Hi Guys,
Wondering if anyone out there can help me as property development is something I have never researched.
My mum has been offered to purchase a townhouse off the plan from a friend who put a deposit on it quite a while ago and due to personal reasons needs to pull out. Apparently her friend can walk from the deal and be refunded due to the project taking so long or she can onsell it. For some reason my mum would have to pay double stamp duty………..not sure why.
Also, besides ASIC is there any website I can check out the developer.
Any comments would be much appreciated.
sounds dodgy, is henry kaye involved?
Have it valued first by an independant valuer. Get the rental returns or guarantee’s get the depreciation schedule, check the repayments of the buy price and rates and body corp and servicability. If any one thing doesnt add up run like theres no tomorrow.
Otherwise it might be a good op, buy it at a discount of what your friend bought it.Kevin
[email protected]Why does your mum have to pay double stamp duty? If the friend is onselling to your mother they are responsible for their own portion of the stamp duty.
Why not get a list off the developer of past projects done and check them out? If they are hesitant to provide the info you’ll soon find out.
On another note, if the friend can walk from the deal, then so can the developer. Something to be wary of.
Brendon
Acute Mortgage Reductions
http://www.acutemr.com.au
[email protected]thanks guys.
It is in our home town so we know the price is great.
I think the reason mum has to pay the double stamp duty is because if her friend pulls out she pays nothing but if she onsells it she pays stamp duty???
“due to personal reasons needs to pull out.”
“Apparently her friend can walk from the deal and be refunded due to the project taking so long or she can onsell it.”
— Which is the reason for on-selling the townhouse?
We conduct a number of developments with a pre-sales [OTP] component. A purchaser on-selling for personal reasons is not uncommon – although severe penalties generally apply if settlement obligations are not met.
The second scenario is not as common and will often adversely impact anyone associated with the development.
1. It would appear the purchaser is able to on-sell the contract. However, this needs to be verified [see purchase agreement] and check whether there are any staged payments due prior to settlement.
2. If the project is at the stage where buyers have the option of a deposit refund, this more than often means the developer is in financial trouble.
As a result the project could come to a halt and/or the developer may be forced to file bankruptcy – meaning the project could be on-sold several times [if at all] before further work is undertaken.
Subject to the stage of development, a new owner/developer may not have to comply with the design and standard controls set by the original developer in the terms of sale.
Before getting involved in a transaction such as this, look beyond the potential opportunity and “great price”, research the project and developer, and ask a lot of questions.
Request a copy of the purchase agreement and body corporate agreement and take these to a qualified lawyer and accountant.
I have seen too many people acquire property off-the-plan then realize what a mistake it was – because they didn’t spend a couple of hundred on qualified advisors – or conduct a background check into the developer.
As noted, find out what other projects the developer has conducted “from start to finish”. Then conduct research to verify the extent of the developers involvement and how successful the project has been since completion, i.e. sales figures.
OTP deals are easy to get into, but they can be very difficult to get out of.
— Michael
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