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Watch Out for This Hidden Fee

Category: Retirement Real Estate

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.

Posted by John Brady on September 29th, 2010


  1. i agree that this HIDDEN FEE does not pass the smell test. in Mexifornia(california) the selling agent would be obligated to specifically point out the fee to the buyer up front during negotiations and by the escrow officer. guess NC has less restrictions in the real estate business.

    by david huckabee — September 30, 2010

  2. How did Mr Huckabee get NC out of this article?

    by Bob Barker — September 30, 2010

  3. Although I appreciate the content of the article and will watch for any of these added fees, perhaps you could explain what the term “Queer the Sale” means?
    I’m not familiar with this term. If it’s meant to be some derogatory reference to homosexual then perhaps your writer should take a course in Politically Correct writing. There are many terms that could be used instead.

    by Fred Deweese — September 30, 2010

  4. Definition of queer, it means a lot more than homo~.
    queer? ?/kw??r/ Show Spelled
    [kweer] Show IPA
    adjective, -er, -est, verb, noun
    1. strange or odd from a conventional viewpoint; unusually different; singular: a queer notion of justice.
    2. of a questionable nature or character; suspicious; shady: Something queer about the language of the prospectus kept investors away.
    3. not feeling physically right or well; giddy, faint, or qualmish: to feel queer.
    4. mentally unbalanced or deranged.
    5. Slang: Disparaging and Offensive .
    a. homosexual.
    b. effeminate; unmanly.
    6. Slang . bad, worthless, or counterfeit.
    –verb (used with object)
    7. to spoil; ruin.
    8. to put (a person) in a hopeless or disadvantageous situation as to success, favor, etc.
    9. to jeopardize.
    10. Slang: Disparaging and Offensive . a homosexual, esp. a male homosexual.
    11. Slang . counterfeit money.
    12. queer the pitch, British Informal . to spoil the chances of success.

    by Bob P — September 30, 2010

  5. Perhaps Mr. Deweese should swing by his local high school and take an English refresher.

    Great article. Thanks for the warning. I would NEVER buy from a developer that tried such underhanded dealings.

    by David Rivers — September 30, 2010

  6. my appologies for going a bit senile on the HIDDEN FEES article. i had just read the good article about BREVARD NC and my brain did not shift gears. the rest of what i said about MEXIFORNIA(CALIFORNIA) real estate still stands. if it is HIDDEN by design, it would be challenged in court upon discovery. the developer would probably be sued by every one and the state. this type of business ethics is not even close to being acceptable, based on california real estate laws. i am surprised UTAH thinks it is acceptable.

    by DAVE HUCKABEE — October 1, 2010

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