1. Not every state uses 99 years as a test of the rule against perpetuities (RAP). RAP is one of the most complicated topics taught in law school, and the common law RAP doesn’t rely on the 99 years model. Federal law often relies on common law, I don’t know about RAP though.

2. Covenants that run with the land are supposed to benefit all parties burdened, and are supposed to bind all simularly situated parties within a development. Freehold is trying to use two arguments to legitimize this… by requireing that some proceeds go to a local charity they are trying to show benefit conveyed during the entire time the covenant is in place, and by saying that these are deferred repayments of funds used to put in infrastructure for the development. The problem is that only a small part of the amount collected will likely go to charity, and there is probably not an ongoing obligation to maintain the infrastructure, that is usually passed off to local governments, improvement districts (who charge their own assements), or the individual land/home owners. Also traditional covenants can be negated for everyone if they are not policed and a few get through.

3. Freehold is actually arguing that they are benefiting the present and future property owners by setting up a market where they will essentially have to sell their property for a lower value. They are, I suppose, implying that the property owner will have a selling advantage by selling at a lower price. But in the same breath, they say the market regulates and everyone is getting what they pay for. How can it be an advantage if it is fair market value?

4. They also jump from property law to contract law, which is understandable as servitudes have components of both. But in Contract law, there is no privity of contract between the subsequent buyers and Freehold…. unless the subsequent buyer consents.

For a real fair market value to develop, Courts will have to find these arrangements to be legal. I forsee the first obligated property owners to be the ones who sustain the greatest loss in establishing a true fair market, unless they commit fraud, disclosure doesn’t occur, or the Buyer is an idiot. Until a Fair market develops, Appraisers will be pulling numbers out of thin air (more than they do already) to try to value these properies.

The examples Freehold uses is the original property selling for 2% less than an equivalent property. It used to be a rule of thumb that a property sold every six years or so. If that is the case over the length of the covenant, property sellers will pay 15-16% of appreciating gross values (even if they sell for a loss) for that 2% discount. That initial “investment” by freehold doubles four times.

Courts could also view Freehold’s lien as more a lien than a covenant and since is subjugated to the mortgage, if there is a foreclosure Freehold’s lien could be wiped out.