I have, under my company name, an option and soon to go to contract over four titles of vacant land. My company has also achieved a DA for 30 units over a two storey building. I am finding it difficult to raise the finance to settle so my have to try and extend the contract and flip it the entire project to at least get my money back for the DA process ($500,000 +).
Question – who doe the DA belong to? Can the current vendors refuse to extend the contract if I can’t settle then go on to sell the land with the DA?
Can another buy come along and buy the land and go to the council and take over the DA?
What do I need pay particular attention to here?
Technically, the DA belongs to the land, if you don't exercise your option then the DA sits with the owner of the land. If you have achieved a DA, and are unable to negotiate an extension to the option or flip it prior to it lapsing, then you are unable to pick it up and move it to another site regardless of howmuch you have spent achieving it. From the other side, why would the vendor grant you an extension if you have taken all of the risk and the DA will sit with his property? You have added value to the property by achieving the DA so it is in your interest to flip it ASAP or the vendor has a choice to develop it themselves.
As for the plans, now that is another story. You have paid for the plans and the designer owns the copyright on those plans. They may only be used for that property however, without you selling your rights to utilise the plans, someone who builds without using the same designer to complete the works (or buys the right to use them) will impinge on the designer's copyright.
Thanks for the feedback.
As there are more than one vendor across the four titles I imagine that would make matters a little more complicated, but there is nothing stopping them getting together and forming a joint venture to sell the entire parcel to a developer with the DA in place (assuming they are shrewd enough and get on together!). And one of the vendors would need to take the initiative and lead this.
Regarding the plans. I assume the new owner of the land (or the current owners) could apply for some type of change to the DA with new plans, providing they keep to the same parameters as granted (eg, 2 storey, 30 units, density…. etc)?
Am I correct in the above?
I now see this as a major risk.
On the first part, well they have done it once so there is nothing stopping them from doing it again.
No easy way to get around the copyright or the right to use 'your' drawings. A S96 will allow them to modify the drawings but essentially keep the proposal – this may mean altering the facade & internal layout but not to the extent that it may be construed to be a new proposal.
There's always the option of selling the approved plans back to the vendors if you can't proceed.
Scott No Mates is bang on the money. However, copyright laws are pretty strict and potentially even using the same architect would be considered a breach of copyright because to avoid copyright the plans would have to be SUBSTANTIALLY different. Arguably, if the vendors keep the property and use the same architect, that architect wouldn't be able to help but use several of the same ideas as your plans. They would have to get completely new plans drawn up and submit them to council as a modification to the DA.
But you are in a pickle. If you can't settle then you will lose the $500,000 plus any further losses sustained by the vendor if they sell the property at a significant loss. The law around this is quite technical so you would be best off getting legal advice on your potential losses if you can't settle.
I agree with SNM that the best thing for you to do is to onsell the property, even at a loss, because as it is you stand to lose at least $500,000. Alternatively you could look at private finance, which will cost you a packet but you may be better off paying the higher interest on a private loan and not lose all the money you stand to lose at the moment.
Cheers
K
In WA, the DA belongs to the applicant that submitted the application. The application of course wouldn't be accepted unless you have the landowner sign the application form or provide a written letter permitted you apply for DA on the land. If you don't settle you are entitled to cancel the application or approval because it is in you or your companies name.
I’m in QLD so WA law won’t help me here. But thanks for advice.
I agree that to be on the safe side to find a way to settle. I acknowledge that I own the plans etc and I take “some” comfort in the knowledge that the vendor(s) or another developer would have to spend substantial money to put in a re-submission of some form to council – plus it could take a long time. So hopefully the vendors will agree to an extension on the contract to allow me time to flip the project (even at a very competitive price to get what it owes me). But in the past the vendor has been “difficult” and given this has taken years to get to this stage, their patience has all but gone! So an extension may not happen of they dig their heals in.
Private Money !!!!!!???? Have been trying for six weeks or more. Spent a lot of money with “brokers” who give me an “indicative offer” but then nothing happens after that.
Anyone know of a good source for private money to settle on purchase?
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