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Clauses when buying off the plan

Discussion in 'Legal Issues' started by wombat777, 23rd Aug, 2015.

  1. wombat777

    wombat777 Well-Known Member Premium Member

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    Note my cup of tea, but good advice if you decide to purchase OTP.

    http://propertyupdate.com.au/some-special-clauses-when-buying-off-the-plan-rob-balanda/

    Clauses are summarised below, but read the article above for an explanation.


     
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  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    no seller would agree to that.
     
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  3. RPI

    RPI Property Lawyer, Town Planner Business Member

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    And if it is a commercial development lend then you have the financier to approve conditions also. They wouldn't touch above.
     
  4. bonanzawealth

    bonanzawealth Well-Known Member

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    very interesting... check the website, it leads to Michael Yardney's.

     
  5. CosmicTrevor

    CosmicTrevor Well-Known Member

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    With those clauses the developer couldn't regard it as an unconditional contract, so the developer's financier wouldn't consider it as a "sale". For a developer to accept this you would think they would have to be desperate, already have finance or not know what they are doing.

    In addition to this, if the valuations come in under and the developer has to settle as per the proposed clauses they will immediately affect the value of the other properties in the development. This would cause significant reputational damage with both their purchasers and financiers which in turn would threaten the viability of future projects.

    No harm in trying, but I can't see it happening.
     
  6. RPI

    RPI Property Lawyer, Town Planner Business Member

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    We write off the plan contracts for developers all the time, so know first hand what the financier's require and how picky they are. It wouldn't be unconditional in the eyes of the financier so would not count in their presales numbers. Many lenders require us to provide a written advice outlining that each of the contracts are indeed unconditional.

    Even if you were on a residential lend in a small development I just don't see any advantage for the vendor, unless they were absolutely desperate.