Bexley/Beverly Hills
Site amalgamation can be an excellent method of adding value to existing properties. However, owners who plan to amalgamate a site and sell to a developer need to make sure all the i’s are dotted and the t’s are crossed or they could find themselves out of pocket and having to start the sale process again from scratch.
John Gymellas at Raine & Horne explains that in cases where he can see the opportunity for a client to sell their home collectively with their neighbours to a developer, he is quick to alert them to this possibility and is then skilled in presenting this opportunity to the neighbours.
Site amalgamation in a suitably zoned area usually results in significantly higher profits for homeowners than they would otherwise have achieved. However, not all deals go to plan.
In this case study, we discuss an instance where two homes had been sold as a parcel to a developer only to have the developer renege on the deal when his financial circumstances and the market worsened. Unfortunately in this case, the contract was less than robust.
By the time the developer quit the project, he had an approved development application for townhouses on the site. However, under the contract, the developer had no obligation to pass on the DA and the intellectual property to the original owners. The homeowners were back to square one with no buyer and no development plans.
A new beginning
When the homeowners approached John Gymellas, he assessed the situation. On a positive note, the market was picking up and the zoning for the site had changed from the earlier, low-density residential zoning to mid-density residential zoning. This meant that units or apartment blocks could be built on their amalgamated site.
However, there were complications before the homeowners could realise the value locked in their site. With John’s help the owners sought a new approval and engaged a consultant to recreate the original approved plans. As anyone who has ever tried to get approval on development concept and plans, there is a great deal of planning and work involved.
Once the site was again a viable proposition for a new developer, John made sure the new contract was ironclad so these homeowners could move forward. While the new sale took around thirteen to fourteen months to achieve, getting all the ducks in a row takes time.
The final approved design for this site was a six-storey building consisting of 22 units.
Commercial property can present more complex scenarios
John explained that the commercial property side real estate industry does tend to draw more complex issues into the mix. In this case the complications were caused by a poorly drafted contract with the original developer. John, on the other hand, is very specific about sticking to the process as he knows how easily problems can be created when contracts and other legal matters aren’t carefully considered.
In this project, John made sure that he was on hand to provide his clients with professional advice so that all parties were up to date and well informed. Plus, in a case like this it was important to keep the communication lines open so that everyone could be on the same page for their common goal to be achieved.
Not all offers are good offers
John also points out that not all homeowners wish to participate in site amalgamation. The important thing is to respect the decision should a homeowner reject the proposal. However, for those who choose to go in this direction, they can end up with a substantial profit when it comes to selling their house.
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