URGENT ADVICE: Selling due to Compulsory Acquisition?

In a previous thread, I mentioned that I bought an investment H&L package in Bethania, Queensland, and then later received a letter 2 months after settlement about a compulsory acquisition due to expanding railway tracks.
I had my first online meeting with the Department of Transport and Main Roads (Queensland) and brought along my conveyance lawyer and buyers agent to sit in with me.

Long story short, the project will take place at some point in the future no matter what, it's just that they do not have full funding from the government just yet.
Bottomline is that the property will inevitably be acquired at market value at the period of acquisition.

They have presented me with 3 options:

1. Wait for the resumption process to take place (12-18 months from now).
2. Go ahead with building the house, renting it out until the property is acquired.
3. Apply for an early acquisition immediately (3 months from now).

My current situation:
I am only currently paying off a 12-month Interest-Only loan on the land component and not the building. I have just received building approval this week but have advised to put that on a hold until I make my decision.
My buyers agent shared his personal opinion in that Option 2 is favourable since the finished property will offer a much better margin by the time it is sold to the government.
I am currently leaning towards Option 3 just so I can stop stressing out about this, cut my losses/take what small profit I can make, and then move on to a different investment property with more capital.

Here are a few questions I'm hoping to get some opinions on:

1. Now that I have received the official documents in writing, is it worth me forking out the extra money to go through this process with a lawyer? If so, from which stage onwards? I would definitely want to do so in the price negotiation stage.
2. I already have an existing relationship with my conveyance lawyer but I don't know if he's got much experience with compulsory acquisitions. Is it worth me looking for someone who has experience with this?
3. Seeing as I'll be terminating my building loan contract (all my loans are through the same bank), would there be a huge financial penalty for this?
4. Would I be able to be reimbursed for any of my expenses? ($2000+ Land Tax, lawyer fees, stamp duty, council rates etc.) I am still paying for council rates at this stage.

Obviously, the longer I drag this on, the more financial strain I'm putting on myself.

Thank you in advance for any advice you can provide!

 

Option 2 seems nuts! Why would someone suggest that?

Is there more to it?

Recently a Woodridge house sold for heaps!! I can't understand why.

Do u know what they would pay for option 3?

 

I have no idea or experience - however - I personally would go with Opt. 3.

 

option 2 seems crazy.. to build for just a few years knowing full well it is going to be knocked down! (take into consideration holding costs including interest, rates, progress payments etc. without tenant) surely this can't be worth it versus just selling and running? Would need to know what the offer is for option 3 now too?

EDIT: terrible situation by the way.. Really sorry this has happened to you and caused stress and I hope it all works out. (which I think is taking the most money and compensation you can get for it and moving on!)

 

Yeah, the more I think about it, the more crazy Option 2 sounds. I think it would pose some challenges finding only short-term tenants (families for my target market) to sustain my repayments.
My buyers agent only gave me a rough ballpoint price of what my current land value is as of today, which is a good 15-20% more than what I paid for it.
However, if I can't be reimbursed for anything, then it more likely to just break even.

The final price will be negotiable as far as I know.
They have their own valuer and so will I, then we have to come to a mutual agreement. If not, neither of us can walk away from the deal. In my case, it would be forfeiting Option 3 if I walked away of course.

 

There is no way I would be putting anymore money into this property that is necessary for you to get away from it. The more $ you put in the more risk you have.

 

#3. If you can get back more than you've spent, move on quickly.

Leave behind all the uncertainty and stress, take charge of your future and don't be a passenger in what may come.

 

If I am in your shoe. This would be my decision - option 3.
Done and dusted - out of mind, out of sight.
I am not getting younger and I don't need the stress.

 

On first read before reading the comments my thoughts were the only right option seems to be Option 3, which seems what everybody else says too

 

I'm in the bail now camp, beat the rush & free up your capital to go again elsewhere.

Why put additional funds into the block if it will take up to a year before competition only to be demolished 6 months later?

 

Two makes sense to me. If the Government is going to offer a sweetener on top of the actual value, then increasing the value and making some money in the meantime makes a lot of sense to me.

I'm sure there's more complexities and contingencies, but as a base plan, its far from crazy. I've seen it happen before.

 

I say option #3 as well. Big believer in the Gordian Knot lesson. If you cannot undo it, cut it. In other words make sure they pay all your reasonable costs incurred, on top of the value of the land, then cut and run. Always other opportunities out there. And the stress is not worth it. Not the kind where you are not in control of. It would do my head in personally.
Good luck. I really hope you get a favourable outcome. It sucks big nuts regardless.

 

You are not in control. When you are not the master of your destination.
This could take years to unravel. What is the opportunity cost to you?

 

Refer State Development and Public Works Organisation Act 1971 Part 6 Planned development (Qld)

"Division 2 Subdivision 1 86 Compensation Preliminary Definition for div 2 In this division— owner, of an interest in land, means the owner of the interest at the time an approved development scheme first applied to the land. Subdivision 2 87 Entitlement to compensation Compensation An owner of an interest in land is entitled to be paid reasonable compensation by the Coordinator-General if— (a) immediately before an approved development scheme started applying to the land, there was a prior affected development for the land; and (b) after the approved development scheme started applying to the land, the development of the land for the prior affected development would be an offence under section 84A or 84B; and (c) the application of the approved development scheme to the land reduces the value of the interest; and (d) the owner of the land has, under the approved development scheme, made a prior affected development request to the Coordinator-General to approve the development of the land for the prior affected development; and...."

The Qld Act is very wishy washy IMHO compared to the NSW Act

I'd suggest @KTJH getting a valuer & solicitor on board to run you through the process & extricate you at the earliest.

 

what happens if the market falls in the next 18 months and you are then forced to sell at a certain time that does not suit due to a change in the market price? I would take option 3, get your money out and move on to another property.

 

Valuation is at the date of notification of the scheme. Undertaking development of the site post-acquisition notification doesn't increase the compensation payable.

 

Are you sure? That doesn't sound right to me.

 

I'm more familiar with the NSW Just Terms Compensation Act, the Qld Act looks prehistoric even to a trained eye. It limits the price effect on the acquirer as the infrastructure may cause local prices to skyrocket if it's good or crash if it's bad eg freeway exhaust stack.

JTCA sets out the heads of compensation quite clearly.

Edit: This would be the appropriate Act ACQUISITION OF LAND ACT 1967 - As at 27 August 2020 - Act 48 of 1967 - refer Cl 20