Realtor signing contract

Group Sales – Are you selling with your neighbours to developers? What’s the catch?

Sarah Newman ||

It is clear that there has been a significant shift of what local areas looked like twenty years ago in comparison to now. Sydney’s Greater Western region is set to undergo a major transformation over the next five years, reinforced by extraordinary levels of public and private investment, particularly in regards to property development. With this, comes the increasing demand for high-rise structures and as a result, group sales between neighbours are becoming more common.

A group sale is when neighbours join forces to collectively sell their property to the same developer. Commonly known as a “package deal”, owners are taking the initiative to offer their properties to prospective developers. This agreement is becoming a popular way in which property owners can maximise their sale price through becoming part of the development.

What is causing the demand for group sales?

Mass Urbanisation

With a growing population, comes economic growth. Mass urbanisation increases the occurrence of group sales as developers are likely to build infrastructures that meet the growing population. Due to this, development is usually accelerating at a faster pace than usual to meet the increasing demand.

Rezoned/Rezoning Areas

Zoning can be defined as the governmental classification and permitted uses of an area or piece of real estate. Re-zoning is a change in that classification. A developer usually takes into consideration an area that has been rezoned or is fit for rezoning for prospective growth. With this, new infrastructure will be advantageous particularly if it is surrounded by shops, transport and schools.

How do I know if my area is desirable?

Land Size

  • Most importantly, you must know whether your land can be redeveloped or not, which is determined by zoning laws, which regulate what is prohibited or permitted on a block of land; and,
  • Blocks over 700 square metres usually qualify for development.

Location

  • Developers are attracted to properties that are in close proximity to public transport, local communities, shopping centres and schools, as well as those close to coastlines; and,
  • Developers are also interested in areas where projects are already being established – showing that the area is under growth maximisation and is more favourable.

What are the benefits and limitations of group selling to developers?

Benefits

The benefits of being involved in a group sale include:

  • Free from the risk of a failing sale due to no financial refusal, nor the pending of an existing sale; and,
  • No efforts needed on advertising and marketing sale of home as usually, a developer will approach the community with their prospective ideas.

Limitations

The limitations of being involved in a group sale include:

  • The size of your land is usually not taken into consideration, even if your land might be larger than your neighbours, the costs are usually evenly distributed;
  • Some neighbours may have unrealistic expectations of the land – it is important that the price is feasible between the developer and the homeowner. Developers may be inflexible when negotiating terms of the transaction as councils often put restrictions on the size, number and style of properties that can be developed.

Where do I go from here? Do I need a Joint Venture Agreement?

A Joint Venture is an agreement between two or more entities to undertake a venture, commercial activity or business operation together. Whether the selling group is large or small – everyone needs to consider the legal consequences and structures in which they undertake during their developments. It is imperative that expert advice be obtained to ensure an understanding of the venture and what follows.

Are you stuck in this situation or considering a group sale to developers? It is important to consult with a lawyer who is highly experienced in this area and can advise you of your rights and obligations in a group sale. Please do not hesitate to get in touch with a lawyer in Coleman Greig’s Commercial Property team who would be more than happy to assist you.

Share:

Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.

Categories
Archives
Author

More posts

SafeWork NSW
SafeWork NSW releases new strategy to address psychosocial hazards

On 22 May 2024 SafeWork NSW introduced a new strategy to address psychological and psychosocial hazards. The SafeWork NSW Psychological Health and Safety Strategy 2024-2026 establishes new supports for employers regarding their duties in preventing psychosocial harm in the workplace.

roles in the strata scheme
Understanding roles in the strata scheme

A strata scheme is a building or group of buildings that have been divided into lots which can be apartments, villas, offices, units or townhouses. This will be articulated in the strata plan.

Airbnb home
Can I put my home on Airbnb?

Airbnb is a form of short-term rental accommodation. To add your property to Airbnb in NSW, you are required to meet several laws and regulations governing short-term rentals.

liquidators required to seek approval
When are liquidators required to seek approval to retain legal counsel?

When does a liquidator (or the company he or she is appointed to) need court, creditor, or committee approval to validly retain a solicitor to act in a liquidation matter which is likely to extend for longer than three months?  The answer to this question has only recently been settled.

Proposed changes to building
Proposed changes to building and construction law in NSW

The Building Bill 2022 (the Bill) is the key avenue through which the NSW Government has proposed to reshape the culture of the building and construction industry by eliminating poor performance and improving the quality of building statewide.

Dismiss an employee
Can you dismiss an employee who fails to return to the office?

Slowly but surely, most employers are requiring employees to return to the office for at least a portion of their working week. Some employers continue to struggle with employees resistant to returning to the office or those who have an expectation that they can continue to work from home whenever it suits them.

Phoenixing in Construction
New powers to combat phoenixing in construction

The rise of phoenixing in the building and construction industry in Australia in recent years has proved a significant challenge to regulators. Mismanagement of time or cashflow can quickly propel businesses into insolvency.

© 2024 Coleman Greig Lawyers  |  Sitemap  |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230