Process Overview

Partnering with Freehold to create future interest reconveyance fee financing is an innovative approach to real estate. It offers a tool for sellers, buyers and brokers to structure true win-win transactions by funding infrastructure and other improvements in a more efficient way. Specifically, improvements are funded through a fee of 1% of the sales price of the property.

Essentially, the concept is based on the premise that improvements which enhance real property are in the immediate and long-term public interest; and a system enabling present owners of private property to better and more fairly apportion present costs and profits amongst multiple future beneficial owners increases economic efficiency.

Traditionally, initial buyers shoulder 100% of the burden of amenities, infrastructure and other improvements, which creates a high barrier to entry into the development. By utilizing this funding tool, developers can now more fairly apportion expenses incurred for permanent improvements among successive owners of the property who will be enjoying the amenities and improvements for years to come. (A familiar example would be bonds issued to finance new schools, where the bonds are paid off over time by the same families whose properties continue to benefit from having a school in the community.) In fact, Transfer Fee financing has often been referred to as the creation of a "mini-bond". However, unlike traditional bond financing, the transaction costs associated with creating Transfer Fees Rights are minimal.

Flowing from this premise, reconveyance fee financing enable institutional owners and developers to allocate costs amongst future willing buyers by requiring, in connection with each subsequent transfer of title, the payment of 1% of the gross sales price.

Buyers who acquire property subject to reconveyance fee financing have the ability to acquire the property at a lower cost. A lower acquisition cost can translate into lower carrying costs, lower property taxes, etc., thereby making the property more affordable. Buyers given the choice of deferring a portion of the sales price now in return for the promise to pay the 1% fee when they sell will almost always elect to do so.

These are just a few of the ways working with Freehold can benefit property sellers and buyers alike. Simply put, the process is designed to encourage innovation in the way real property is bought and sold while also building a stronger community. It is about creating a unique asset and segregating it out from the property, thus imparting flexibility to sellers and lower carrying costs for buyers. In fact, it's about thinking of property sales in a whole new way.

We invite you to learn more.