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Anyone Obtained Developers Permission to Onsell OTP?

Discussion in 'Property Finance' started by House, 16th Aug, 2016.

  1. House

    House Well-Known Member Premium Member

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    Looking to sell the OTP in Fortutude Valley I bought before knowing any better. Clause in the contract states I can't onsell unless I get the sellers permission so naturally want to obtain this but what would be the best way to request it?

    Was thinking of saying my residency wasn't granted or partner is due a cute little baby in 6m and we want to put that money aside for It but not sure how legit the reason has to be.

    I'm working on finding a buyer for the apt so the seller won't be stuck with it again and so more likely to say yes. Still another year to go for settlement.

    If anyone has experience in obtaining the sellers permission to onsell I'd be keen to hear!
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  2. thatbum

    thatbum Well-Known Member

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    Despite what the contract says, I don't think the developer can really stop you from on-selling your interest in the property on reasonable terms.

    You certainly don't have to give some sob story - that's not what the legal issue will be.
     
  3. kamchatsky

    kamchatsky Well-Known Member

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    Surely as long as you can settle the property with the developer, you can onsell it to the next person within the next second?

    Of course it mean you are still liable for stamp duties, and the buyer won't get first home grant etc if that is what they are aiming .....
     
  4. House

    House Well-Known Member Premium Member

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    Really? Thought if that kind of condition was in a contract is was set. What would reasonable terms be though?

    I want to sell it before settlement and while it's probably one of the better OTP projects in Bris, it's looking far too risky for my liking.

    Yes the Stamps is the only thing that might just keep me in there! Lose $15k to get back a $40k deposit :/ But if I can only get 80% finance like I'm expecting then that's another $40k to be fed into something that doesn't look like it'll give a satisfactory return for very long time.
     
    Last edited: 16th Aug, 2016
  5. TaylorChang

    TaylorChang Well-Known Member

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    Why don't you call up the developer and ask them ?

    The big question developer worry is if we allow you to onsell it, who will going to buy from you ?

    Because from the developer's eye, they have sold that particular unit to you. They move this "stock" away from their book. They don't want to unit back to them, they just want to collect the cash.

    Hence, if you negotiate with the developer, try to stand at their point of view, it may help you to comes out a better term for you
     
  6. Joynz

    Joynz Well-Known Member

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    It looks like you can sell as long as you meet whatever the conditions mentioned are.

    Only one way to find out - ask the developer.
     
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  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Call anonomously from a blocked or private number and ask what the process is to onsell.
     
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  8. tobe

    tobe Well-Known Member

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    My understanding is you can nominate the sale without triggering the on sell clause in the contract. You only pay stamp duty once and the price needs to be the same as what you agreed with the developer.
    There's risk involved however as the nominee isn't bound by the contract, so it's important to get legal advice.
     
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  9. JDM

    JDM Well-Known Member

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    There's two ways an on-sale can be dealt with:

    1. Deed of rescission and the developer enters into a new contract with the new buyer. Your deposit will be refunded in accordance with the terms of the deed of rescission which is usually when the new contract is unconditional. Your contract will also usually end once the new contract goes unconditional. Most developers will agree to this if you pay their legal costs (circa $1,100 usually). The new contract will usually be on the same terms as your existing contract. Provided certain conditions are met (mainly that you are not on-selling at a higher price or receiving a benefit by on-selling), you do not pay transfer duty with this method.

    2. You request a transfer by direction which means the property technically transfers from the developer to you and then to the new buyer (all using the same Form 1 Transfer). You will be liable to pay duty in this case and your deposit will not be released until settlement, however you will not need to pay any funds at settlement provided the new buyer's funds cover the full purchase price. The advantage of this method is that you can sell at an increased price, however the obvious downside is having to pay transfer duty.

    Option 1 is the most common from my experience and the main reason for this is to ensure the new buyer signs a contract on the same terms as your existing contract. The developer wants to ensure the buyer grants them certain rights (amongst others) in respect of the body corporate so the developer can effectively control the body corporate for the first 12 months.

    The developer just wants the lot to settle so they have no reason to not consent to the on-sale provided you deal with it in the way they require. I've dealt with the settlement of at least a few thousand OTP lots and not once have I had a developer refuse to allow an on-sale/rescission.
     
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  10. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @JDM great write up and thanks for the info.
     
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  11. TaylorChang

    TaylorChang Well-Known Member

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    Great input thanks @JDM
     
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  12. Redom

    Redom Mortgage Broker Business Member

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    Learnt plenty of that post @JDM - great input.
     
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  13. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    This will vary depending on where the property is located. @JDM was referring to Queensland but the rules do vary between the States/Territories. For example in WA, you will generally still be liable for stamp duty if your contract is cancelled so that a new one can be entered into with another purchaser (this is called a subsale). There's no requirement in WA (unlike Queensland) that the original purchaser benefit from the subsale. One way potentially around this is, where possible, for the new contract to be over a different lot in the development (this may not be a subsale).

    The stamp duty implications impact on how the parties choose to deal with onsales. As do the commercial drivers of whether the development is in demand and whether values have increased from when the contract was first signed.
     
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  14. House

    House Well-Known Member Premium Member

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    Indeed many thanks @JDM. 'Deed of Recission' is exactly the kind of info I was after. Potential of not paying stamps has got me very happy!

    Thanks to everyone for their suggestions/info too :)
     
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  15. Cactus

    Cactus Well-Known Member

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    I try to cross out any clauses relating to on selling.

    However the developer is trying to prevent you selling against them at lower prices than them.

    If you are selling for same as them or they have completed selling this is less of a problem.

    The other issue is there is often conditions you have signed up to that they want the next purchaser to sign up to like building deadlines, landscaping deadlines, building design requirements etc.

    All this can be dealt with by a dead of succession (or something like that can't 100% recall name).

    I have never had a problem on selling but then I am not trying to undercut the developer, I am trying to Get more.
     
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  16. House

    House Well-Known Member Premium Member

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    Some great news, the vendors solicitor has said they're happy with recission as long as I can find a replacement buyer :D Pretty reasonable request and have more than year to find one.

    The company I bought it through will charge around $10k to sell it (they have a huge database) but will try my own advertising online to see if I can beat them to it and save the $10k. Can't be too difficult. Anyone know an agent who speaks Mandarin?! :p
     
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  17. oki doki

    oki doki Well-Known Member

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    Ring Sam Dastyari..he will refer u to someone reliable :)
     
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  18. Redwood

    Redwood Well-Known Member

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    Hi House

    Sorry the hear. FV is a mess, developments cannot be financed and I ask any client with an apartment there to sell at any cost. Most developers will agree - however you have to find a buyer and now the word has went around and inner city brissie is copping it big time in the word of mouth. Who did you buy it off? remember if you bought it off an agent - once you sell, generally, they will refund their comm to the developer (depending on the agreement). Thats why they are charging 10k as that was their comm in the first place.

    Re chinese, it has stalled which is killing the brisbane apt market - mostly due to the crackdown on non-resi lending, so the we chat / weibo channels are very negative on brissie and aussie property generally.

    My thoughts - it will be tough to onsell, if you can - do it at any cost.

    Hope all goes well

    Cheers Ivan