If you split it in the next 25 years, pay us 100k

Has anyone come across this sort of clause before?

A large splittable block...

Sellers have a clause that the block can only be split into two. If it's split more than that within 25 years, they get paid 100k.

 

First they've gotta catch you. You could always on-sell to a related party hidden away in a trust etc then split as the second owner

 

Interesting. I wonder if they are just trying to profit from the event or if they are living nearby and trying to prevent it.

Would they hold onto the clause if you would walk if they didn't remove it.

 

Unusual.

Did they forget to add "scaled for inflation" to the $100k? Won't be worth much in a couple of decades.

 

I've never seen such a clause in a contract I have reviewed before. Is the clause drafted to require any future purchaser of the property to enter into a covenant with the seller to agree to the same terms? If not they could just sell the property (perhaps to a related entity) and the new buyer could subdivide as they please.

On that note I have seen a clause like that in development approvals in England. The concept is known as overage and there is no reason it could not be used in a sale contract if worded correctly - Land-sale overage - Wikipedia, the free encyclopedia.

I would question whether this would potentially trigger a higher transfer duty liability as there is a contingent payment involved. If I was acting for a buyer in this situation this is something I would look into further.