“Uplift” fee in property contract

Discussion in 'The Buying & Selling Process' started by charli, 30th Mar, 2020.

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  1. charli

    charli Member

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    Hello,

    Needing help....wanting to buy a small block that’s part of a new subdivision and backs onto our PPOR. After agreeing on price and terms with owner/developer they have just told me today that they are now going to add a clause to contract that we (or future owners should we sell) will pay them a fee of $50 000.00 should we go on to subdivide land. This is because they believe we could make a profit on our land that would not be possible if we do not buy there land.

    I’ve never heard of this and can only find something similar in UK for Uplift or Hope Agreement?

    Anyone heard of this before? I’m about to walk away from it.
     
  2. wylie

    wylie Moderator Staff Member

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    I'd walk away from it.
     
  3. charli

    charli Member

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    Yep I’m hearing you that was my initial reaction when I heard of it as well. I just wasn’t sure if it’s a common thing or if I am over reacting. To me it feels like they want to sell land (one of highest priced vacant lots that the suburb has seen) but then they also want a piece of the pie if/ or when someone in the future was to ever split it up.
     
    Last edited: 30th Mar, 2020
  4. datto

    datto Well-Known Member

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    Knock the price down 50K.
     
  5. charli

    charli Member

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    Now that's a great idea, they wouldn't even consider negotiating the price before, but I should just put it back to them with offer 50 k reduced.

    I just think its greedy, like they want a piece of the pie if you choose to do the work down the track. Especially after we agreed on price and terms and then they throw this one in. Done a bit of research and it seems that Uplift in UK contracts can be quiet common but cant find anything here. I might be using wrong terminology though.
     
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  6. datto

    datto Well-Known Member

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    My oath. Put it on them. But don't say 50K. Start at 70K and let it work down.
     
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  7. Player

    Player Well-Known Member

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    Just wait 6 months for property to be well and truly on the nose and offer them 150K less and then they can have their 50K up lift
     
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  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    They can include a caveat to limit later subdivison. But to seek a nominated sum for a owner to utilise a legal right ??? I would legal advice on how enforceable this may be.

    How big is the land and is it truly subdivisible ? You may avoid the issue by building a duplex ?
     
  9. wylie

    wylie Moderator Staff Member

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    If they tried to include such a caveat, that would also be a "walk away" trigger.
     
  10. TMNT

    TMNT Well-Known Member

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    what a pack of morons, thats the defintion of "having your cake and eating it"

    id reduce the price, and walk away, and if they come back again later, reduce your original price
     
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  11. wylie

    wylie Moderator Staff Member

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    I inspected the house next to one we held (about 14 year ago). It was priced at $660k from memory. It wasn't worth that.

    About two years later I saw it was listed with another agent for $470k. An offer had been made on it, I think for $450k. I think from memory the vendor countersigned but the purchaser was taking the weekend to think about it, or probably hoping they'd still get it at that price.

    We went in cash, unconditional (no cooling off back then) and locked it up that weekend. Had this vendor said to us "you have two blocks now and we want extra because you can subdivide" we would have walked.

    It costs money to subdivide and there's no guarantee you'd get that extra money back anyway.
     
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  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Its not uncommon in new land releases to include clauses to limit dual occpancy etc. fences and all sorts of other apparent issues (solar is becoming normal too) to ensure the new dev area meets a standard. This assist the developer as the dev grows and then its usually a non issue aftre its fully released and developer by initial homes. Very normal. But I have to say I havent seen a developer who doesnt sell off splits themself if they can....I bet the land is incapable of subdev at present anyway. Imagine if council says No way will we allow density to be greater than 10 years later its relaxed and they want a cut. FO..

    i wonder if its a legal impedement or just a stupid clause. If it had legal advice and its fine and of no effect then sure its just a sale obstacle and may help a willing buyer.
     
  13. Archaon

    Archaon Well-Known Member

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    Seems ridiculous that in this climate they would be looking to stiff you like that, they should be thankful for the sale contract you were about to sign.
    I'd offer them less as well.

    One point to take away is to keep your cards close to your chest, people look to take advantage where profits can be made.