selling before settlement

You can sell it, but you can’t free up the deposit until the final settlement.

Terryw
Discover Home Loans
North Sydney
[email protected]

Stevie,

I think the best person to get advice at this stage is your solicitor. Talk to your solicitor about your situation and see what he/she say. I am sure there will be a solutions for you. Your solicitor will be able to help you with appropriate paper work.

Kind regards

Chan Dollars
[Retire Young, Retire Rich] [strum]

As noted, the land can be sold prior to settlement. We conduct these type of transactions on a regular basis with land and buildings.

The transaction should be conducted whereby the purchaser submits a deposit i.e. 20 percent – which is then held by your lawyer in a trust/escrow account until settlement.

The balance is paid to you on the settlement date. You then pay what is owed to the original land owner – work the two transactions in synch.

The key is “assigning” the land to the purchaser at a profit if at all possible. The difference between what you owe the original land owner, and what you sell the land for [less taxes and fees] is your net gain/profit.

The ROI is calculated as net profit divided by the deposit amount – which is always significantly more than if you acquired the land outright. A lucrative investment strategy.

The risk on your part is whether the purchaser will meet his/her obligation at settlement. If not you will be liable for the settlement amount.

However, if the purchaser defaults, you can retain the deposit if the agreement is structured correctly.

Before proceeding, you should discuss any scenario with a qualified lawyer and tax accountant.

— Michael

In a transaction such as this, you should not seek to claim the deposit from the person you sell too – unless you have access to sufficient funds if the person defaults.

Even with a clause that states you retain the deposit on default.

The result would then be owing the original seller the balance at settlement, and potentially repaying the person you sold too [the deposit] if they take legal action because you failed to comply or adequately disclose information.

This is a worst case scenario, but it does happen relatively frequently and can lead to severe financial problems for the person on-selling the property if not financially secure.

“Risk management” should be first and foremost when considering any real estate transaction.

— Michael

“I’m assuming the original contract was unconditional, so no matter what the funds will have to be ready at settlement anyway.”

My point was, it would “appear” [Stevie24] is not in a financial position to risk having access to another buyers deposit prior to settlement – or why the need to “free up” the deposit.

As noted, the scenario I outlined is worst case, but I have seen less experienced investors put in this position many times.

The fact that an agreement is “unconditional” means little if the buyer [person the land is on-sold too] cannot meet his/her financial obligations at settlement.

“I dont know what you mean about proper disclosing to the end purchaser”

When someone is in a position where they cannot meet their financial obligations at settlement, they will look at every angle to dispute the contract.

It is never advisable to put so much faith in a written agreement, unless there is a contingency plan to counteract all possible scenarios.

— Michael

hi guys, I have the same situation. I bought a land and not settled yet. and I am looking for some other investment, and want to sell the unsettled land.
If I want to sell the land before the settlement, do I still need to pay the stamp duty?