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HomeCivil CodeDiv. 2Pt. 4Ch. 2Art. 1§ 1098 Transfer Fee Exemptions

§ 1098 Transfer Fee Exemptions

Civil Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 1098 Transfer Fee Exemptions

This law explains what counts as a 'transfer fee' when real property is sold or transferred, lists things that are not considered transfer fees, and sets rules for fees that were recorded before certain dates.

Key Takeaways

  • •A 'transfer fee' is any fee required by a covenant or condition in documents that affect property transfer.
  • •Government taxes, mechanic's liens, court-ordered payments, and certain estate or trust fees are not transfer fees.
  • •Fees recorded before December 31, 2007, must meet specific notice rules to be enforceable after 2016.
  • •The notice must be in a single document and cannot be taken from another document.

Example

A homeowner sells a house and the deed includes a $3,000 payment that must be made to the homeowners association before the sale can close.

Because the payment is required by a covenant in the deed and is not a government tax or a mechanic's lien, it is considered a 'transfer fee' under this statute. The seller and buyer must follow the rules for transfer fees, including providing notice of the fee amount and purpose.

How to Calculate

No explicit numerical formula is provided in the statute; it only requires that the 'method of calculation of the fee' be disclosed in the notice.

  1. Identify if a fee is imposed in a deed, contract, or other document that affects the transfer of real property.
  2. Check if the fee falls under any of the exclusions listed in subdivisions (1) through (8).
  3. If the fee is not excluded, it is a 'transfer fee' and must comply with the notice requirements in subdivision (9).

A buyer sees a $2,500 transfer fee listed in the deed.

Result: The fee is a transfer fee and the seller must provide the listed notice to the buyer.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 1098 Transfer Fee Exemptions

(a) A “transfer fee” is any fee payment requirement imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid as a result of transfer of the real property. A transfer fee does not include any of the following: (1) Fees or taxes imposed by a governmental entity. (2) Fees pursuant to mechanics’ liens. (3) Fees pursuant to court-ordered transfers, payments, or judgments. (4) Fees pursuant to property agreements in connection with a legal separation or dissolution of marriage. (5) Fees, charges, or payments in connection with the administration of estates or trusts pursuant to Division 7 (commencing with Section 7000), Division 8 (commencing with Section 13000), or Division 9 (commencing with Section 15000) of the Probate Code. (6) Fees, charges, or payments imposed by lenders or purchasers of loans, as these entities are described in subdivision (c) of Section 10232 of the Business and Professions Code. (7) Assessments, charges, penalties, or fees authorized by the Davis-Stirling Common Interest Development Act (Part 5 (commencing with Section 4000) of Division 4) or by the Commercial and Industrial Common Interest Development Act (Part 5.3 (commencing with Section 6500) of Division 4). (8) Fees, charges, or payments for failing to comply with, or for transferring the real property prior to satisfying, an obligation to construct residential improvements on the real property. (9) (A) Any fee reflected in a document recorded against the property on or before December 31, 2007, that is separate from any covenants, conditions, and restrictions, and that substantially complies with subdivision (a) of Section 1098.5 by providing a prospective transferee notice of the following: (i) Payment of a transfer fee is required. (ii) The amount or method of calculation of the fee. (iii) The date or circumstances under which the transfer fee payment requirement expires, if any. (iv) The entity to which the fee will be paid. (v) The general purposes for which the fee will be used. (B) A fee reflected in a document recorded against the property on or before December 31, 2007, that is not separate from any covenants, conditions, and restrictions, or that incorporates by reference from another document, is a “transfer fee” for purposes of Section 1098.5. A transfer fee recorded against the property on or before December 31, 2007, that complies with subparagraph (A) and incorporates by reference from another document is unenforceable unless recorded against the property on or before December 31, 2016, in a single document that complies with subdivision (b) and with Section 1098.5. (b) The information in paragraph (9) of subdivision (a) shall be set forth in a single document and shall not be incorporated by reference from any other document. (Amended by Stats. 2015, Ch. 634, Sec. 1. (AB 807) Effective January 1, 2016.)

Last verified: January 9, 2026

Key Terms

transfer feecovenantreal propertyDecember 31, 2007

Related Statutes

  • § 1092 Real Property Grant Form
  • § 1093 Property Description Consolidation
  • § 1098.5 Transfer Fee Recording Requirements
  • § 1098.6 Transfer Fee Covenant Restrictions
  • § 2931 Foreclosure Of Redemption Right

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Civil Code. Section 1098.
View Official Source