LDA Land Releases- Be wary of a contract term that’s been added.

ChrisCross 18 August 2010 3

Hi all,

I recently purchased land at Bonner and Wright, and I wanted to give a heads up to any buyers (in particular 1st home buyers) who are under the mistaken impression that the LDA is to be trusted with their standard contract terms.

The Bonner land contract (at least for stage 2) was very straight forward. No conditions that would warrant even a second glance.

But the Wright land contract? Wow!

Anyone who has purchased (or considering a purchase), should have a very good read of Clauses 38 and 39. They relate to getting approval from the seller (in addition to normal planning permissions through Actpla), and if you dont it’s going to cost you $8,000 in damages! Furthermore, all purchasers (regardless of whether you are Land Rent or Standard Lease) must pay LDA $8,000 on settlement as a “compliance bond”, which is then refundable upon getting their nod of approval- by which time they are allowed to earn interest on and keep all that interest.

Now, bear in mind that they cant unreasonably withhold this approval if you are approved to build through Actpla and satisfy their requirements. So basically, they cant refuse approval, but they can and will claim $8000 in damages if you dont get their stamp prior to building. Can someone please explain to me how this clause isnt predatory? Because I can see A LOT of people getting stung by this unfair requirement buried 3/4’s into the contract terms.

The sellers approval cant be withheld from you. It’s Actpla that decide if you meet planning requirements or not. But the seller can claim damages if you dont ask them if its ok to build first. How or why is this allowed in the ‘standard terms’ of LDA’s land releases. Unbelieveable! I mean, Forde had a “compliance bond” requirement (at $2500), but that’s expected because they are private developers. But the LDA to use predatory terms like this is completely unexpected.

I just want all buyers of land in the ACT to double check what they are signing, and dont assume that one land release directly released by LDA is the same as the next.

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3 Responses to LDA Land Releases- Be wary of a contract term that’s been added.
chrisi chrisi 10:33 pm 21 Aug 10

Oh dear… maybe it’s how I’ve typed my original post, but you’ve both missed the point I was trying to make completely.

DSV_Twig, I never insinuated that this was “stuck this in there” last minute. Yes it’s been available to read prior, and yes I completely understand the extra requirements that this clause requires. My point is, that these extra requirements (and quite expensive extra potential penalties) is NOT in all LDA land releases, and difference is hidden in the fine print- for which I am trying to highlight. The fact is, most people who are applying for multiple ballots in different suburbs shouldnt assume that all LDA land release contracts are the same, even though the seller and the method of purchase is exactly the same. An $8000 penalty for not asking the seller for approval for plans they cant reasonably knock back anyway, isn’t exactly a standard term in all contracts.

Furthermore, a house not meeting the standards in the Wright Development Code would not gain approval through ACTPLA, therefore the reasoning you state that the seller requires to give this approval isnt correct. The seller cant reasonably refuse approval if ACTPLA have already approved it- making the sellers approval requirement redundant. And the $8000 penalty amount required is completely overinflated for the actual real the seller will face if the new owner doesnt ask for their permission…. which is virtually nothing.

And hk0reduck… congratulations for contributing so usefully. I think you’re the lifesaver here! Of course people should read contracts carefully before signing them, thank you for stating the glaringly obvious and completely missing the reasoning for my post.

For the benefit of both of the posters above (and to all others reading this thread), the point of my post was to make sure people take careful note that it makes A HUGE difference to your upfront costs when one block of land from LDA has this clause, and another doesnt.

For first home buyers wishing to purchase a block that have saved X amount of money (normally being 10% deposit and stamp duty allowances), the $8000 requirement that is to be paid upfront before even one brick is laid will make the difference between being able to afford one block over another. The fact that it’s refundable (only if conditions are met) isnt the point. It still needs to be paid!

hk0reduck hk0reduck 8:44 pm 18 Aug 10

Wait… Wait, let me get this straight.

You’re saying it’s a good idea to actually READ A CONTRACT for potentially the biggest purchase of your life before signing it?

Thank you Chrisi, you’re a lifesaver!

DSV_Twig DSV_Twig 9:29 am 18 Aug 10

I don’t get it.

It’s not like they just stuck this in there. This was in both the development guide for Wright, and the sample contract on the website for months before the sale.

Further, the “compliance bond” is only payable if you start building after ACTPLA approval, but before LDA approval. This is to protect against people who build a house meeting the ACTPLA requirements, but not the additional requirements set out in the Wright Development Guide.

If you submit your plans to ACTPLA and the LDA and get approval from both prior to commencing building, you don’t pay the compliance bond.

If not, and you start building without LDA approval, and then your house doesn’t comply, you lose $8000.

Did you get a solicitor to check the sample contract before you purchased the land?

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