Are you concerned about specific conveyancing laws for property developers? If you’re a property developer then buying and selling property will be something you do repeatedly year in, year out. While most people only buy or sell a home every five to ten years, property developers are continually buying new property, developing it and reselling. So when handling conveyancing for property developers, it’s even more important to ensure that tight procedures are in place to make sure your property development business runs smoothly.
With a private sale it may be inconvenient, or even costly, if legal proceedings for buying or selling property are delayed, but for property developers well planned conveyancing is critical. Just one delay in buying property could mean that you miss out on a potentially lucrative deal and one single snag in selling a property could bring your property development business to its knees.
Conveyancing for property developers and disclosure
Under the current Queensland law system, conveyancing for property developers requires developers, their agents and real estate salespersons to make a “disclosure” before entering into a sales contract with a prospective buyer.
This disclosure means informing prospective buyers about the “benefits” a person or entity received, receives or expects to receive in connection with the sale of the property, or for promoting or rendering a service in connection with the sale. Such “benefits” can include agent fees, commissions, marketing costs and property development promotion costs.
The duty to disclose arises when a property developer has at least a 15% interest in the property and will be paying a third party fees or commissions. Typically fees or commissions may be paid to mortgage brokers, building or pest inspectors, marketing agencies, property agents or real estate salespersons.
The information to be disclosed by property developers includes:
- the full name of the third party;
- their relationship with the property developer, its property agents or real estate salespersons;
- the benefit they will receive.
Most importantly, property developers must disclose the total commission paid on the property sale to their employees and salespersons, although they do not need need to disclose how the commission is distributed.
Disclosure forms relevant to conveyancing for property developers
This disclosure is made through a “disclosure form”, which must be filled out and signed by both the selling agent and the buyer. Property developers selling house and lot packages must comply with the disclosure requirement both for the land and for the house or building contracts.
Furthermore, property agents and salespersons are also required to disclose to the seller, in this case the property developer, if they have any “beneficial interest” in the sale transaction. A property agent or real estate salesperson is said to have a “beneficial interest” if the buyer is a family member, a business associate or similar.
The disclosure is made by filling out a “beneficial interest form”, which states the details of the property and the beneficial interest of the property agents or real estate salespersons. This beneficial interest form must be signed by both the property agent or real estate salesperson, and by the property developer.
Why conveyancing for property developers is so stringent
The disclosure requirements for property developers enable potential buyers to gain a clearer understanding about the property offered for sale before they sign a contract.
In addition, the property developer also becomes better informed about the beneficial interests of the property agents or real estate salespersons during the sale transaction.
Hence, compliance with the disclosure requirement during conveyancing for property development allows more transparency, not only between the property developers or its selling agents and the buyers, but also between the property developer and its selling agents. In turn, this makes conveyancing for property developers easier and helps build trust between the parties involved.
Book a free conveyancing consultation now
Contact us now for informed legal advice on conveyancing for property developers or buying or selling property in general. To book your free consultation outside business hours please use the consultation booking form below or call us now on 1300 224 278.