What is a land purchase agreement, as it relates to Epcon Communities franchises?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
While, currently, most franchisee purchase raw land for their project, you may purchase developed lots from a land developer or other seller for your project. The most common way of doing this is through a land purchase agreement (also called a real estate purchase agreement), in which a franchisee has an exclusive option to purchase all developed lots constituting the franchisee's project on a defined "takedown" (purchase) schedule. Typically, Land Purchase Agreements require the payment of a deposit to the land developer or seller that is between 5% and 10% of the total value of the agreement. The value of the agreement is typically calculated by multiplying the number of developed lots to be purchased by you by the purchase price attributed to each lot. This deposit is usually returned to you as credits as you close on the final five to ten lots of your project. The amount of the deposit reflects the deposit for the developed lots and for the community amenity. (Note 5 below includes information regarding this amenity).
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 22–32)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, a land purchase agreement, also known as a real estate purchase agreement, is a common method for franchisees to acquire developed lots for their projects. This agreement grants the franchisee an exclusive option to purchase all the developed lots within their project according to a defined schedule for purchasing the lots.
Typically, these agreements require a deposit to be paid to the land developer or seller, usually ranging from 5% to 10% of the total agreement value. The agreement's value is calculated by multiplying the number of developed lots by the purchase price of each lot. This deposit covers both the developed lots and any community amenities included in the project.
This deposit is often returned to the franchisee as credits when they close on the final five to ten lots of their project. While most franchisees currently purchase raw land, purchasing developed lots through a land purchase agreement can reduce the time needed to bring a project to market, as these lots typically have already been zoned, entitled, and developed with the necessary permits for construction.