Development approval ownership.

I hope someone can help me here.

I can't get a definitive answer to my question, even from people who have been in the property industry in various forms for many, many years.

My question is;
                     If I am purchasing a property subject to development approval then obtain the approval but cannot settle on the puchase, who does the approval belong to?

The development application is in the name of the purchaser and there is no legal agreement for the approval to be transferred to the vendor should the purchaser be unable to settle.

It seems like a black and white situation to me but there seems to be many assumed opinions but nothing definitive.

I hope someone can help.

Thanks everyone.

Regards, Debex. 

I think it belongs with the land. So the new owner will be able to proceed with it. But, you may retain the copyright to any specific plans or designs etc.

Terryw
Finance Broker
Solicitor

I'd agree with Terry, the vendor has signed the DA, the DA relates to a specific site and cannot be separated  from that site. As you have done the hard work, it is your risk that if you can't settle you don't get any benefit (unless you have a claw-back clause

I am opinionated. Take me at face value, read between the lines.

http://www.reao.com.au/forum/entry.php?80-How-bright-is-your-agent

The DA will contain plans which will show the building which has been approved. These will be owned by the person who commissioned the draftsman or architect I think. without these another person probably couldn't proceed. But they probably could just get their own plans done and apply for an amended DA.

Terryw
Finance Broker
Solicitor

or maybe the copyright to the plans would remain with the draftsman.

Terryw
Finance Broker
Solicitor

 
Thanks again Terry. I appreciate your views, but as you can see there seems to be a gazillion opinions but no legal ruling as such. It's very confusing.

Regards, Debex

P.S.    This is a land subdivision. Sorry I didn't mention it.

What are you hoping to get out of it, if you don't own the land? Are you just trying to stop the owner doing what you had planned to do?

Hi Mattnz,

I would at least like to be able to sell the D.A. and recoup some of the costs incurred. It was an expensive exercise and the contract was only exchanged at the agreed price because without an approval the site wasn't worth anywhere near as much.

You might have to approach the owner and ask them.

Have you spoke to a lawyer yet, and what did they say?

Terryw
Finance Broker
Solicitor

I'm not an expert, but if there was nothing in writing stating that if you didn't exercise your option to buy, that the owner would pay your costs, I don't think you have a case.

It would be like entering into a long settlement contract to buy an old run down house, spending money to improve the value of it, but if you never settled, you would have no recourse to claim for the improvements.

There was an opportunity to take advantage of your option to purchase and make money on it, just by lining up another buyer to settle on the same day that you had to. You missed that window of opportunity.

mattnz, I'm no expert either and I can see your point but I go back to my previous "theory" in my obtaining of the D.A. the vendor's price is justified but if I don't settle then should the vendor not be required to obtain their own D.A. approval to justify the price they are asking?

I am no expert either, so I asked a developer friend and he said the DA goes with the land and the ownership of plans etc are usually retained by the draftsman - unless you have a specific agreement otherwise with them

If you don't settle then the next owner with 'have' the DA available to them but will have to do the plans again or go back to the same draftsman and get a reduced rate for redoing the same plans.

Terryw
Finance Broker
Solicitor

Only if the CC requires more detailed plans otherwise the DA drawings will suffice. The council will provide copies of these to the owner of the land for use in connection with the land.

I am opinionated. Take me at face value, read between the lines.

http://www.reao.com.au/forum/entry.php?80-How-bright-is-your-agent

I'm just a dummy around Council matters, but I reckon from a logical point of view, if you don't own the property then the DA is worthless, isn't it ? So unless you own the property, it's a moot point.
Cheers
thecrest

the cosmos always delivers so order carefully

I am no expert, but as far as i know

You applied the DA basis on the fact you own the place, If you don't own the place, the DA belongs to whoever that owns it. Because council appvoed it for that location, and that purpose. You only asking the council for a permission, which anyone who owns the place or intend to rent/buy the place can do so. Whoever the applicant doesn't matter, what matter is the what is approved, but then anyone can get approved under the same condition.

Even you have paid all the cost, but you can't sell the DA without the permises to carry it right? you can sell the design if someone is intereted doing the same thing, provided that you selling at a price that is lower than what they could do it themselves.

Just a thought.

Classic case of why you should negotiate a longer settlement under option or development agreement subject to DA/finance etc. If you don't get the DA etc, don't settle. The DA stays with the land. Vendor owns it. You don't. If you don't have anything in writing that says vendor will reconcile DA costs (but ask yourself why would they, the settlement or sale would've been contingent upon YOU getting the DA) then thats your risk and if you cant' settle.. well... you lose. They're under no obligation at all to pay you anything. The approval (assuming its now obtained) then 'justifies' the increase in price. Thats the strategy - get raw land, add DA, onsell for profit. The DA itself isn't something you can sell as a seperate entity. It and the land become 'one' once the paperwork is issued. Sorry to burst your bubble.

I dont' mean to sound harsh and its not my intent to vilify, I'm simply pointing out, thats the risk you take and prior preparation and planning is KEY before entering into any binding agreements with a vendor.

Brilliant case for finding a good property lawyer prior to entering into any deals and having your paperwork, due dilligence and finance options ready and waiting ....