Selling land to a real estate developer is an interesting opportunity, which often allows you to obtain a higher selling price. In fact, we published a Complete guide to selling your land to a real estate developer. In this article, we will focus on the legal and regulatory aspects of this complex process.

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Zoning and regulations

In urban planning, zoning refers to the regulatory process by which a municipality or other competent authority divides a territory into zones according to the types of land use authorized and specific regulations. This practice aims to organize urban space in a coherent and efficient way, by defining areas for housing, commerce, industry, green spaces... Zoning allows for the control of urban development and the planning of future land use to meet community growth, environmental, and economic needs.

In addition to zoning, the Local Urbanism Plan may impose other restrictions that affect land development, such as building height limits, aesthetic requirements, or obligations to maintain certain environmental characteristics.

In some cases, selling land to a developer may include obligations for the developer to participate in urban development, such as the construction of roads or other public infrastructure.

It is important to understand how these obligations may affect the negotiation and financing of the project.

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The suspensive conditions

A suspensive condition is a clause that states that the completion of the purchase is subject to the occurrence of a specific event. Here are the most common suspensive conditions when buying a property by a developer or developer:

Obtaining a completed building permit or development permit: This condition is crucial for developers and developers, as it guarantees that they will be able to carry out their project.
Validation of soil studies: Validating the soil study is an important step in the process of selling land to a real estate developer. It aims to assess the quality and characteristics of the soil in order to determine its capacity to support constructions and to reveal possible constraints that could affect the development of the real estate project. The purpose of a soil study is to identify the physical and chemical properties of the soil on a given piece of land. This includes stability, permeability, composition, and other environmental and geotechnical factors that may influence the technical feasibility of the project.
Financing: Depending on the economic conditions and guarantees required by the market, developers and developers often include a clause conditioning the purchase on obtaining adequate financing to finalize the transaction.
Pre-marketing: Sometimes an offer is subject to the prior sale of a certain percentage of the project to third parties. This requirement, often requested by financial institutions, guarantees the commercial viability of the project.

These conditions allow developers and developers to ensure that all aspects of the project are viable before finalizing the purchase of the land or property.

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Promoter due diligence

The due diligence process by the proponent may include environmental assessments, soil studies, and title verifications. Be prepared to provide full access to your property for these studies. Discoveries during this phase, such as soil contamination or title issues, can affect trading or even prevent a sale. Here are the main aspects of the due diligence carried out by the promoter:

Legal assessment

Property title : Confirm the legitimacy of the title and verify the absence of restrictions, mortgages, or easements that could affect development.
Regulatory compliance : Ensure that the land and the projects envisaged comply with all local zoning, urban planning and construction regulations.

Soil analysis and environmental assessments

‍Geotechnical studies : Review soil survey reports to identify soil conditions and assess potential risks related to terrain stability or contamination.‍
Environmental Assessments : Conduct environmental studies to detect any contamination or ecological problems that could restrict land use or require costly remediation measures.

Planning and technical compliance

Audit of development plans : Analyze architectural plans and impact studies to ensure their compliance with stakeholder expectations and regulatory requirements.
Consultations with experts : Engaging architects, urban planners, engineers, and other consultants to validate the technical feasibility and compliance of projects.‍‍

Risks and mitigation strategies

Identifying risks : Identify all potential risks associated with the project, including construction delays, cost overruns, and legislative changes.
Mitigation plans : Develop strategies to minimize or effectively manage identified risks.

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Managing the termination of the lease before the sale

In the event that the land sold is currently leased to an operator, terminating the lease is an essential step before finalizing the sale. The seller must ensure that the lease is completed in accordance with legal terms and appropriate notifications. This generally involves providing sufficient notice to the operator, in accordance with the legislation in force and the specific clauses of the lease. This approach must be managed carefully to avoid delays in the transaction and to ensure that the developer can take possession of the land free of any rental constraints. It is often advisable to consult a lawyer specialized in real estate law to properly navigate the legal aspects of termination and to minimize the risks of litigation or complications.

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Conclusion

Selling land to a real estate developer presents a multitude of opportunities, including the possibility of obtaining a higher selling price through an effective negotiation strategy. However, this process is full of regulatory, legal, and technical pitfalls that require specialized expertise. This is where our real estate agency comes in, providing you with comprehensive and personalized support throughout this complex transaction.

By mandating IPGS Immobilier, we become your privileged interlocutor. We analyze your property and we support you in its transfer to a developer, through our network, at the best conditions, according to the specificities of your property and the needs of the market. Let's make an appointment to discuss your project.

‍Our objective is simple: to share our expertise with you, and simplify the sales process for a faster, more transparent and safer experience.

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