Forums / Getting Technical / Finance / Split House & Land Contracts

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  • Profile photo of charlie123charlie123
    Participant
    @charlie123
    Join Date: 2007
    Post Count: 19

    Hi Guys,

    I am in the process of getting plans approved for a duplex development and I was planning on selling each one as a house and land package using split contracts. After speaking with many different brokers today I am led to believe that it is not possible because the two dwellings share a common slab etc.

    Then I had a conversation with a gentleman from Bayland Property (townhouse developer) who said they do them all the time without any difficulties. Are there any brokers reading this that think they could assist or perhaps know somebody they could refer me to?

    Thanks in advance for any replies

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    They would need separate titles to be able to be sold separately. It is possible.

    Why are you seeking a broker out for this sort of advice?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of charlie123charlie123
    Participant
    @charlie123
    Join Date: 2007
    Post Count: 19

    Thanks for your reply Terry,

    Ideally I need these to be purchased as a house and land package as I am not in a position to carry the construction finance myself.

    A prospective purchaser has made numerous enquiries with some local brokers who all say it isn’t possible to finance such a deal.

    If you feel confident that you could arrange such a deal I can send some business your way.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    It is not possible for a purchaser to finance your construction like this. They could buy the land and settle and then construct. But if you want settlement after completion what is the buyer going to use as security for their construction loan>?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of charlie123charlie123
    Participant
    @charlie123
    Join Date: 2007
    Post Count: 19

    Hi Terry,

    There would essentially be two seperate contracts, one for the land purchase and the second for the construction part of the project. The new purchaser would be able to use the land that is on a seperate title for security and settle, then carry on with a standard construction loan until completion.

    The brokers I have spoken to already have said that banks are unlikely to fund such a transaction because the dwellings cannot be independently built however technically this is not the case.

    Bayland finances about 600 of these types of deals every year so hopefully you will be able to assist in the matter.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Yes that is possible.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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