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  1. #1
    Join Date
    Sep 2015
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    Maryland, USA
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    Question How Does House Front Foot Fee Impact Real Estate Transaction

    My question involves real estate located in the State of: Maryland, Baltimore County.

    How does House Front Foot FEE impact real estate transaction ?
    ==================================


    Thanks for responding to my threads.

    I am in the home buying process in Maryland. As I reviewed the draft contract doc, a weird clause caught my eye. It states :

    The property is subject to fee or assessment charged under authority grated to developer pursuant to section 32-4-310 of the Baltimore County Maryland code. Which purports to cover or defray the cost of installing all or part of the public water or sewer facilities constructed by the developer of the sub division known as .... This fee or assessment is $500 - 900/year. I did not see any dept in state or county as oversight to this Front Foot FEE.
    It looks like much more than water consumption bill and throwing $ in drain. I did go after this property, because it did not have HOA. This item is surfacing now. The seller/agent did not provide any addendum related to this. It is bothering me.

    I did google it and learned that it was called a Front Foot Fee being assessed to the buyer. Sometimes it is called a Front Foot Assessment (FFA) or Front Foot Benefit.

    What is the benefit for the owner, who buy this property and pays $500 - 900/year?

    Are there ways to avoid/remove this lien hold on this property?

    Does this Front Foot Assessment has impact on sale price/offer of the property?

    If there is no Front Foot Assessment for a house, will it sell it for more $?

    After talking with Seller agent, they disclosed:

    $550/year for next 13 years (remaining term). The original term is 33 years , xxx/year. I am not aware about original term, that is why I put xxx/year.

    The house is coming to me with mini mortgage ($550/year, for 13 years).

    What is the best way/strategy to factor this into offer/sale price?


    I did not see the additional info/addendum for this.

    I did see the amount/term higher compare to other properties. Is it because of seller's default payment caused to readjust?

    Technically , this property coming with 13 year term debt . How do address this in real estate transaction?

    What will be the liability of utility infrastructure attached to this property after 13 years (fully paid)?

    Who is responsible for maintenance /break fix of attached utility infrastructure now and after 13 years (fully paid)?

    What is the document to show this info?

    Who is the oversight in state/county for this Front Foot FEE arrangement?

    Thanks for your guidance.

  2. #2
    Join Date
    Jan 2006
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    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    It sounds like a special assessment. That is a limited tax that is used to pay for, usually, improvements that benefit the party being taxed. In your situation it appears to cover the cost of municipal water and sewer infrastructure.

    Whether you believe it alters the value is your determination of whether it alters the value. There really is nothing to address. It cannot be removed. Whether you wish to reduce your offer because of it is entirely up to you.

  3. #3
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    Nov 2013
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    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    Quote Quoting jk
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    It sounds like a special assessment. That is a limited tax that is used to pay for, usually, improvements that benefit the party being taxed. In your situation it appears to cover the cost of municipal water and sewer infrastructure.

    Whether you believe it alters the value is your determination of whether it alters the value. There really is nothing to address. It cannot be removed. Whether you wish to reduce your offer because of it is entirely up to you.
    I agree with you except a special assessment is not a tax. It's a lien on the property that has to be paid off for municipal or county improvements in infrastructure that benefit the property. The improvements are usually funded by bonds that are sold by the jurisdiction that makes the improvements. The assessment pays off the bonds.

    Defaulting on assessment payments can result in foreclosure and a loss of the property.

    32-4-310. Fees And Assessments For Privately Financed Utilities.

    Latest version.


    (a) In general. Unless otherwise agreed to by the county, installation of public water and sewer facilities shall be without cost to or contribution by the county.

    (b) Fee or assessment for cost of installation. The applicant may charge a fee or assessment that is reasonably calculated to cover or defray all or part of the applicant's cost of the installation if:

    (1) The county has not contributed to the cost of the public water or sewer facilities; and

    (2) The property proposed to be subject to the fee or assessment under this subsection is not currently the subject of a water or sewer benefit assessment by the county.

