WASHINGTON - How about this for a new and ingenious real estate money
machine: Every time a house sells during the next 99 years, 1 percent of the
price goes back to the original developer or is shared among investor
partners. Ka-ching!!!

The levy won't be subject to haggling between future buyers and sellers,
either. That's because it's a covenanted mandate - a novel type of lien on
the underlying real estate - called a private transfer fee. It's not a
government transfer tax. Nor is it a homeowner association or environmental
protection covenant. It's purely a private requirement that runs with the
land. If a seller refuses to pay it to a third-party trustee at closing, the
sale won't proceed.

Sounds like a great deal - provided you're on the collecting end of a
near-perpetual revenue stream. Apparently the idea has been attractive
enough so that substantial numbers of developers and builders are signing up
with a New York-based company that has devised what it calls a
"patent-pending" system to tap into real estate transactions well into the
next century.

Manhattan-based Freehold Capital Partners declines to identify any clients
or participants in its private transfer fee program, but claims on its Web
site that as of late 2009, "the owners of an estimated $488 billion in real
estate projects nationwide, including some of the country's largest, most
well-respected companies, have partnered with Freehold."

The company says it is negotiating with institutional investors to
"securitize" pools of transfer fees - essentially creating bonds based on
future cash flows that can be sold to deep-pocket money managers.

By creating future revenue streams - which builders can "monetize" upfront
by selling to investors for cash - the plan allows developers to sell houses
for lower prices than they otherwise could.

http://www.dailyherald.com/story/?id=363252



Best Regards

Tom.