Here’s a really good deal – at least for the developer of your new active adult community. A new fee being inserted deep into some convenants has this feature – when you sell your home someday, the developer will get 1% of the price. But wait – it gets better! For the next 99 years, every time your home is sold, the developer will get 1% of the sale price. Talk about annuities!
The New York Times recently reported about this new fee in its “A Fee Only a Developer Could Love” article. One of the worst aspects of the view is that unwitting homeowners are not always made aware of the fee, in some cases the details are spelled out in addendums that do not require signatures. Freehold Capital Partners claims that it has signed up 5000 developers who have signed up for this new fee, who apparently find the future revenue stream very appealing in these difficult days for real estate developers.
Others are not so sanguine about the new fees. According to the Times, Justin Ailes, director of government affairs at the American Land Title Association, the new fee “…doesn’t pass the smell test”. A number of real estate trade groups, including the National Association of Realtors, the American Land Title Association and the Center for Responsible Lending, are organizing to oppose these fees. The federal government doesn’t seem to like the fees other, so it appears that the concept could be in danger.
What About Your New Home
The new fee means you must add yet another item to your due diligence list. Ask your lawyer to determine if there is such a resale fee attached to your new home. If there is, negotiate to have it removed, walk away, or insist on a price adjustment. Some day you or your heirs will have to sell this home, and you don’t want this fee around to queer the sale.
What do You Think?
Have you any experience with resale fees? Please use the Comment section below to share with your other members.