ᐅ Signing a Construction Contract Before Purchasing the Land?
Created on: 9 May 2019 10:18
G
goalkeeper
Hello everyone,
We are basically in agreement with our future general contractor (GC) and are having the contract reviewed by a specialist lawyer and a friend who is an architect. After that, we would be ready to proceed.
However, our notary appointment has roughly shifted to the end of June/early July. We will be purchasing a municipal plot of land.
The GC has already informed us that the shell construction definitely cannot be completed this year, as he won’t have enough time. As a result, the entire construction project will be delayed by several months due to the winter season. However, we urgently need the space since we are expecting another child.
He would grant us a right of withdrawal in the contract if, for any reason, the land purchase falls through – any costs incurred up to that point, probably around 3.5% of the total price, would of course be our responsibility.
The question now is whether there could be any other issues with signing the construction contract before the notary appointment for the land purchase?
Our mortgage lender doesn’t see this as a problem, since we would be financing the 3.5% from our own capital, and the loan would only begin once the land purchase is complete.
What do you think?
We are basically in agreement with our future general contractor (GC) and are having the contract reviewed by a specialist lawyer and a friend who is an architect. After that, we would be ready to proceed.
However, our notary appointment has roughly shifted to the end of June/early July. We will be purchasing a municipal plot of land.
The GC has already informed us that the shell construction definitely cannot be completed this year, as he won’t have enough time. As a result, the entire construction project will be delayed by several months due to the winter season. However, we urgently need the space since we are expecting another child.
He would grant us a right of withdrawal in the contract if, for any reason, the land purchase falls through – any costs incurred up to that point, probably around 3.5% of the total price, would of course be our responsibility.
The question now is whether there could be any other issues with signing the construction contract before the notary appointment for the land purchase?
Our mortgage lender doesn’t see this as a problem, since we would be financing the 3.5% from our own capital, and the loan would only begin once the land purchase is complete.
What do you think?
Nordlys schrieb:
Good question... I’m afraid not, because otherwise you could go to the notary already, but that’s not possible yet... Then there’s no need to wait for the registration of the land charge/mortgage.
The only option left is registering a priority notice of transfer; otherwise, you’ll have problems!
Our notary appointment for the home financing was in May. Five months have passed including the survey, registration of the survey, creation of the parcel, and approval from the bank.
G
goalkeeper10 May 2019 12:13Nordlys schrieb:
Good question... I’m afraid not, because otherwise you could just go to the notary, but that’s not possible yet.....All measurements have already been completed. The municipality insists on scheduling 31 consecutive appointments for all plots in the new development area at the notary one after the other – and since these are not available consecutively until June/July, the process is unfortunately being delayed.
N
nordanney10 May 2019 12:41Nordlys schrieb:
Good question... I’m afraid not, because otherwise you could just go to the notary, but that’s not possible yet..... It is also possible to purchase a "yet-to-be-surveyed area of x m² (x sq ft) from plot xy" and place encumbrances both on the purchase agreement and the land. This is common practice, but it creates more work for notaries, banks, and the seller.
G
goalkeeper10 May 2019 13:04nordanney schrieb:
It is also possible to purchase a "yet to be surveyed area of x sqm (y sq ft) from parcel xy" and secure both the purchase agreement and the property with it. This is common practice but creates more work for notaries, banks, and the seller. The plot sizes are definitely fixed.
The clerk from the tax office will be back next week – then I will gather more information.
Thanks so far for all the advice here – this was something we hadn’t considered before.