The days of a property developer approaching individual owners
to purchase their properties is fast becoming a distant memory.
Increasingly, owners are taking the initiative and joining forces
to offer their properties as a package deal.
This is particularly the case in areas where the land is or has
been rezoned, as well as areas where new infrastructure such as
railway stations are being installed. This type of arrangement has
become a popular way for owners of individual properties to
maximise their sale price by becoming part of a larger site
offering, and consequently, typically a more attractive proposition
What to do first?
Firstly, you need to know developers won't always bite just
because there is a group of properties. The properties that are
most sought after, are those that have a rezoning potential or have
been rezoned, and are close to services such as transport. If there
is a group of property owners that fit the bill, then it's best
that a joint sales agreement document is prepared by an experienced
What is a joint sales agreement?
This document sets out the rules and structure by which the
group will operate. This includes setting up a structure which is a
bit like a club, so that there is an Executive group to hold
meetings. Instructions then come to the lawyer from the Executive
so that both parties don't have to deal with a multiplicity of
contacts. This of course, also saves the group money by having an
efficient line of communications.
It's also a good idea for the solicitor acting for the group
to review other required documents such as the real estate
agent's agency agreement (where applicable) to ensure that it
properly reflects what has been agreed in such a complex, and
possibly long-term group of transactions.
Each property owner within the group sells their property
subject to an interdependency clause. In simple terms, this means
that all the properties must be exchanged and settled at the same
time. However, we always require each individual owner who is a
party to the group transaction to complete an individual
questionnaire about their particular property as properties within
the group will vary – for example, not all will have a
swimming pool or be rented. In this instance, individual special
conditions would need to be tailored into the contract to cover
these situations. In addition, some property owners may need to
adjust land tax whilst others would not.
The other important issue that needs to be considered in group
sales is how the sale price will be split between the parties to
the group. Will it be based proportionately upon the size of the
properties or split equally between all members of the group,
regardless of their property size? It's an important question
Coleman Greig is experienced in acting for groups in these
situations with highly skilled Property Lawyers ready to advise the
best way to assist the group.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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