Understanding Development Rights in US Property Law

Development rights are a set of legal entitlements that allow developers to make changes to their property within the limits imposed by state or local law. Transferable Development Rights (TDR) are a way for developers to purchase development rights from certain plots within a designated sending district and transfer them to another receiving district, thus increasing the density of their new development. This concept is based on the idea that all lands have a set of property rights. Development rights are used to control land use as an alternative to land-use planning and zoning for more effective management of urban growth and land conservation. For instance, if an owner has air rights that can be used as TDRs to build a zoning greater than that allowed on their other properties, they can sell these rights to a developer in the new area and receive compensation for not being able to develop their own property.

Development rights can add value to a property, as they emphasize the development potential of that property. In some cases, development rights may be granted elsewhere if the owner is prohibited from building more on their property due to conservation reasons (cultural or historical).