Is Financier's Development Deed common?

[Sirousm]

Hi,
I am a small property developer & have a situation & I would appreciate your thoughts. We are doing a multi-residential dwelling in a prime location in Brisbane. We are very excited as everything (almost!!!) is ready to go. DA, BA, building contract, buyers who bought all the units off the plan,... Last Friday, we signed the mortgage documents & the architect was required to sign a document called 'Grant of Licence in Plans', & his signature had to be witnessed by a JP. He didn't want to spend time on this, wanted to charge me a fee, I found a JP just 2 min away from his house, we met at JP's place, the document was signed, witnessed & that was great. It meant to be my day off, hey no complaints, managed to get things done. This was the good part of the story.
Here is the painful part of the journey, the builder was also required to sign a document ' Financier's Development Deed' which determines the responsibilities of the builder & what would happen if the builder is at default. Now my builder sought legal advice & is not signing the document. To him, it is too restrictive;why he should be signing this, or that the financier has no right to make him enter in to such agreement. Without this document, the settlement does not proceed. I suggested that his solicitor speak with the financiers solicitors and sort things out. Anyone has any solution to this problem?
Regards,
Cirrus

 

[Sirousm]

Me again

Hey guys, I sent a post before re 'Financier's Development Deed', & I am still awaiting some feedback. Some sympathy will do!!! Actually, I found another term for this kind of agreement. Tri-party agreement, genius, aren't I?!!!!. I still don't seem to be able to convince my builder to enter into such agreement, he is blowing up the development project. What should I do?
Cheers, Sirous

 

[JoannaK]

the tripartate agreement should not determine what is the builder's responsibility. what it should do is state that any contract you have entered into with the builder will be the same contract that the builder will enter into with the bank should you as the developer go bust.

It is not uncommon at all.

 

[GoAnna!]

My builder signed one for my development. It did mean that the bank was protected in that if I became a liability during the building process they could push me aside and continue with the builder as per the contract I signed. It did commit the builder to advising the bank of any changes requested by me that might devalue the development and for the bank to authorise contract amendments above a set amount.

I am surprised that this appears such a new thing for your builder and that he is making such a fuss. I presume he usually just does individual buildings? Do you have a possible second builder if it comes to that. You never know this situation might be a blessing in disguise and the builder's current attitude might be a sign of things to come....

 

[NigelW]

Standard requirement. Bank wants step in and cure rights if its borrower and mortgagor breaches terms of building contract. Worst thing for financier from a security value perspective is a half finished building!

Cheers
N.

 

[Sirousm]

thanks for feedback

Hi,
Thanks for your responses & feedback. We have decided to speak with another builder who is happy to take over, we are hoping the new estimator be able to match the previous builder's quote, otherwise we will run into another battle.
Thanks again, Sirous

 

[Perp]

Good luck with the new builder, Sirous. And rest assured, you have my sympathy, for what it's worth. Remember, if this was easy... (you know the rest)