Received an offer from the developer

Discussion in 'The Buying & Selling Process' started by Investor9876, 16th Mar, 2022.

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  1. Investor9876

    Investor9876 New Member

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    Hi,
    I have received an offer from a develop for an empty property I own and this is the first time that I deal with property developer, who wants a 12 months settlement.
    My solicitor said the special conditions are ok but it is up to me to accept or not…
    If 12 months settlement, I would want to rent the property out.
    I know all the words of the special conditions, but I wonder that it really means in real life as I never deal with tenant or planning.

    Could you please help?

    1. how practical is it to agree to give the buyer unrestricted access to the property when it is tenanted upon reasonable notice for the purpose of obtaining the required permits?
    2. why the developer wants unrestricted consent from me in regards to obtaining the required permits? And consents that I would not object any applications?
     

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    Investor9876, 16th Mar, 2022
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  2. wylie

    wylie Moderator Staff Member

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    Are you getting a really, really good price?

    With the market moving in many parts I wound't want to lock up a property for sale with a twelve month settlement.

    Also, there are rules about renting in these circumstances. The tenant will need to know the house is being sold (rules might vary from state to state) and no tenant is going to want people traipsing on their land or in their house.

    And what happens if the purchaser elects to settle early and you agree to that? Will they take on the tenant if a lease is in place?
     
    wylie, 16th Mar, 2022
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  3. Stoffo

    Stoffo Well-Known Member

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    Usually you have to be the owner to lodge for development/building permits (and this takes time), by signing over unrestricted access the developer can save themselves a lot of time (waiting for settlement, then applying and waiting months for council), only worry is IF the developers plans aren't approved that they could walk away from the deal having paid very little (so get a substantial deposit and even add in a clause with an exit fee).
     
    Stoffo, 17th Mar, 2022
    #3
  4. BennEznElle

    BennEznElle Well-Known Member

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    I would have thought you would want to get a non-refundable deposit of at least the amount of rent (or more) that you would be able to charge for the year. I suspect it would be difficult to lease, as Wylie said, they can settle early giving you 30 days notice, so you would struggle to get a tenant out in that period.

    Your lawyer said the special conditions are ok but isn't it their job to give you the practical applications of the conditions so you can make a decision?
     
    BennEznElle, 17th Mar, 2022
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  5. spludgey

    spludgey Well-Known Member

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    There's no way I'd sign off on clause #4 in its current form!
     
    spludgey, 17th Mar, 2022
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The 12month deferal doesnt delay the CGT impact. However a (little known) ATO concession allows you to amend to include this once it does settle. You may have non-deductible holding costs throughout the year.
     
    Paul@PAS, 17th Mar, 2022
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  7. Investor9876

    Investor9876 New Member

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    Can you explain a bit more?
     
    Investor9876, 17th Mar, 2022
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  8. Stoffo

    Stoffo Well-Known Member

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    Well, if you lived next door (locally) and the developer applied to turn it into a nuclear waste storage facility you couldn't oppose the development (and probably couldn't rescind the contract either) !
     
    Stoffo, 17th Mar, 2022
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  9. spludgey

    spludgey Well-Known Member

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    Yes exactly, it's way too broad and if there's another exit clause, the developer could just use this to shut you up if they're developing the block next door and then drop your block. There's so many things that could go wrong.

    I disagreed with @Terry_w recently that all contracts need to be written/reviewed by a lawyer, but this is definitely one that needs to be!
     
    spludgey, 17th Mar, 2022
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  10. Investor9876

    Investor9876 New Member

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    Update:
    The buyer wants to split the payment of deposit…
     
    Investor9876, 18th Mar, 2022
    #10