29 Oct 2015

Purchasing land for development: some useful special conditions

by Nicole Besgrove, Will Webster

Special conditions in a contract of sale for land can ensure all necessary consents and approvals for future development have been, or can be, obtained.

So you have found the perfect parcel of land for development. You are keen to snap up the property but don't want to go unconditional until you are confident that all necessary consents and approvals have been or will be obtained.

You may want the ability to secure your own development approval before the contract settles. This could include taking over a development application that has been commenced by the vendor, in which case you will need to ensure that you get the full benefit of any preliminary work that has been undertaken.

If the vendor has already obtained a development approval, then you need to ensure that you are able to carry that approval into effect. There are a number of special conditions that you should consider for inclusion in your contract in these circumstances.

Contract conditional on you securing a development approval

You may want to enter into a contract conditional upon obtaining a satisfactory development approval. Special conditions in that scenario could include:

  • an obligation on the vendor (as landowner) to give its consent to your development application;
  • if the application is publicly notifiable, a restraint on the vendor lodging any representations opposing the proposed development or subsequent appeal;
  • the ability to access the land and conduct soil, groundwater or other testing;
  • the ability to erect and maintain signage at the property (required when advertising a development application); and
  • provision to terminate the contract at any time if the application process becomes difficult or prolonged, or if your development application is refused, or given subject to conditions which are not satisfactory.

Where the relevant development application was publicly notifiable, it is important that your unconditional date allows for the expiry of any submitter appeal period.

Development application commenced by the vendor

Where a development application has already been commenced by the vendor, you may want further special conditions in the contract to ensure the application is properly progressed prior to completion. These could include:

  • a reasonable timeframe for you and your consultants to determine if the proposed development meets your needs and is likely to be approved;
  • the ability to access and review all relevant application material;
  • a positive obligation on the vendor (as landowner) to diligently progress the application, or their consent for you to take over carriage of it;
  • provision for you and your consultants to discuss the development application with council planning officers;
  • if the application is in the information request stage, an ability to comment on further information before it is submitted;
  • provision to terminate the contract at any time if you are not reasonably satisfied with the progress of the development application or its prospects for approval; or
  • provision to terminate the contract if the development application is refused, or given subject to conditions which are not satisfactory to you.

Your contract should also include a requirement that, at settlement, the vendor will ensure you get the full benefit of the approval or application in particular:

  • providing copies of all materials relevant to the application or approval to you (for example structural plans, landscaping design plans, contamination reports etc); and
  • ensuring that you are assigned the benefit of all relevant copyright and intellectual property in those materials.

Without these obligations, you may not be able to access all relevant materials or use them without breaching the intellectual property rights of their authors.

Development approval already attaching to the land

Even where a development approval is already in place and attaches to the land, you may want to consider including in your contract the following:

  • the ability to delay completion until expiration of any relevant submitter appeal period (and to further delay completion or terminate if an appeal is commenced);
  • if within time (ie 20 business days after the decision notice is given), the ability to suspend the appeal period, to make representations in relation to the development approval or the ability to appeal to the Planning and Environment Court if the development approval and/or conditions are not suitable;
  • where representations are made and a negotiated decision notice is given by council, the ability to terminate if the negotiated decision notice is not satisfactory; or
  • if the approval is longstanding and due to lapse, the ability to seek an extension of time to effect the development, before the contract becomes unconditional.

If you would like assistance to determine which contract conditions are relevant to you and the land you wish to purchase or would like assistance in negotiating those conditions, please contact us.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.