One for the brokers. I got a call from someone I used to work with. He's now running a middle sized builder and having trouble getting finance for townhouses. Clients have signed land and build contracts, so its progress payments. Trouble with valuers and lenders because it's 'built in one line'. Although the properties aren't joined. Anyone have any suggestions on how to help? I thought of setting the builder up with Otp development finance so he can build OTP for (some) of the buyers.
As they're not OTP, why's it such a problem if construction is staged rather than financing the lot in one go? Can he undertake a stratum subdivision for the stages hence reducing lender risk?
There would have to be something that is common for them to be getting deemed split contract. CBA Definition A split contract for a multi property development is identified by any of the following characteristics, the: Approval / planning permit for the subject development is not specific to the property, (development approval encompasses the whole development, not just the property in question) Subject property is typically, (however not necessarily) situated within a development that has 'common property' and may share common party walls, roofs and / or footings with adjoining properties Sale of the land settles prior to the commencement of construction of the dwelling and the purchaser is thereafter committed to begin construction per the executed building contract. All loans involving split contracts for multi property developments must be treated on an Off The Plan purchase basis, with no loan funds to be released until the development is completed
Agreed- there should be some joint component which would be causing the issue, otherwise shouldn't be a big deal. Might be worth trying to get a look at a val and the build docs to see what exactly is going on, because it should otherwise be a simple deal for each site.
Pretty sure it's joint planning/council/build permit. And yes that's the next step getting a couple of vals done and then shopping them.
If there's individual buyers the settlement of land wouldn't complete without the division being finalised - so I think tobe is on the money about the permits being joint causing the issue.
Had to pick up the pieces for another banker regarding a split contract after they left the customer in the dark and payments to the builder were due. They had tried to get around the split contract by getting the council to provide separate approvals for each dwelling - not sure which council your deal is with, but they were able to do this. (Didn't get around the split contract though for them, as there was a party wall - but might be what works for you) It would likely be coming up in the valuations, need to look at them to attempt to address the issue. Funnily enough with the deal above I'm talking about it was two clients (brother) building on each side, one valuer picked it up the other it got through.