    (1988 Code, 26-246) (Bill No. 38-98, 6, 6-20-1998; Bill No. 79-01, 2, 7-1-2004)
    In this instance, the developer paid for the cost of the infrastructure apparently without local or county contribution.

  4. #4
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    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    Quote Quoting budwad
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    I agree with you except a special assessment is not a tax. It's a lien on the property that has to be paid off for municipal or county improvements in infrastructure that benefit the property. The improvements are usually funded by bonds that are sold by the jurisdiction that makes the improvements. The assessment pays off the bonds.

    Defaulting on assessment payments can result in foreclosure and a loss of the property.



    In this instance, the developer paid for the cost of the infrastructure apparently without local or county contribution.
    fine, it’s a pseudo tax.

    But you misconstrue what a lien is. A lien is nothing more than s legal notice. A lien must be supported by an associated debt. The lien is placed on the property to ensure payment of the pseudo tax. the only difference between a special assessment and an actual tax are the mechanisms in place. A special assessment is a financial obligation to pay for the cost of a specific matter charged against those who benefit from the specific improvement.

    A tax is a general levy which is used to pay for operating costs of the municipality which could include the construction of a sewer and water system. The municipality could seek a general tax increase to cover the cost of the infrastructure but typically does not since that would result in all members of the tax base paying for improvements that only a limited number benefit from. It is unfair to spread the debt of a limited benefit to all parties of the tax rolls.

  5. #5
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    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    I misconstrue nothing. You said exactly what I said. A special assessment on property for the benefits they receive from an infrastructure project the cost of which is apportioned to those properties that benefit is perfected by the local jurisdiction selling bonds to fund the project. The assessment to each property becomes a lien on the property.

    In Maryland they call it special taxing districts but it has nothing to do with taxes pseudo or otherwise.

    I served as the chairman on four boards of special assessment for water infrastructure projects when I was in public office. That was NJ but the laws are very similar. What they call the payback doesn't mean much being a special assessment or payment to a special tax district. It's a lien on the property to pay back their share of the bonds.

  6. #6
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    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    Quote Quoting budwad
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    I misconstrue nothing. You said exactly what I said. A special assessment on property for the benefits they receive from an infrastructure project the cost of which is apportioned to those properties that benefit is perfected by the local jurisdiction selling bonds to fund the project. The assessment to each property becomes a lien on the property.

    In Maryland they call it special taxing districts but it has nothing to do with taxes pseudo or otherwise.

    I served as the chairman on four boards of special assessment for water infrastructure projects when I was in public office. That was NJ but the laws are very similar. What they call the payback doesn't mean much being a special assessment or payment to a special tax district. It's a lien on the property to pay back their share of the bonds.
    Ok, then you were simply wrong with your statement regarding a lien. A lien is not something that has to be paid off. The assessment is what must be paid off. The lien is a legal encumbrance against title. It is not the debt and you don’t pay it off. I didn’t say exactly what you said.



    since you did say a lien must be paid off, it proves you misconstrued what a lien is. You pay the underlying debt that allowed for the lien.


    support of my statement from Maryland law;



    14-202. Creation of lien by contract.
    (a) In general. — A lien on property may be created by a contract and enforced under this subtitle if:
    (1) The contract expressly provides for the creation of a lien; and
    (2) The contract expressly describes:
    (i) The party entitled to establish and enforce the lien; and
    (ii) The property against which the lien may be imposed

    (b) Lien as security. — A lien may only secure the payment of:
    (1) Damages;
    (2) Costs of collection;
    (3) Late charges permitted by law; and
    (4) Attorney's fees provided for in a contract or awarded by a court for breach of a contract.
    so, a debt associated with a property does not automatically nor necessarily create a lien. A lien is an individual legal construct that allows the lien holder to act as the law allows a lien holder to act should the debt not be paid. In Maryland, it can allow a foreclosure of the property so the lien holder can liquidate the property to be paid the debt. If not for the lien, the creditor would have no right to foreclose. Along with that, payment in full of the debt doesn’t release the lien. It requires a lien be released but since it is a separate legal construct, the satisfaction or cancellation of the debt does not remove a lien. It is a separate action. In fact, many lines remain after the cancellation (not forgiveness) of a debt and legally and rightfully so.



