If/when I am fortunate enough to find an owner who allots me an option to develop his/her land, is it kosher to begin building on the land before I exercise the option?
Does Mark Rolton do it this way?
- High risk esp if you forget to exercise your option
- The contract will need to allow for early access
- Commencement of works may trigger the option
- You would be better off having the option, securing the DA then flipping the option/block.
I don't see an issue as long as the Terms of the Option allow it and of course you have legally indemnified the seller.
Probably are going to want to ensure you have all of the required Insurances in place.
Just remember you won't be able to borrow a cent using the property as security so either need Cash or equity elsewhere to draw upon.
We personally use cash for such projects.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Great.
Thanks guys.
Rather risky I think. What if you forget to exercise the option on time – if your exercise is ineffective or defective. Plenty of cases where this has happened.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Not just a matter of forgetting to exercise the option in time but if you do something that is deemed as a breach of the Option Contract prior to the execution you may find that all of the work / improvements you have done to the site are lost and the benefit reverts back to the original Vendor.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
It shouldnt be a problem to develop on the land as long as you ensure that all the points / clauses that you agree upon are in the special conditions of the option.
for example: based on what you have mentioned above, clauses that you and the vendor may negotiate are:
1. Buyer is granted the authority to develop the land without exercising the option
2. Should the buyer choose to develop the land after approved DA application has been submitted a license to occupy (develop) fee will be paid to the vendor for ($x amount)
in addition to the option fee payable.
3. Buyer is required to obtain the appropriate insurances required to develop the property
4. etc etc etc
I know a great legal guy that does both residential and commercial who is all over these types of contracts.
Im happy to have a chat. email: [email protected]
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