Anti-speculation Agreement By Builder
theres a builder in california selling new homes with an anti-speculation agreement.
basically it says that the buyer cannot sell, rent or lease the house for 12 months after buying or the buyer owes 50K in damages.
there are the usual hardship clauses.
is this something that the builder can enforce??
is this even legal? can i sell a property and have
any arbitrary clause in it specifiying damages.
for example can i say my dog is buried in the back yard, and if his grave is ever disturbed
i'm to get 5K in damages??
Yep, the matter is a contract. If the parties agree to it and there are no other factors. The document stands.
This has been done in the past in various governmental housing projects.
As a matter of fact I am in the midst of one now. We deliver a house to a person for $58,000 and that house would on todays crazy market sell almost at once for about $250,000 and I am being conservative. These are erected on in fill lots. Most of the houses around them are at this time selling for about $325,000 to $375,000.
Now you take a nice man that makes less then $16,000 a year, has a wife and a child or two and is grabbing every free service that is offered. He gets into a house like this and can make that kind of a profit? Of course he will. I know the following year he will be back on Section 8 housing, but the thrill of having about $200,000 in your hand even for a short while is overwhealming.
I really do not know what to do. I want to build on scattered lots all over the San Fernando Valley. It positions families on the lower economic level in close and ongoing contact with members of the lower middle class. The kids go to school with them, the parents meet at little league and it all rubs off. Within two generations at the most, they are pretty much the same.
The only way I know how to handle it is to restrict the resale and you know that also has an effect on my social experiment. Any Ideas? Any prior experiences? Help. I could use some advice.
Lucius the Container Person. 8-) 8-)
these houses are at market. theres no discount, not even a rebate for using the builders prefered lender!.
i can understand the city doing that because its subsidising your housing with taxpayers dollars but is it legal for anyone else?[ Edited by niravmd on Date 03/29/2004 ]
Lufos, why aren't you pricing at the market price? I know you have a good reason, but I'm curious. Are you that altruistic to give that kind of money away?
When I started the development of a high rise condo project in Chicago. Another developer suggested that we place a 10 year anti-speculation clause in the sales contract. The agreement also restricts occupancy to owner and immediate family. The clauses which the owner has is job transfer and death. Any other sale splits the profit 25% to the homeowner,25% to the condo assoc. and 50% to the developer.
thanks michael
how do you track who sells and when?
in your case the condo assocation would know
whenever title was transfered, but if there was
no association, would you have someone scouring the mls for the next 10 years?
Lucius,
Concerning your question...
I know only the broad picture of what you're trying to accomplish so take my comments in that context.
Option 1. Title to the lot would not be conveyed; the buyers would own the container house but lease the land.
Option 2. Title to the land including container house would be conveyed but deed restricted so that the owner could not sell, exchange or convey title to the property for a stated number of years for an amount exceeding X$-- X = owner's purchase price ($58K) + some below-market percentage of annual appreciation. The intent would be to maintain the relatively wide spread between the value of the neighborhood and the sale price of the property. To prevent the owner from selling the property basically as a building lot with a teardown structure, there would also have to be a deed restriction prohibiting the demolition or removal of the existing house.
Option 3. Title to the land and container house would be conveyed. Deed restriction providing that if the owner sells, exchanges or conveys title within X years from purchase, owner must pay the municipality (whatever governmental entity is subsidizing here) some ridiculously high penalty--like 80% of the difference between the original purchase price and the resale price.
Option 4. (Variation on Option 3) Title to the land and container house is conveyed but a lien is recorded against the property for an amount equal to the difference between say, $350K (current value of the neighborhood) and the original purchase price. Don't know how this could be worded, but the intent would be that the lien would be deemed satisfied after X years. So if the owner sells in X + 1 years, there would not be any "punitive" lien.
Nancy,
You are wasting your time, get thee hence, no not to a nunnery but to the legislature. They need you, and now!
This program of mine is non supported by anybody. Not Hud, not FHA, not any of the local housing authorities. It is strictly an expression of a capitalistic idea as to how to break the cycle of slums being a necessary adjunt to urban areas.
We were able by utilizing containers at a very very low cost due to the screw up in international trade. To come in at completion costs that have not been seen since Mary and the kid bunked out in the manger.
I think your idea of the Master Lease on the land may be the answer. Sort of strange cause being underfunded we have been gathering lots on the 99 year lease basis. With options to buy of course.
Thanks for your scholastic and well thought out variances. We will start with the Master lease and restrict ownerships and occupation to the original Buyer. I supose some sort of appeal committee is necessary for those hardships which do occur in life. I think maybe some form of reduced value payment to the Owner upon surrender of the dwelling. Guess I will have to research.
Thank you. Lucius 8-)
Quote:
On 2004-03-29 01:13, dirtman89 wrote:
Lufos, why aren't you pricing at the market price? I know you have a good reason, but I'm curious. Are you that altruistic to give that kind of money away?
I cheated I sold 30 at about $125,000 still at least $200,000 under, but we needed capital. From that point on we dropped to $58,000. I mean what am I
going to do? Like to try this social experiment. probably will have no effect, but I would like to try. Every PsyHistorian in the world says it will have no effect. Even if I produced 500,000 homes.
I think if we get off and rolling. Some really smart big time builder like Snyder will start in and who knows what might happen. Would be nice to have some really cheap modern state of the art housing that us medium types could live in. Everytime I go down to Venice Calif. and see what the artsy fartsy types are building I go crazy. God I wish I had the money to pay $600,000 for a lot and just cut a genius arch. loose. The big thing now is to leave the screw and nail tops exposed. Industrial Modernism. A little nuts but fun.
cheers Lucius 8-)
Quote:
I think your idea of the Master Lease on the land may be the answer. Sort of strange cause being underfunded we have been gathering lots on the 99 year lease basis. With options to buy of course.
That's very interesting. Can you say more about your business plan regarding lot acquisition or how you find/negotiate these deals? Do your leases give you the right to erect improvements? How are you financing development?
Quote:
On 2004-03-29 02:22, niravmd wrote:
thanks michael
how do you track who sells and when?
in your case the condo assocation would know
whenever title was transfered, but if there was
no association, would you have someone scouring the mls for the next 10 years?
Hi niravmd -- Did you end up selling anyway? I have a similar situation in Las Vegad right now. From what I've been told, the builder uses the anti-speculation contract to simply scare investors away. However, the builder typically does not have the time or energy to actually follow through on the contract. From what I can tell, the HOA are the only ones who would be notified of the sale and they are supposed to be independent from the builder. Thus, I think that I could get away with selling the property as long as I do not put a sign out front and possibly put a lock box on the side of the house.
i decided to back out of the deal. didnt have the time or energy to mess with the builders. i've heard that in CA , only 2 poeple have ever been sued for this. thats only 2 out of possibly thousands who've done this.
you're right builders aren't going to stake someone outside your house to make sure u're staying in it. just dont make it obvious by having an open house or ballons.
This could be an interesting opportunity to clean-up.
For a comparatively nominal amount of legal fees, you could could have the contract torn apart by a legal team, and I bet, that clause could be voided.
The afordable housing restrictions are for the "good of the public interest", this clause is for the good of the builder/developer and not one else.
Now if he took that money and donated it to habitat for Humanity, that would be a different story.
Oh.. I forgot to mention...
If anyone needs a "job" in N. CA such that they're more the 35 mi from the project, let me know!