Sale of Development Rights Agreement

Development rights can add value to a property, as they underscore the development potential of that property. A special type of development rights is represented by the Transferable Development Rights, which can compensate owners for not being allowed to develop certain properties because of legal limitations. By allowing the transfer of rights, the government tries to leave certain areas undeveloped while encouraging the rehabilitation of others. If for preservation reasons (cultural or historic) a property owner is prohibited from building more on a property, he or she can be given development rights elsewhere, where development is encouraged. The owner can sell these rights to a developer from the new area, being, thus, compensated for not being able to develop his or her own property.