Land Banking & Lot Takedown Structures

 

Land banking — also called lot banking — moves land off a builder's balance sheet. A capital partner buys and holds the land; the builder takes lots down on a schedule under an option, paying for them as it needs them. It converts an equity position in dirt into a contractual right to buy lots, and it is now how a large share of residential land is controlled in the Mid-Atlantic.

 

Practice Contacts
Ryan C. Day · Anthony J. Clark · Douglas M. Irvin

 

We advise homebuilders on the option purchase agreements, takedown schedules and development agreements that govern institutional land-bank structures. Separately, we represent developers and landowners selling land and finished lots to builders.

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Our Experience

 

• Representing homebuilders in institutional land-bank transactions.

 

Where we act

 

Our land-bank and lot takedown practice advises homebuilders on transactions in Maryland, Virginia and across the Mid-Atlantic. Individual attorney admissions vary. We provide services only as permitted by applicable law and work with locally admitted counsel where required.

 

The documents

 

• Option purchase agreements and lot option agreements

• Development agreements between the land banker and the builder

• Takedown schedules, minimum takedowns and lot release mechanics

• Memoranda of option and title clearance

• Guaranties, deposit and option payment structures

• Completion and finishing obligations, and who performs them

• Assignment and collateral assignment provisions

• Multi-stage closings combining a direct takedown with successive land-bank closings

• Substitution of one land banker for another mid-project, including termination of the option of record

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What is actually negotiated

 

• The takedown calendar. Pace, minimums, acceleration, and what happens when absorption does not match the schedule.

• Lot price. Escalators, carrying cost, and how price moves if delivery slips.

• What a finished lot is. A recurring source of disputes in these deals, and often left to a cross-reference.

• Who performs the development. Seller, builder or land banker — and who carries the bonds.

• Entitlement and permit risk. Allocation between the parties when an approval, a permit or a sewer allocation does not arrive on time.

• Remedies. What the builder loses on a failure to take down, and what the banker owes on a failure to deliver.

• Exit. Termination, put rights, and disposition of undeveloped remainder.

 

To discuss a land-bank structure or a takedown agreement, get in touch.