AG’s office secures $1.6 million for Washington homeowners who were charged illegal fees by Hayden Homes
The Washington State Attorney General’s Office has agreed to an assurance of discontinuance with the homebuilder Hayden Homes and its nonprofit partner First Story, requiring them to stop adding illegal private transfer fees to properties and to pay back Washington homeowners who paid the fees. This settlement concludes the office’s investigation and avoids litigation.
“Under Washington law, no one can force you to pay fees to a third party when you sell your home,” said Attorney General Nick Brown. “Our agreement makes the affected homeowners whole and stops these suspect business practices.”
Between 2006 and 2025, Hayden Homes put covenants on 7,627 Washington properties it sold to homebuyers. These covenants required every homeowner to pay 0.125% of the property’s sales price to First Story every time a homeowner sold one of these properties. First Story is a nonprofit lending corporation founded by the CEO of Hayden Homes. More than 2,000 Washingtonians paid these fees upon selling their home. Some of the homeowners filed complaints with the AG’s office, prompting this investigation.
Under the law, “charitable covenants” that require home sellers to donate to a nonprofit organization are only legal if the donations are used to directly benefit the property being sold. One of First Story’s primary purposes is to lend money to people purchasing Hayden Homes, a program unrelated to the property of the homeowner paying the fee. First Story used the money to make donations to other nonprofits that homeowners did not select and often did not know about. Because First Story is so closely associated with Hayden Homes, the AG’s office alleged that the payments essentially allowed Hayden Homes to take money from their client homebuyers and use it to burnish Hayden Homes’ public image.
Specifically, the AG’s office contended that the covenants requiring homeowners to pay a fee to First Story violated Washington’s Private Transfer Fee Obligation Act and the Consumer Protection Act. The AG’s office also contended that within the covenants attached to each property, Hayden Homes and First Story included threats to take legal action against homeowners if they refused to pay the fee, a deceptive practice which violated the Consumer Protection Act, since the fees were legally unenforceable.
The agreement between the AG’s office and Hayden Homes requires Hayden Homes to pay $1.6 million in restitution to homeowners who paid the fee, which includes full refunds plus interest. Hayden Homes must also cease the use of these covenants and remove existing covenants from all other properties they have built or sold in Washington.
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