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What are my options now?

Ken15

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I’m in the process of purchasing some development land in Waterloo, ON. The deal was conditional on my:



1.) Due diligence, 2.) Financing, 3.) The sale of two of my investment properties and 4.) The severance of the property I’m trying to purchase.



The deal was structured to allow me to complete my due diligence (verifying geotechnical, servicing, zoning, environmental, etc…) first then once waived the next conditions: severance, sale of my properties and financing started for a period of 60 days after first waiver.



I did all my necessary due diligence and waived my first conditional period. I’m now onto the second conditional period.



The problem is I have recently found a piece of information from the local Conservation Authority that affects the property, which the Conservation Authority originally failed to tell me during my initial due diligence period!



What are my options now (if any)? I still want the property but my offer price is a little too high now based on this new information.
 

Thomas Beyer

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QUOTE (Ken15 @ Jan 28 2010, 05:16 PM) What are my options now (if any)? I still want the property but my offer price is a little too high now based on this new information.

options:

a) extend condition period until the implications are clear
b) lower price and waive condition at the same time
c) walk
d) amend contract to state price X if that new information will lead to ABC implication or price Z if that new information will lead to DEF implication, on or before MNO date, payable on or before XYZ date (up to 2 years in the future)
e) lower price and offer seller a participation of upside based on certain events beyond your cntrol (say zoning decision of municipality or nature reserves as a % of land size)
 

Ken15

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Can I "Walk"?

What if I can technically fulfill my remaining conditions? i.e. Financing, Sale of my Investment Properties and the Severance.

Could they not hold me to my original offer and say "tough luck you waived your due diligence already this new information is your problem not ours"!?!?!

Ken




QUOTE (ThomasBeyer @ Jan 28 2010, 06:39 PM) options:

a) extend condition period until the implications are clear
b) lower price and waive condition at the same time
c) walk
d) amend contract to state price X if that new information will lead to ABC implication or price Z if that new information will lead to DEF implication, on or before MNO date, payable on or before XYZ date (up to 2 years in the future)
e) lower price and offer seller a participation of upside based on certain events beyond your cntrol (say zoning decision of municipality or nature reserves as a % of land size)
 

Thomas Beyer

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QUOTE (Ken15 @ Jan 29 2010, 09:26 AM) Can I "Walk"?

What if I can technically fulfill my remaining conditions? i.e. Financing, Sale of my Investment Properties and the Severance.
Usually a condition is phrased like so: "Contract is subject to XYZ condition satisfactory to purchaser."

Then usually elsewhere it states "Purchaser conditions are for the sole benefit of the purchaser" .. look for that.

You do not have to state any reason why you did not waive conditions. The XYZ issue, say financing, was not satisfactory to you. PERIOD.

You just send an e-mail or fax stating "I will not waive condition XYZ. The contract is hereby canceled"

Do you wish to walk ? Or reduce price ? Or need more time ? Then tell that to seller. Many seller will agree. Some don`t and then contract gets canceled.

"XYZ condition cannot be waived at this time. However I wish to still purchase property as stated in contract dated ABC. I request that the condition date be extended to ___________ and that possession date be amended to ____________".

Your signature. .............. Date ...............

Accepted by Seller: _________________________________ Date: _____________________

Senior step:


XYZ condition cannot be waived at this time. However I wish to still purchase property as stated in contract dated ABC except price. Purchase price is hereby reduced from _______________ to ____________. I also request that the condition date be extended to ___________ and that possession date be amended to ____________".

Your signature. .............. Date ...............

Accepted by Seller: _________________________________ Date: _____________________



The last one works best if all conditions are waived and price is reduced at the same time. Seller has to agree. You may loose deal. But: it is OK to ask !! He might say "yes" .. or "no".
 

gwasser

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QUOTE (Ken15 @ Jan 29 2010, 09:26 AM) Can I "Walk"?

What if I can technically fulfill my remaining conditions? i.e. Financing, Sale of my Investment Properties and the Severance.

Could they not hold me to my original offer and say "tough luck you waived your due diligence already this new information is your problem not ours"!?!?!

Ken

If you are serious about getting out, go to your lawyer. Don`t do these things without advice. Better a couple of hundred in the hole for legal fees than on the hook for thousands.
 

housingrental

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Hi Ken
I take it your not using a realtor?
Ping me with land info if your walking if not on mls (or info if firming up on your next project)
The places your getting rid of are these from your Bridge / University development? or ?
 

