Considering a purchase or lease subject to a development consent? Some timely matters to consider.

In June 2020 the Federal Government announced a $110 billion 10 year infrastructure plan designed to build transport infrastructure to meet the needs of a growing population and to support the recovery of the economy and employment numbers in the fallout from the COVID-19 pandemic.

Targeted projects range from largescale Federal infrastructure down to local roads and community facilities operated by local councils.

Many of these projects will unlock development opportunities that become feasible with the construction of new or improved transport links nearby. In addition, such projects bring about land zooming amendments which open up the door to the commencement of new industries and businesses that could not previously be undertaken due to zoning constraints.

It is likely that landowners will take the opportunity to sell land which increases in value with any infrastructure or zoning changes nearby. Business owners looking to buy or lease such land will also come along in search of new opportunities to start or grow their businesses.

This will lead to an increasing number of purchases and leases which are conditional upon the purchaser or lessee obtaining development consent from the relevant consent authority to commence their businesses. Usually this is undertaken through a conditional contract to purchase or an agreement for lease.

When negotiating such contracts or leases where completion is subject to the granting of development consent to the purchaser or lessee on terms amenable to their businesses, a number of matters ought to be borne in mind at the negotiation phase.

Firstly, consideration must be given to the timeframe in which development consent is to be received, so that the parties are not bound to a contract or lease for such a long period that the business opportunity is lost, or where it becomes clear that consent will never be obtained, or at least issued on acceptable terms.

Secondly, the terms of the consent to be sought should be spelled out in the contract or agreement for lease, so that the vendor or landlord is aware of all of the purchaser/lessee’s needs. This will assist if consent is issued on unacceptable terms and the purchaser/lessee seeks to avoid any further obligations under the agreement.

Thirdly, provisions should be included in the contract or lease dealing with any potential appeal against the refusal of consent by the relevant consent authority to the NSW Land and Environment Court. Obviously, the need to invoke that process will impact on any timing provisions dealing with the issuing of consent.

With the large swathe of changes and in both the property and legal sectors in recent times, and given the considerable overlap between those two sectors, landowners and business operators ought to seek experienced legal advisors to avoid any exposure to pitfalls or missed opportunities which abound in today’s times.

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