Outrageous Clause in Option Contract?

[NewAge Property]

I recently attended on of Mark Rolton's one-day presentations during which he outlined some of the strategies he uses to secure properties whilst he is investigating their development potential.
One of those strategies is to insert a clause in the option agreement that allows for the premium, or deposit, to be refundable should he not proceed with exercising his right to buy.
To me, this sounds like a condition that is wildly unfair to the landowner, but given Rolton's success with the property development business, I'm wondering whether the clause only seems unfair because of my lack of experience.
Has anyone seen this refundable deposit clause used?

 

[Aaron_C]

It doesn't sound very legal as it violates the whole principle of 'consideration' in a contract.

 

[cu@thetop]

Depending on the wording it probably is legal. Anyone with business experience would tell Rolton or anyone bearing such terms in their offer to "rack off" but I think you will find Rolton's modus operandi is to have a contract ready to go and to stitch up the elderly land owners (without them seeing a lawyer). Commonly he will on sell the option without having to spend a cent.
Tying up the property for nothing. He will say it is "win/win" because there is a high figure for the sale price should the option go through 2 or 3 years later.

I agree it is unethical as the landholders are not really making an informed decision. Rolton has much more money than me. You choose.

 

[Paul@PFI]

First thing any solicitor will do is look at special clauses inserted...LOL. Who would exchange on that?

Rack off would be polite.

 

[NewAge Property]

I subsequently heard Rolton in an interview, justify the refund ability clause by saying (words to this effect) why should I be penalised for trying to add value [through gaining a development approval] to the seller's property? He also claimed to have never had a a development application refused in his 11 or 12 years of operating in this way.


- cu@thetop - I doubt if the presence or absence of this clause in Rolton's contracts completely accounts for the difference between his financial success and ours.

 

[cu@thetop]

I subsequently heard Rolton in an interview, justify the refund ability clause by saying (words to this effect) why should I be penalised for trying to add value [through gaining a development approval] to the seller's property? He also claimed to have never had a a development application refused in his 11 or 12 years of operating in this way.


- cu@thetop - I doubt if the presence or absence of this clause in Rolton's contracts completely accounts for the difference between his financial success and ours.

That's the self centred delusional thinking I find with many option dealers I meet. In fact it is being penalized for taking the property off the market for a period- not "adding value".


As for financial success- my business model is far different from Rolton and I'm OK with that. I would like to investigate his claim of never having a DA knockback but it may be true of him as an individual. I'm wondering if any of his associated companies or successors in title can say the same.