Covenant recorded on or after September 1, 2008, contact your local Stewart underwriting personnel for guidance.

If a document purporting to establish a Transfer Fee Covenant is recorded prior to September 1, 2008, all commitments and policies must contain the following exceptions:

Owner's Policy:  (Covenants, Conditions and Restrictions, set forth in instrument recorded _____________, together with transfer fees set forth therein).  This instrument includes provisions purporting to create a lien on the Land payable upon each transfer of the Land.  Notwithstanding any Covered Risk, policy provision, or endorsement to the contrary, this policy does not insure against and excepts all loss or damage due to the failure to pay any fees, amounts, or assessments: (a) on any prior transfers of Title, (b) on the current conveyance of Title, and (c) on any future transfers of Title.

Loan Policy:  (Covenants, Conditions and Restrictions, set forth in instrument recorded _____________, together with transfer fees set forth therein).  This instrument includes provisions purporting to create a lien on the Land payable upon each transfer of the Land.  Notwithstanding any Covered Risk, policy provision, or endorsement to the contrary, this policy does not insure against and excepts all loss or damage due to the failure to pay any fees, amounts, or assessments: (a) on any prior transfers of Title, (b) on the current conveyance of Title, and (c) on any future transfers of Title, and (d) a lack or loss of priority of the Lien of the Insured Mortgage to any lien securing the payment of such fees, amounts, or assessments.   

NOTE:  RSMO 442.558 specifically excludes the following from a Transfer Fee:

*consideration payable to the grantor for the interest in real property transferred; *commission payable to licensed real estate broker for the transfer under agreement between broker and grantor; *interest, charges, fees payable by a borrower to a lender under a loan secured by mortgage against real property; *rent payable by a lessee to lessor under a lease; *consideration payable to the holder of an option to purchase; *any tax, fee or assessment payable to or imposed by a governmental authority.

To view the entire statute, click here: http://www.moga.mo.gov/statutes/C400-499/4420000558.HTM 

For an Example of a Transfer Fee Covenant, click here. This is only a sample; do not assume that the Transfer Fee Covenant in your chain of title contains the same terms. 

If you have questions relating to this bulletin, please contact your local underwriting personnel or Stewart Legal Services. 

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None