why is there a wait for title when buying land?

[stockt12]

sorry... probably easy question, but i couldn't answer it very well to a couple of friends.

"well, if i buy it's mine! why do i have to wait a few weeks"

 

[tobe]

land developers often engage a buyer for their blocks before they have completed the subdivision process with the relevant government authority. The contract usually shows the parent title details, and the proposed subdivision, being lot something of stage something blah estate. The settlement date is shown as 14 days after registration of subdivision. It can then take them quite a while to get the subdivision approved, and I think some developers may not apply for subdivision until they have sold a certain number of blocks.

The good thing is you dont have to settle, and pay interest on the block in the interim, the bad thing is it makes it dificult for the builder to do a soil test and get a building contract drawn up. Also many developers insist on an unconditional contract, even though the land is not yet available, which can cause some issues with the bank, especially with FHB's who are relying on the FHOG.