Selling prior to subdivision

[lamby]

Question on behalf of friends in the shire of kalamunda in WA. They currently own a property that is large enough to subdivide in a battleaxe subdivision. The difficulty they face is that finance is fairly tight. Talking through some options with them the other day I was mulling over selling the back half of the property prior to subdivision and having the purchaser pay costs - it would help them free up equity while not having to go through refinancing - something that would be incredibly difficult now that they're down to one income.

I know we can do it in rural real-estate so was wondering what the go was in that sort of scenario? Did a search through somersoft last night but didn't really come up with any applicable results.

 

[Scott No Mates]

Although you can sell prior to subdivision you are unable to settle without having the new titles issued eg OTP units. Funds cannot be released.

How do you get around it? Possibly draft an option agreement for the value of the work and a sale for the newly created lot where the option fee serves as the deposit if the buyer exercises the option.

 

[albanga]

I may be missing something but how is this even possible?

How could you sell a portion of land if it does not have its own title?

If I am missing something and it can be done then it would take a game buyer to take this sort of thing on though anyway I would have thought. Read through the first 10 developer diaries on this forum and they will all tell you about the hidden costs of subdivision which cost them $30,000+.

You would basically be buying with the unknown and then on top of that what happens if it cannot be subdivided for whatever reason. Someone would now have something that is basically worthless (unless they have cattle that need grazing ).

 

[Scott No Mates]

I may be missing something but how is this even possible?

How could you sell a portion of land if it does not have its own title?

As I posted, when buying an off the plan purchase you are buying into the developer's vision. The building doesn't exist let alone the airspace or strata that you are buying. These come into being as the building is constructed and the strata subdivision is registered upon completion.

Selling an otp is easier but in this instance the outcome follows a parallel path ie you need a DA, plan of subdivision etc and contract of sale.

 

[RPI]

I do this all the time, both personally and through my practices. 5 or under lots can be done without ever touching a sod on the ground.

It's about to get easier in QLD too because for land subs over 5 you will no longer need to be so far advanced and will be very similiar to OTP for units and townhouse.

 

[Scott No Mates]

Are these the proposed changes Darryl ====> Linky