New estate vacant blocks - covenant

[rroodd]

Hi all,
We are seriously considering the purchase of 2 x blocks of vacant land , side by side, in a brand new housing estate, in my town.
One of them will be to build our 'dream home' on, and will become our PPOR.
The other block, I would like to just keep vacant, so as we can have a huge yard ....

The blocks are quite large, at 1240m2, and 1050m2, so in theory, we would be sitting on approx. 1/2 acre. I figure this is the only way i can achieve my dream of owning this size block, yet still be very close to the city.

My question is, what do you think the chances are, of the developer 'waiving the covenant' on one of these blocks, so as I can go ahead with this plan..? (ie. covenant will presumably state that a house must be built within 2 years etc. however I want to keep the second block unimroved)

The developer is keen for sales in this estate, to generate interest, etc, and these would be possibly the first two blocks sold, if i go ahead.

Anyone had experience with covenant 'alterations' ...?

Cheers,

 

[Propertunity]

Anyone had experience with covenant 'alterations' ...?

Yes.

what do you think the chances are, of the developer 'waiving the covenant' on one of these blocks, so as I can go ahead with this plan..?

Not good - especially since there are no sales at this stage. Covenants are put there by developers to maintain sales value and make it easier to sell to buyers who plan to make substantial investment in improvements.

(ie. covenant will presumably state that a house must be built within 2 years etc. however I want to keep the second block unimroved)

You say 'presumably'. Don't you know? Are you sure this is what the covenant says?

 

[rroodd]

.

You say 'presumably'. Don't you know? Are you sure this is what the covenant says?

No, not sure yet, as covenant hasn't even been finalized for this estate yet. The Real Estate who is marketing the estate has told me they are waiting on the developer to release it.

I've kinda 'got in early' on this, as it is just up the road from where i currently live. Real Estate has only just put up some signage as of this week.

 

[boods99]

rroodd,
first of all you need to ascertain as to who has actually put the covenant on...either the developer, or alternatively, the council. Sometimes the council requires the developer place certain covenants as a condition of planning approval.

If it is a council requirement, sorry mate, next to no chance of having it lifted.

If it is a developer's covenant, then you may have a chance, although
I have never seen it done.

What usually happens is people simply ignore them and it is up to the developer to enforce. Often they don't bother, however I have seen them enforce them rigorously (I have been on the receiving end of it before) For instance, a large unnamed developer here in Perth threatened me with all sorts when I breached, but now the estate has sold out, they have shipped out and people are breaking them left, right and centre

In your case, the worst thing that could happen to you I imagine is that they ask you nicely (at first) to build on your vacant block. At this time you can decide if you want to be difficult or not.

You could be in for a whole lot of hurt should they wish to pursue you.

Boods

 

[rroodd]

cheers Boods,
yeah it's definitely going to be a developer's covenent, and not a council one, ( i do know that much at this stage)

So guess I will just have a good read when it comes out, and decide where to go from there...

Thanks again

 

[tubs]

But how can they FORCE you to build? They can't come on to your land, and do they have a legal right to fine you if you don't?

I'm sure if you waved the money for 2 blocks in front of them they'd lift that covenant quick smart.

 

[boods99]

But how can they FORCE you to build? They can't come on to your land, and do they have a legal right to fine you if you don't?

I'm sure if you waved the money for 2 blocks in front of them they'd lift that covenant quick smart.

tubs,
in my case, the developer had us sign two transfer documents at the time of sale, one for the transfer from them to us, and another for the transfer from us back to them. They kept this second transfer document on file just in case they needed to use it. In effect we had already agreed to sell it back to them.

I was only a youngun back then when this all happened, and it didn't occur to me what I had signed at the time, until we received a not-so-pleasant letter from them threatening to buy the land back from us (contract stated it was to be purchased back at the lesser of a)the original purchase price minus SD and their legal costs or b)the improved value of the land. No second guess needed as to which figure was going to be used here...the land had a rather substantial 2 story house 3/4 of the way through construction on it.

Although I did seek legal advice at the time, the lawyers attitude was to the effect that there was no way out for us.

Given my time again, I would never have agreed to sign two transfer docs...

Live and learn...I now read and understand EVERYTHING before I sign...

Boods

 

[Fudge]

Not too sure on this, but depending on which council you belong to, you can merge two lots into one without going through a DA. (Amalgamation of Lots)

Obviously, the other way around (1 into 2) you need a DA for reconfiguring a lot.

Then you could put a fence around the whole area. (Not too sure about the covenant though).

F

 

[rugrat]

But how can they FORCE you to build? They can't come on to your land, and do they have a legal right to fine you if you don't?

I'm sure if you waved the money for 2 blocks in front of them they'd lift that covenant quick smart.

In ACT the local government will simply requisition the land again if you fail to comply. I assume it would be similaar elsewhere, but maybe not.