demolition before settlement

[mimimao]

Hi guys,
I recently put an offer towards a development site. The existing house on site is not livable. The vendor has come back with a counter offer of 14k more.

Honestly I'm willing to pay at that price. But I know there's no other interested buyer and vendor is eager to sell. So I thought I should make the best out of it. Vendor has already agreed to a 3% deposit, early access and long settlement. So I was just curious would it be possible to ask for demolition before settlement? I'll obviously pay for the demolition cost but I was just worried would my lender and the vendor's solicitor have issues with this approach?

If it's do-able that'll significantly save on my holding costs. Any thoughts?

thanks heaps
mmmao

 

[turk]

Leaving aside the fact that the lender and vendors solicitor would have myriad concerns, I would also consider would the vendor have any concerns.

 

[willair]

Hi guys,
I recently put an offer towards a development site. The existing house on site is not livable. The vendor has come back with a counter offer of 14k more.

Honestly I'm willing to pay at that price. But I know there's no other interested buyer and vendor is eager to sell. So I thought I should make the best out of it. Vendor has already agreed to a 3% deposit, early access and long settlement. So I was just curious would it be possible to ask for demolition before settlement? I'll obviously pay for the demolition cost but I was just worried would my lender and the vendor's solicitor have issues with this approach?

If it's do-able that'll significantly save on my holding costs. Any thoughts?

thanks heaps
mmmao

First cab off the rank would be a call to the local council and see if you can take the building away,you don't want to find out there is a problem,
and the vendor walks away..

 

[mimimao]

Just to clarify, the site already has a permit and the building can be taken down

 

[Aaron_C]

You can ask for it if you want. But the lender might have a problem because of the building insurance. However, if you are telling them it is a development site and you intend to build on it then you should be OK.

 

[Scott No Mates]

if the lender's fine with the security & isn't advancing any funds prior to settling, there shouldn't be an issue. Who'd carry the public liability insurance during demo?

Worst case is if the deal fell over once you had paid for the demo.

Will you be putting the time prior to settling to good use getting the construction certificate?

 

[Mick C]

Insurance and injury is another consideration + legal liability

Regards
Michael

 

[Terryw]

As long as both parties agree, I can't see there being a problem. It could be a problem to the vendor if you cannot settle for whatever reason - they keep the 3% deposit but lose a house.

 

[Graemsay]

I think that it could be a bad idea.

Under English law, any changes made to a property before settlement have to be reverted if the deal falls through. This could be expensive if you've just knocked a house down.

I'd suggest checking that with your solicitor first, as things could be different in Australia.

The second risk is that if you did flatten the property, and then the sale fell through for whatever reason, you're out of pocket for the work done.

 

[Ed Barton]

As long as both parties agree, I can't see there being a problem. It could be a problem to the vendor if you cannot settle for whatever reason - they keep the 3% deposit but lose a house.

if the house is uninhabitable and only good for development, wouldn't the house being gone a good thing for the vendor? wouldn't a development site without a dump of a house be worth more than one with a dump of a house?

 

[Terryw]

if the house is uninhabitable and only good for development, wouldn't the house being gone a good thing for the vendor? wouldn't a development site without a dump of a house be worth more than one with a dump of a house?

This could be the case. It costs around $20k to $30k to have a house demolished.

But there is also the possibility that the house is worth something too and the vendor would no doubt be asking for some compensation.

This could all be taken care of in the contract of sale to make it clear that the purchaser is only buying the land and not the chattels. Then maybe enter into another agreement to remove the house for the owner.

 

[Aaron_C]

You have to be careful with demolition. Especially in inner-city areas of Melbourne the heritage overlay controls prohibit the demolition of any structure until formal approval has been given by Council.

 

[Stacey Survey]

Just to add to Aaron's post, a copy of title costs around $12 and will show overlays and any special conditions of the site. Definitely worth finding this out before beginning your development!

 

[Ausprop]

in Vic Park they wouldn't approve demo until the new devy was approved. squatters took over and terrorised the neighbourhood, council ordered us to secure the premises and stop the squatting. It became a serious headache. Council, police, irate neighbours and security gaurds calling me at all hours....