Anyone have experience with pre-sale contracts?

Question

My partner (also builder) and I are preparing to close on three lots that we'll build on. I'm going to own two lots And he'll own one when it's all said and done. The problem we've run into is the lot he's going to own and one of the ones I'm going to own are on one parcel. In order for the bank to give us our own loans they need them to be on separate parcels. We've already moved closing out once so moving it out to have the city do a lot split isn't really an option at this point. One thing the bank recommend is my partner put those two houses in his name and we sign a pre-sale contract between us that says he'll sell it back to me when construction is complete.

My questions are, what are the risks of us entering this agreement? And how do we go about writing it? Our agent says he doesn't have any such contracts for us to use.

Located in Northwest Arkansas

My questions are, what are the risks of us entering this agreement? And how do we go about writing it?  Our agent says he doesn't have any such contracts for us to use.

Located in Northwest Arkansas

Greg Dickerson · Answer

If I understand your question you are saying there are only two parcels. If that’s the case  I would not recommend you close on the property until you have The property divided into three separate parcels. You cannot build 2 single-family detached homes on one parcel so you will not even be able to get a building permit to do that more than likely.

Ryan Blackstone · Answer

@John Clark What you could do is you close on the two lots that are on one parcel, and he closes on the one that is by itself. Now, you get your own parcel by getting a survey done, and get approval by the city. I would honestly get approval from the city before, because Bella Vista is particular about their lot splits, and all cities want enough frontage. The worst situation, is that you can't split the lot and you can only build one house on the "two" lots.

John Clark · Answer

@Greg Dickerson

Hey Greg, you are correct that there are two parcels.  However, the one larger parcel is already split into two lots.  It's just the bank won't give us separate loans until each lot is on its own parcel or if one person takes on the one large parcel.