The real reason why the neighbor is having lunch with you is because he wants to build a bigger building on his property, but is not able to because he has used up all his development rights, which is referred to as floor area ratio or FAR for short, under the applicable zoning. Thus, he is coming to you so that the excess FAR on your property may be purchased and “transferred” to his property. To be clear, he is not asking to build on top of your property, but rather, merely wants to use the excess FAR on your property so that he can build on top of his existing 10-story building. You are about to retire and you never really had plans to build anything higher so you negotiate and agree to sell the excess FAR to your good neighbor for $5,000,000! This is not a bad deal for the neighbor since transferrable development rights may sell for close to or in excess of the value of the vacant land itself. Now, how do you get this deal done? Continue reading →