    Under Maryland’s real estate code


    14-303.
    A lien established in accordance with this subtitle shall extend to the land covered by the building and to as much other land, immediately adjacent and belonging in like manner to the owner of the building, as may be necessary for the ordinary and useful purposes of the building.


    so, to understand how wrong you are replace lien with debt in that section of code. A debt doesn't extend anywhere. It’s simply an accounting in a ledger. A lien on the other hand can be created and removed and altered irrespective of the underlying debt.


    So, due to that, it is clear it is a legal notice; a notice of an encumbrance against the title.



    I wouldn’t admit to having been the chairperson of four boards if this was your typical understanding of the issues involved.

  7. #7
    Join Date
    Sep 2015
    Location
    Maryland, USA
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    38

    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    Quote Quoting budwad
    View Post
    I misconstrue nothing. You said exactly what I said. A special assessment on property for the benefits they receive from an infrastructure project the cost of which is apportioned to those properties that benefit is perfected by the local jurisdiction selling bonds to fund the project. The assessment to each property becomes a lien on the property.

    In Maryland they call it special taxing districts but it has nothing to do with taxes pseudo or otherwise.

    I served as the chairman on four boards of special assessment for water infrastructure projects when I was in public office. That was NJ but the laws are very similar. What they call the payback doesn't mean much being a special assessment or payment to a special tax district. It's a lien on the property to pay back their share of the bonds.
    Thanks for weighing in . Will there be a legal document recorded with County/state with agreed terms like contract?

    I did talk with Baltimore County permits, water & Sewage , utility, budget & Finance, assessment, and Property tax. No one knows about such documentation.

    I did search on MD land records, I found the DEED for the property, attached mortgages, but I did not find a document to support "FRONT FOOT FEE" arrangement among land registry records.

    We know "FRONT FOOT FEE" arrangement is a DEBT attached to property that has a LIEN. Why is not part of property records?

    What is the entity within county/state register/record such instrument ("FRONT FOOT FEE")?

    Thanks for guidance.

  8. #8
    Join Date
    Mar 2013
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    17,062

    Default Re: How Does House Front Foot Fee Impact Real Estate Transaction

    Quote Quoting MDRI
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    What is the benefit for the owner, who buy this property and pays $500 - 900/year?

    You have water and sewer service to your house without having to did a well or install a septic tank.

    Are there ways to avoid/remove this lien hold on this property?

    No

    Does this Front Foot Assessment has impact on sale price/offer of the property?

    Only if you want it to.

    If there is no Front Foot Assessment for a house, will it sell it for more $?

    That's up to a buyer.

    The house is coming to me with mini mortgage ($550/year, for 13 years).

    What is the best way/strategy to factor this into offer/sale price?

    Should be obvious that you can offer a lower price to offset the debt and you can walk away from the deal if the seller doesn't accept your offer.


    I did see the amount/term higher compare to other properties. Is it because of seller's default payment caused to readjust?

    Could be due to different size lots or homes. Otherwise, I have no clue.

    Technically , this property coming with 13 year term debt . How do address this in real estate transaction?

    Again, offer a lower price to offset the debt.

    What will be the liability of utility infrastructure attached to this property after 13 years (fully paid)?

    Who is responsible for maintenance /break fix of attached utility infrastructure now and after 13 years (fully paid)?

    What is the document to show this info?

    Who is the oversight in state/county for this Front Foot FEE arrangement?

    For the answers to the last four questions I suggest you contact the water/sewer department
    ............................

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