Sunday, March 7, 2010

Eagle Mtn: Private Transfer Fee On Home Sales

"How about this for a new and ingenious real estate money machine: Every time a house sells during the next 99 years, 1 percent of the price goes back to the original developer or is shared among investor partners. Ka-ching!!!

The levy won't be subject to haggling between future buyers and sellers, either. That's because it's a covenanted mandate - a novel type of lien on the underlying real estate - called a private transfer fee. It's not a government transfer tax. Nor is it a homeowner association or environmental protection covenant. It's purely a private requirement that runs with the land. If a seller refuses to pay it to a third-party trustee at closing, the sale won't proceed.

Sounds like a great deal - provided you're on the collecting end of a near-perpetual revenue stream. Apparently the idea has been attractive enough so that substantial numbers of developers and builders are signing up with a New York-based company that has devised what it calls a "patent-pending" system to tap into real estate transactions well into the next century.

One of DAI's homebuyers, Camber Keiser of Eagle Mountain, Utah, said the fee "was not disclosed" at the time of purchase, "so yes, we were surprised to learn of it" and pleased that DAI removed it." -Chicago Daily Herald

Click here for the story.

No comments: