What Developers Actually Mean by "Subject to Feasibility"

The Phrase That Costs Vendors Money

"Subject to feasibility" sounds reasonable. The developer wants to confirm the project works financially before committing. The vendor agrees, signs the contract, and waits.

Six months later the developer comes back: "We've run feasibility — it doesn't work at this price. We need a $400k reduction or we walk."

This is the moment the vendor learns what "subject to feasibility" actually means. In its standard form, it's not a benchmark. It's a free option for the developer to:

• Tie up the property for 6+ months
• Run their own internal feasibility model
• Use the time to secure other sites
• Re-trade the price if it doesn't work
• Walk away with no penalty if they prefer

That's not a contract. That's a free option. And vendors agree to it routinely without realising.

Why Developers Want "Subject to Feasibility"

Genuine reasons:

1. Costs are uncertain (construction, finance) for 12-24 months ahead
2. End-product pricing is uncertain
3. They want time to refine the design before committing capital

Less honest reasons:

1. Tie up the site while they parallel-process other deals
2. Re-trade the price post-signing
3. Use vendor uncertainty as a negotiation lever
4. Run pre-sales without committing to the purchase

A well-drafted feasibility condition addresses (1)-(3) above without enabling (4)-(7). A poorly-drafted one enables all of them.

What Strong Conditional Clauses Look Like

Replace "subject to feasibility" with objective, time-limited, milestone-based conditions:

1. Subject to Development Approval

"Subject to the Buyer obtaining Development Approval (DA) for not less than [X] residential units within [Y] months of contract execution, failing which the Buyer or Seller may terminate."

Objective (DA granted yes/no), time-limited, and benchmarked. This is far better than "subject to feasibility" because the developer has to actually pursue the DA.

2. Subject to Finance

"Subject to the Buyer obtaining unconditional finance approval at an LVR not exceeding [X]% within [Y] days of contract execution."

Note the LVR cap — without it, the developer can claim "no finance" if their preferred bank declines, even if 5 other banks would lend.

3. Subject to Pre-Sales

"Subject to the Buyer achieving qualifying pre-sales of [X]% of the project's GRV within [Y] months."

Used in larger projects. The vendor is essentially co-pilot to the launch — needs careful drafting on what counts as "qualifying" pre-sales.

4. Subject to Specific Council / Planning Approvals

"Subject to the Buyer obtaining [neighbourhood plan amendment / boundary realignment / specific overlay relief] within [X] months."

For sites with known planning hurdles, naming the specific approval is far stronger than generic feasibility.

What Weak Conditional Clauses Look Like

Avoid:

• "Subject to feasibility" (no benchmark)
• "Subject to the Buyer's satisfaction with due diligence" (purely subjective)
• "Subject to internal board approval" (gives a free walk option)
• "Subject to finalising design" (open-ended)
• "Subject to sufficient pre-sales" (no number)

These all hand the developer a free option. The vendor's only real protection is to refuse them.

Vendor Protections to Negotiate

If a developer insists on a feasibility-style condition, vendor protections to negotiate:

1. Larger non-refundable deposit (10-15% rather than 5%)
2. Shorter conditional period (60-90 days, not 180+)
3. Vendor's right to terminate if condition is not satisfied by the deadline (not just the developer's right)
4. Good-faith obligation with specific milestones (e.g., "Buyer must lodge DA within 30 days")
5. No re-trading clause — buyer waives the right to renegotiate price post-signing
6. Limited extension rights — extensions only with vendor consent, never automatic

The "Mutual Walk" Trap

A common deceptive structure: the contract is "subject to feasibility, with both parties having the right to terminate during the conditional period". This sounds fair — both parties can walk!

In practice: the vendor never wants to walk (they want the deal). The developer occasionally wants to walk. So the bilateral termination right is a de facto unilateral free option for the developer. If the developer walks, the vendor's only recourse is to keep the deposit (often a tiny 1-5% sum) and re-list — losing months of marketing momentum and leaking concerns to the market.

The vendor's protection is to insist on objective conditions, not bilateral termination rights.

Case Study — A Brisbane Vendor's Lesson

A vendor signed a contract with a developer for a 1,000 sqm Coorparoo site at $4.5m, "subject to feasibility within 120 days".

Day 110: developer returned with "feasibility doesn't work at this price; we'll proceed at $3.9m".

The vendor had three options:

1. Accept the $600k reduction
2. Refuse and let the contract lapse, losing 4 months of campaign momentum
3. Compromise at a middle ground

The vendor compromised at $4.2m — losing $300k. With a tighter "subject to DA approval, 12 months" clause and a 10% deposit, the developer would have either pursued the DA properly or forfeited a meaningful $450k deposit. The vendor would have netted closer to the original $4.5m.

Daniel McCormack

Managing Director, ACRES — Australian Commercial & Residential Group

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