When clients are buying sections with the intention to build their dream home, usually everything goes swimmingly. They buy the land, build their dream home and settle in nicely. No damage to the land is caused during construction of their new home and they are refunded any remediation bond that they paid to the developer before construction started.
Sounds quite simple, but unfortunately it is not always that way. Sadly, it is becoming increasingly common that people are unable to build their dream home after buying their section (for whatever reason) and are forced to sell before any construction begins.
Of course, the damage remediation bond is paid at the outset, and in most cases, developers will only refund the bond to the “registered proprietor” at the time of the completion of any dwelling. This might not be to the person who actually paid the bond.
Often vendors forget that they paid a bond and that it needs to be allowed for when they sell their section. It is for this reason that we urge agents to check with us as to the wording in the original agreement, before drafting any on-sale agreement for a section. You MUST do your homework and determine whether you need to allow for the remediation bond in any new sale agreement.
Recently we had a client dealing with the exact scenario mentioned above. Unfortunately, there was no mention of the original remediation bond in the new agreement. The purchaser didn’t agree to refund the bond of $2,500 to our client. There was no mention of it in the agreement. While this may seem unreasonable, they were within their rights to do this. Because the purchaser had bought privately from our client rather than through the Developer, they didn’t have to pay any bond before commencing construction. As it stands, once they complete their build, the Developer is required to pay the bond to the “registered proprietor” at that time. This mistake cost our client $2,500.
In this case, the agent realised they were responsible for not inserting the relevant clause into the agreement and subsequently paid the refund to our client from their own commission.
Thankfully the client accepted the refund without laying a complaint against their agent. However, we urge you to add this important check to your “to do” list when drafting an agreement for on-selling a section. Remember, if in doubt, give us a shout!