Help with terms for sale of raw land

[John P.]

I am selling approximately 30 acres for about $1m to an experienced developer/investor. He plans to have the property re-zoned from 1/2 acre lots to 1/3 acre lots. We have generally agreed on price and a timeline for getting the zoning done and are working to get this to a writing.  I am not represented by a Realtor any longer as my Realtor (the only land specialist in the area) proved to be incompetent but that's a story for a different day.  So all is good and now the buyer is suggesting that the payments be made about 1/3 up front, and 1/3 at 18 months and the last third at 36 months. He tells me this is a common "takedown" for this type of sale.  This buyer had made an offer last year, when I had my realtor, and it was a straight purchase so I assumed this would be too.  I am selling to him for a very fair price and yes I want to sell it but if it doesn't sell now then so be it. The price isn't so amazing that I feel I want to bend to much to make it happen.  Also, I don't need the money. However, for other reasons I would love to sell it and be done with it.  Overall I want the deal to be fair to both of us as I find most deals go smoother, and with better feelings, when things are fair to all concerned. I feel like by his terms I get no benefit for agreeing to the delayed payment but if things go to crap then he walks away and I don't sell the rest of the land.  It seems to me I should get something for agreeing to getting paid over time. I am curious what you experts think. I want to be reasonable. I am an attorney but do not have significant real estate or contract experience.  Again, any feedback/thoughts/suggestions would be appreciated. 

[Jay Hinrichs]

You want to talk to your CPA first and foremost you don't want to get in a situation were your deemed a dealer and lose your cap gain tax advantages.

that said a take down schedule like this is common in the industry.. although CA usually a million dollar property is not a lot.. vis a vi development ground.. and builder developers there usually stroke a check if needed.

I suspect though if your going to sell it in phases.

the land would be split into 3 phases and you deed out each phase as he pays if off.. but not individual lots that were your CPA can advise you on dealer status.

its common though in these scnerios to have accerlated payment

so you have  3 phases  333k each... you sell first phase for  400k.. second phase for 400k last phase for 200k.. this way you get a premium if he fails to buy the rest of the dirt

also in your contract make SURE you demand that all work product engineering soils geo tech that type of stuff is once paid for your property as well.

usually in vanilla real estate transaction on the west coast I don't recommend or see the need for a lawyer but in this case I would find a good real estate lawyer tell him these basic terms and things you need then let him prepare the contract..

hope that helps.. and assuming the dirt is in CA.. of course.