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Two Pitfalls of Leveraging Developer Influence: Transfer Fee Covenants and Tying Arrangements

October 2014 

By William B. Aycock II

                 During the recent financial downturn, revenues generated by commercial real estate developers shrank by almost half.[1]  During those difficult years, a number of tactics emerged, some old, and some new, that held out the promise of improving the business model by shoring up the bottom line. These tactics attempted to take advantage of the influential position held by developers in what will be the fundamental purchase in the lives of many, buying a home.  What follows is a brief discussion of two methods by which developers have attempted to expand the influence afforded their role, and how those attempts have fared/may fare under the law.

Transfer Fee Covenants

                 A transfer fee covenant (“TFC”) (also known as a recovery fee, a re-conveyance fee or a resale fee) is a requirement included in a deed or a community or condominium declaration that requires the payment of a fee upon a conveyance of a home or unit.[2]  The amount of the fee can be a set amount, or can be based upon a percentage of the sale price.[3]  A common example of this kind of fee is a capital contribution paid to a homeowner’s association at a closing.  Under North Carolina law, for such a covenant to be enforceable, both the benefit and the burden of the covenant must touch and concern the land.[4]  The above example satisfies this requirement, as the fee burdens the new owner (it is her requirement to pay), and the money benefits the homeowners’ association, funding common area maintenance, insurance, and other community expenses.              

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Partner Amy H. Kincaid honored as a Fellow in the American College of Trust and Estate Counsel

Schell Bray is pleased to announce that Amy H. Kincaid, a partner in the firm’s Trusts and Estates Practice Group, was recently elected as a Fellow in the American College of Trust and Estate Counsel (ACTEC). Ms. Kincaid’s practice focuses on a wide variety of estate and trust administration, estate planning, and tax issues, including simple and complex charitable giving techniques, multigenerational planning, formation and use of family limited liability companies, modification and termination of irrevocable trusts, asset protection planning, power of attorney matters, and estate and income taxation of estates and trusts.

The American College of Trust and Estate Counsel is a national organization of lawyers elected to membership by demonstrating the highest level of integrity, commitment to the profession, competence and experience as trust and estate counselors.

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Barbara R. Christy and Jennifer L.J. Koenig honored as Herb Falk Society Fellows

The Greensboro Bar Association recognized its 2013 Herb Falk Society Fellows at its September 18th member dinner at Starmount Forest Country Club. Schell Bray partners Barbara Christy and Jennifer Koenig were among those honored for having performed over 75 hours of pro bono service in 2013. 

The Society honors the life and work of the late Herbert S. Falk, Jr., a former Greensboro Bar Association president who was deeply committed to pro bono service.

The firm applauds Barbara Christy and Jennifer Koenig on their exceptional commitment to the practice of law and to making their professional services available without charge for the public good..

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Barbara R. Christy and Christina Freeman Pearsall speak at NC Bar Association Program

Barbara R. Christy and Christina Freeman Pearsall, members of the Schell Bray Real Estate Practice Group, spoke on September 12, 2014 at the NC Bar Association’s live and webcast CLE program “2014 Advanced Topics in Real Property”. Their presentation was entitled “Advanced Commercial Leasing”.

Barbara Christy’s practice focuses on commercial real estate. She is a Board Certified Specialist in Real Property Law – Business, Commercial and Industrial Transactions by the North Carolina State Bar Board of Legal Specialization. Ms. Christy received her J.D. degree from the University of North Carolina at Chapel Hill School of Law.

Christina Pearsall’s practice focuses on commercial real estate. She received her J.D. degree, magna cum laude, from North Carolina Central University School of Law, and LL.M. (Tax) from Boston University School of Law.

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What We Practice
Business Real Estate Trusts and Estates

Our business lawyers serve as regular outside counsel to public and privately held businesses with diverse interests in local, national  and international markets.  » more

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At Schell Bray, our Elder Law and Special Needs Law practice encompasses many different fields of law providing for the unique legal and financial demands of senior citizens and people with disabilities. Our attorneys assist clients and their families with a variety of legal issues, from estate planning to long term care issues, with a primary emphasis on promoting quality of life for the client. Schell Bray takes a holistic approach to planning to ensure that each client’s plan addresses the legal, medical, financial, and social needs of the client.
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At Schell Bray, our Elder Law and Special Needs Law practice encompasses many different fields of law providing for the unique legal and financial demands of senior citizens and people with disabilities. Our attorneys assist clients and their families with a variety of legal issues, from estate planning to long term care issues, with a primary emphasis on promoting quality of life for the client. Schell Bray takes a holistic approach to planning to ensure that each client’s plan addresses the legal, medical, financial, and social needs of the client.
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The lawyers in our Commercial Real Estate practice group have a broad range of experience and expertise. We offer sophisticated legal services often associated with large law firms combined with small-firm efficiencies, which we believe provide our clients with the best of both worlds. » more

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Schell Bray’s tax-exempt organizations practice has the breadth of experience and depth of knowledge to help our charitable and nonprofit clients innovate and achieve their missions while keeping compliant with applicable laws. Our attorneys provide high level, practical legal counsel that comes from decades of experience in - and a deep commitment to - the nonprofit sector and its component organizations. » more

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At Schell Bray, our Trusts and Estates practice group is involved in all aspects of estate and trust planning and administration, from preparing basic estate planning documents to planning and implementing the most cutting-edge planning techniques to transfer wealth and preserve assets. We provide a full range of estate and trust planning and administration services. We advise beneficiaries and fiduciaries of estates and trusts on their rights and duties, and we form and advise tax-exempt entities. » more

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Meet Our People
Doris R. Bray
Doris R. Bray

Doris Bray’s practice concentrates in the business and transactional areas. She advises clients in establishing their businesses, including assisting clients in determining the most advantageous financial and organizational structure for their business, and preparing all necessary documentation. She is knowledgeable…» more

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