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ADDING SPECIAL CONDITIONS TO A BUILDING
CONTRACT FOR LAND PURCHASE

Special Conditions:

adding special conditions to a building contract
Having determined why you want to buy this particular block of land, what “special” conditions do you want noted on your Purchase Contract in order to make it a legitimate contract. Conditions added to contracts are more common than not and should always reflect your needs and your abilities to secure a loan at an affordable interest rate. Make these conditions to suit you and not the vendor or the selling agent. Remember, both the vendor and the selling agent have their own reasons for wanting you to buy from them and they will try to influence you. This is why doing your own research and due diligence is so important. Know your rights and don’t be afraid to be assertive. Some examples would be:-

  • Covenants imposed on by the Developer
  • Easements which are applied to the land
  • Local Government Restrictions as to the type of dwelling

Is there a “cooling off” period?

Normally a “cooling off” period is given in the event that once the contract is signed and either parties change their mind. This cooling off period is between 3-5 business days. Normally there are no penalties attached if this clause is written in to the contract.

Is the contract subject to finance?

When buying a block of land, most lenders are reluctant to lend money on vacant blocks. The reason for this is that if you default on payments, selling land is much harder for the lender to recoup their losses. Therefore be sure that you understand that a block of land without a house is going to limit you as far as borrowing is concerned, but no impossible. Provide a financial clause in the contract that will buy you time to search lenders willing to help you raise the funds for the land.

Certificate of Title:

Have you done a title search?

Is there a special request?

Are you waiting on the soil test or perhaps information from the local Council? Be sure to make this as a special condition on your contract.

Caveats:

Are there any caveats on the property? A caveat is an instrument registered against a Certificate of Title which prevents certain actions taking place with the Title. For example an owner may not be able to register a new mortgage or variation of mortgage, or transfer the property without the consent of the caveator (the person or body that registered the caveat over the property). Caveats registered by council are usually to protect some form of non-compliance of building or planning matters, and are registered to also act as a warning to prospective purchasers of the property that there is some form of non-compliance or monetary payment outstanding on the property.

Zoning Restrictions:

Have you checked for zoning restrictions? Before a tract of land may be developed, the intended use must be permitted under the existing zoning classification. If the proposed use is not permitted, you or a developer must apply for an amendment to the Zoning Ordinance or for rezoning. Such amendments are granted by the local governing body, generally following a public hearing and recommendation from the Planning Commission

Easements:

Are there any general easements over the land? Easements give one party the right to go onto another party’s property. Utilities often get easements that allow them to run pipes or phone lines beneath or overhead private property.

Overhead power line easements:

Are there any overhead power line easements?

Sewer Lines:

Where is the position of the sewer line? This will enable your designer or architect to work out how to best position your new building without having to build on top of a sewer or be blocked by an easement.

Telephone Line:

Where is the position of the telephone line in relation to the street or road?