Land Use Controls

[dusematic]

Marketing fees, variously known as promotional fees or transfer fees occur when a developer platts out land in lots, encumbering the property with a restrictive covenant that requires a subsequent owner to pay a fee (usually a percentage) back to the original developer (which is sometimes split with other entities).  This can be a one time fee on the first owner to build on the land, or a recurring fee upon every transfer of ownership.  Oftentimes it may be paid in lieu of the decision to use a specific contractor for the construction (i.e. if you don't use their predefined list of suitable people to build your home, you pay the fee) but it is also common to be mandatory.


If anyone does any land use work and could point me to any negative case law on this matter I'd be grateful.  Although, I realize this is an extreme shot in the dark, but I was reading the forums already anyway.

Edit:  I'm aware of the general common law supposition that restraints on alienability of property are disfavored.  But that's not going to be enough to carry the day.

[Salamok]

Don't state and local laws trump most of this shit.  So what may work in 1 state is going to be fairly useless elsewhere.  This is why title companies have escrow officers at the local level instead of doing all the work at some national corporate headquarters serving all 50 states.

[dusematic]

Yes.  However, when case law on a topic is scant or non-existent, then decisions from other jurisdictions are often persuasive. 

[Bandit]

Heh, I am a Land Use Planner, but unfortunately I also work in Canada.  So I can't help you whatsoever. But I am interested in this.  I never heard of this type of encumbrance before in Canada.  I don't understand a few things about it.  Who ultimately gets the money? The developer? and for what purpose exactly.  To me it almost sounds like a "tax" that the developer places on his own subdivision, with proceeds going to the developer.

They sound similar to "Development Charges" here in Ontario, but those monies ultimately go to the Municipality into a fund to maintain growth (infrastructure, roads).

[dusematic]

The developer usually gets the money. It is a device driven by greed.  Substantial monies can be generated in perpetuity for zero effort.  The fees are usually small enough relatively speaking that nobody will bother to challenge them.  They can add up to significant sums in the aggregate. 

[Sky]

How does one go about adding in that encumbrance? Because that sounds like a nice way to make easy money.

[Murgos]

How does one go about adding in that encumbrance? Because that sounds like a nice way to make easy money.

Step 1:  Own a vast amount of land in a prime location for development.

Once you get there we'll fill you in on the rest.

[Sky]

Why do you think I was asking?