Building on land you don’t own can become complicated.
Building on Land You Don’t Own
When would you consider building on land you don’t own?
In this episode Damien Lehmann of ADLV Law in Sydney walks three scenarios where this might be an option you consider.
Here is what we learned but please listen in as Damien explains all this much better than we ever could.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
Building on Land You Don’t Own
There are three scenarios where you might consider building on land you don’t own:
1 – Joint Venture
Joint Venture agreements are common among so-called Mum & Dad projects, where mum & dad own the land and retain ownership until the building is finished.
If you are in Victoria, make sure you find a legal way around the new rules. So you don’t have stamp duty slammed onto your joint venture agreement.
2 – SMSF
Can a company build on land owned by an SMSF? Please have a listen to ep 280 with Bryce Figot where he speaks about property development within an SMSF.
3 – Service and Project Entities
Among large property developers it is common to have different entities within a development business. The holding entity owns the land while a project entity does the building. And then a service entity provides building services to the project entity.
You usually have separate service and project entities for each building project, so you can ring-fence each project from creditors of the other project.
Just make sure that any losses incurred by a service entity – for example when a project doesn’t go ahead – can be used within the group and are not stuck in that entity. You usually achieve that through agreements between the different companies that allow you to pass costs up the chain.
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