Is there a penalty in link building?

No, you cannot get any penalties from links to your site (otherwise it would be easy for competitors to harm you). However, if Google decides the satellite site is of little value or the content is spam, the links may only give you little or no value. They may be classed in the same vein as "footer links" which tend to have low value.

Edit: An update by Google a little while back has confirmed that links from very spammy sites could harm your ranking. This is still pretty rare and not something you really need to worry about.


The accepted answer to this question may have been correct at the time, but it is clearly now wrong. On April 24, 2012 Google released a new algorithm which they called "penguin" which targeted web spam. Part of the algorithm was focused on bad inbound links to a site.

It is now the case that inbound links to your site that are spammy can hurt your site.

To lessen the impact of "negative SEO" where a competitor creates spammy links pointing at your site, Google has released a disavow links tool that lets you report to Google any links that are poor quality but which you are not responsible for creating.