Frequently Asked Questions
What is the purpose of a capital recovery fee?
To spread the cost of capital improvements. This is in contrast to the practice of forcing 100% of the costs onto the initial buyers, and asking them to finance the costs and to then pass them along.
What types of properties are eligible?
Virtually any real property, including (but not limited to) commercial, industrial, apartment, warehouse, retail, office, master planned subdivisions, etc., where substantial improvements have been made
How does this appear on a title commitment?
In the same manner as other common encumbrances such as deed restrictions (e.g. on Schedule B of the title commitment).
How are funds administered?
At the time of sale, the closing agent (e.g. title company) collects the fee and remits it to the servicing agent for distribution.
What is the size of Freehold's portfolio?
We have partnered with the owners of more than one hundred billion dollars in real estate projects, including retail, hotel, residential, commercial, high rises office buildings, condominiums and more, owned by some of the largest real property owners in the United States.
Do future buyers benefit?
Property encumbered by a 1% fee should sell for less than property with no fee. A buyer paying less today will have lower acquisition costs, lower carrying costs over time, and the ability to sell for less.
What do Realtors think?
The National Association of Realtors generally opposes any type of transfer fee, including capital recovery fees used to repay developers for significant capital investments. However, numerous real estate agents are also Freehold agents, so the national associations position is inconsistent with the view of many realtors.
Can future owners also impose a Capital Recovery Fee on the same property?
No. Our instrument prohibits imposing additional fees. This helps to ensure that property is not subject to numerous transfer fees.
Can homeowners work with Freehold to create a private transfer fee on their property?
No. Freehold only works with the owners of large real estate portfolios in order to help them restructure the economics in an efficient way by recovering a portion of their significant capital investment over time, instead of placing 100% of the burden on the first time buyer.
Why the term Capital Recovery Fee?
The term "Transfer Fee" refers to WHEN the fee is paid (i.e. at the time of transfer of title). The term Capital Recovery Fee explains WHY the fee is being assessed (i.e. to recover the significant capital investment made in the project, including expenses for infrastructure, streets, utilities, etc.).
Does Freehold securitize Capital Recovery Fees?
No. As a participant in the ownership interest, we work with investment banks. We are not a broker-dealer, and nothing herein shall be construed as an offer to buy, underwrite or sell securities.