Ken15

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I don`t want to walk from the deal. I would like to re-negotiate the purchase price somehow. Keep in mind it is an enviromental issue that affects the property and I have waived the enviromental condition already.
 

Thomas Beyer

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QUOTE (Ken15 @ Jan 30 2010, 12:37 PM) I don`t want to walk from the deal. I would like to re-negotiate the purchase price somehow. Keep in mind it is an enviromental issue that affects the property and I have waived the enviromental condition already.
just talk to seller / realtor.

Tell him it can`t be waived. Usually financing is contingent upon environmental issues being clean. Tell him the financing won`t go through.

So: extension .. or no deal (due to financing)
 

Ken15

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FYI: By... environmental I mean environmentally sensitive wetlands... not the toxic kind.



QUOTE (ThomasBeyer @ Jan 30 2010, 01:59 PM) just talk to seller / realtor.

Tell him it can`t be waived. Usually financing is contingent upon environmental issues being clean. Tell him the financing won`t go through.

So: extension .. or no deal (due to financing)
 

Thomas Beyer

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QUOTE (Ken15 @ Jan 30 2010, 01:47 PM) FYI: By... environmental I mean environmentally sensitive wetlands... not the toxic kind.
what`s the plan for this land once acquired ?

live there with single family home ? Sub-divide ? Commercial ?

Did you investigate costs to service such as gas, water, sewage, electricity, cable, telephone, access to nearest main road ?
 

Ken15

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The plan is to subdivide and build 15-20 single-family homes OR 50-70 Condo Townhomes. Yes, I have investigated all the costs associated with the development. I did my calc`s based on the lowest possible yield (i.e. 15 single family homes) and have very current servicing pricing from our current development. Everything checks out and the timing of this project will coincide nicely with the finishing of our current development.

QUOTE (ThomasBeyer @ Jan 30 2010, 03:36 PM) what`s the plan for this land once acquired ?

live there with single family home ? Sub-divide ? Commercial ?

Did you investigate costs to service such as gas, water, sewage, electricity, cable, telephone, access to nearest main road ?
 

housingrental

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If you have any ravine lots I`ll take one off your hands



QUOTE (Ken15 @ Jan 30 2010, 06:00 PM) The plan is to subdivide and build 15-20 single-family homes OR 50-70 Condo Townhomes. Yes, I have investigated all the costs associated with the development. I did my calc`s based on the lowest possible yield (i.e. 15 single family homes) and have very current servicing pricing from our current development. Everything checks out and the timing of this project will coincide nicely with the finishing of our current development.
 

Thomas Beyer

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QUOTE (Ken15 @ Jan 30 2010, 04:00 PM) The plan is to subdivide and build 15-20 single-family homes OR 50-70 Condo Townhomes. Yes, I have investigated all the costs associated with the development. I did my calc`s based on the lowest possible yield (i.e. 15 single family homes) and have very current servicing pricing from our current development. Everything checks out and the timing of this project will coincide nicely with the finishing of our current development.
Are you sure the zoning allows single family homes OR THs ? as usually it is either or !!

so .. what is the problem then ?

get a condition extension or walk ..
 

Ken15

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There is no problem technically.... I just want to reduce my purchase price in light of the new info I have. I want to make sure I have leverage to go back to the seller and re-negotiate the purchase price. My Lawyer said I can`t re-negotiate an environmental issue now that I`ve waived that condition. I have to re-negotiate on one of the remaining conditions. I can`t say.... "a wetland issue has come to light so I`m not going to waive my financing condition" However, if I go back and say it`s just a "financing issue and I can`t afford the property" the Seller will walk because they most likely aren`t aware of the wetland issue and think their property is worth the original price.

In other words.... I don`t want to lose the property but I don`t want to pay the original price.

I guess I could use the financing is contingent upon environmental issues. i.e. Bank is concerned with the wetland and the potential size of the future development... ???

QUOTE (ThomasBeyer @ Jan 31 2010, 07:11 PM) Are you sure the zoning allows single family homes OR THs ? as usually it is either or !!

so .. what is the problem then ?

get a condition extension or walk ..
 

Thomas Beyer

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QUOTE (Ken15 @ Feb 1 2010, 07:09 AM) ..

I guess I could use the financing is contingent upon environmental issues. i.e. Bank is concerned with the wetland and the potential size of the future development... ???
exactly ..

seller does not need to know YOUR reason for price reduction .. he can always say "no" ..
 
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