In May 2016, 25 neighbours in the suburb of Castle Hill entered into a deal with a real estate developer to sell all their homes together. The price that each seller will pocket for this transaction is in the $4 million dollar range! Before you get too excited and start running down the street knocking on your neighbour's doors to see if you could make lightning strike twice, there are a couple of things you need to know.
You Need To Consider Location
One of the reasons why this deal was able to go ahead the way it did was because the properties are located in an area that was extraordinarily attractive to a developer. In this particular situation, the area containing the homes was rezoned last year. This, combined with its close proximity to other commercial developments in the area, made it a very attractive target for property developers.
If your think your home could have development potential, you need to talk to a property lawyer before you talk to your neighbours or a real estate agent.
You Need To Consider Legalities
Before you approach your neighbours, take the time to meet with an experienced property lawyer to discuss a joint sales agreement. This type of agreement is one that covers multiple properties being sold at the one time by different owners. In particular, it sets out the terms and conditions of the sale so there are no misunderstandings between the property owners when crunch time comes.
Some of the points that need to be considered and written into the sales agreement include:
- How would potential sale money be split? Does it get split equally among all the sellers? Or, will it be proportional to the size of the property in relation to the overall size of the development?
- How will decisions be made within the group? For example, when it comes to setting the lowest price that is acceptable for the sale of the lots, is there a smaller committee who works on behalf of the owners, or is it an individual vote process?
Additionally, joint sale contracts can be written to have clauses in them to protect all of the homeowners at sale time. For a large sale to go through, all properties need to settle at the same time, so your property lawyer can include a clause to make sure each sale is dependent on the settlement of the others.
By being forearmed with knowledge after meeting with a property lawyer, you can then approach your neighbours to discuss whether the area you live in could be the next big development thing. After all, while you may love your home, selling it for a huge windfall is going to make moving out a whole lot easier to do.Share