What Are Front Foot Benefit Charges (FFBCs)?

Front foot benefit charges — commonly known as FFBCs — are private assessments recorded against residential properties to reimburse the cost of developer-funded water and sewer infrastructure. They are not public utility rates or government-imposed fees. An FFBC is a contractual obligation between a private utility company (formed by the developer) and each successive owner of a lot in the subdivision, created by a recorded declaration and enforceable as a covenant running with the land.

Maryland statute makes this explicit. The required disclosure language under Real Property Article §14-117(a)(5) states: “This fee or assessment is a contractual obligation between the lienholder and each owner of this property, and is not in any way a fee or assessment imposed by the county.”

How FFBCs Work

The mechanism follows a defined sequence:

1. Entity formation. The developer forms a private utility company (typically an LLC) to build and own the water and sewer infrastructure serving the subdivision.
2. Infrastructure construction. The utility company funds and constructs water mains, sewer lines, pump stations, and related facilities.
3. Declaration recordation. The utility company records a Declaration of Deferred Water and Sewer Charges in the county land records. This declaration is the critical legal instrument — it identifies the subdivision, the lots subject to the charge, the annual assessment amount, the term (typically 20 to 40 years), and any escalation provisions.
4. Covenant runs with the land. Upon recordation, the assessment attaches to each lot as an obligation that transfers with title. When a homebuyer purchases a lot, they take title subject to the charge. The buyer's obligation arises from the recorded declaration, not from a separate contract with the developer.
5. Annual assessment. The homeowner pays an annual assessment to the utility company over the life of the declaration. Ongoing utility service charges for water and sewer usage exist separately from the FFBC.

The result is a stream of annual payments flowing from homeowners to the utility company over the declaration term. This cash flow stream is the receivable — and it is this receivable that developers can sell.

The Maryland Legal Framework

Maryland has the most highly developed legal framework governing FFBCs in the country. The key components, organized by function:

The Declaration as Covenant (Real Property Article)

The recorded Declaration of Deferred Water and Sewer Charges creates a covenant running with the land under Maryland's Real Property Article. This is what makes the assessment enforceable against successive owners — the obligation follows the lot, not the person.

Enforcement: The Maryland Contract Lien Act (§14-201 et seq.)

The Maryland Contract Lien Act (MCLA, Real Property Article §14-201 through §14-206) provides the enforcement mechanism for nonpayment of deferred water and sewer charges.

Declaration Drafting: Lessons from Select Portfolio Servicing v. Saddlebrook West Utility Co.

The Court of Appeals of Maryland addressed the relationship between recorded declarations and MCLA liens in Select Portfolio Servicing v. Saddlebrook West Utility Co. (2017). The court held that a recorded declaration does not itself create a lien — the utility company must follow the MCLA procedures (§14-203) to establish a lien when an assessment goes unpaid. The declaration authorizes lien creation, but the lien only comes into existence through the statutory process.

“[A] bloopers reel for a real property course” — the Court of Appeals of Maryland describing the factual record in Saddlebrook: unsigned documents, missing attachments, title searches that overlooked recorded liens.

For developers, the practical takeaway is straightforward: the declaration is the foundation for MCLA enforcement, not a self-executing lien. Work with parties who understand how these instruments function from the outset.

Disclosure Requirements (§14-117)

§14-117 requires disclosure of deferred water and sewer charges at the point of sale. HB989 (2016) added statewide resale disclosure requirements. HB1043 (2014) added provisions specific to Prince George's County, including a 20-year amortization limit. Developers should ensure sales contracts comply with §14-117 disclosure requirements.

Private vs. Public Utility Infrastructure

The distinction matters because the legal framework, funding mechanism, and developer obligations differ:

• Public systems — WSSC (Montgomery and Prince George's counties, governed by Public Utilities Article §25-204) and county-operated systems elsewhere. Funded through connection charges, impact fees, and general obligation bonds.
• Private systems — Developer-formed utility company (LLC). Funded through FFBCs (recorded declarations) and ongoing service charges. Governed by the Real Property Article and the MCLA.

§14-117 disclosure requirements apply to private deferred charges only — WSSC and other public systems operate under separate statutory authority.

Assessment Rate Structures

The FFBC assessment rate is set in the declaration itself. Structures vary by community, but the most common methods are:

Despite the “front foot” name — which originated from public assessment methods based on lot frontage — private FFBC declarations set an annual amount on a per-unit basis determined by the developer. Structures vary by community and product type.

We maintain a database of assessment rate comparables across Maryland counties and product types. Whether you are structuring a new declaration or evaluating an existing one, contact us for comps.

Beyond Maryland

The private declaration model is not unique to Maryland. Similar mechanisms exist in other states, though the legal basis varies:

Delaware

Delaware has no FFBC-specific enabling statute equivalent to Maryland's MCLA. Instead, the private declaration model operates under general contract and real property law. Recorded declarations create contractual covenants binding successive lot owners — enforcement relies on the terms of the declaration itself, not a statutory lien mechanism. Our observation is that the vast majority of new home developments in Sussex County use this model, and more developers across the state are adopting it as well.

West Virginia

The FFBC model is being adapted for West Virginia contractually, with declarations structured under general contract and real property law. If you are developing in West Virginia and exploring deferred infrastructure financing, we would be glad to work with you.

Tennessee: Residential Infrastructure Development Act (2024)

Tennessee enacted the Residential Infrastructure Development Act of 2024 (TCA §§7-84-701–728, Public Chapter 860). This authorizes municipalities to create infrastructure development districts with special property tax assessments — a different mechanism from the private declaration model (municipal special districts rather than developer-formed utility companies), but aimed at the same infrastructure financing problem.

For Developers

If you are building communities with private utility infrastructure, the assessments you record are financial assets. Utility Capital Group purchases FFBC receivables at every stage — from forward commitments before construction to seasoned portfolios where every home has closed. Learn about selling utility receivables, or contact us directly to discuss your portfolio.