Hi All,
I kind of need a quick response on this one. I am in the process of purchasing a property (I settle next week), however there have been soem hicups along the way. The garage attached to the house doesn’t have a council permit. I’ve made it a condition in the contract that I will only settle if the contract is acquired by the vendor. Anyway, the vendor has agreed to get the permit however the process is taking it’s time. The council and builder will be inspecting the property a few days before settlement. It looks highly unlikely that the permit will be obtained before settlement, so the vendor’s solicitor has decided to get creative. Settlement date will still be next week, but the vendor’s solicitor will hold back a sum of money (a few thousand) in their trust account until the vendor gets the permit. If the vendor doesn’t get it, I will have access to the money to get it myself, where any left overs will be handed over to the vendor.
My concerns are:
a) What if the vendor doesn’t get the certificate before settlement. Once the property is transferred into my name, doesn’t this mean the vendor has no interest in the property, hence doesn’t need to obtain the certificate if they don’t choose to?
b) What if I am left to get the certificate and $4000 isn’t enough to cover expenses?
Now I have already had a building inspection done myself. The builder has advised that the garage appears to be legal, i.e. all work was done as it should have. I am just a little worried that the vendor will choose not to get the certificate once I settle, therefore I will be left will the responsibility of chasing things up with builders, council, etc.. This is something I would rather avoid if possible.
Does anyone have any suggestions?
Regards,
OzhanI would delay settlement if possible or get your solicitor to hold back whatever you would estimate the garage itself is worth to rebuild, until the matter is sorted out. There can be many issues that need to be rectified and I wouldnt rely on the builder you had look at it that said it appears ok. depth of footings, setback from boundaries etc all need to be considered.
theBuildingSurveyor,
Thank you for the reply. I’ve actually been thinking about pushing the settlement date back from the start, but wasn’t sure how easily it could be done. Can the solicitor do this easily? Also, will I incur any costs at my end? I should chase this up with the solicitor.
Thanks for pointing out the issues that may need attending to. I now realise the potential problems that can arise from this.
Regads,
OzhanIt is common for sums of money to be held in a solicitors trust account subject to completion of works etc.
I personally would want the monies held in “my” solicitors trust account and not the vendors solicitor.
The amount should be inflated to cover the maximum amount required to complete any necessary works. This provides an incentive for the vendor to do something about it.
Check if your contract contains a default interest clause. If one party cannot settle as per the contract there is a provision to charge default interest until the terms of the contract are complete.
Another suggestion is to use this problem to discount the purchase price. Last year I managed to discount the price of a building by $10k because of a leaking roof – it cost me $500 to fix.
Cheers
JeffThanks ibuycashflow,
I’ve just shot off an email to my solicitor asking for clarifications. My solicitor has said that if I do not settle on the settlement date in the contract, I may be liable for penalties. However, I made it a condition in the contract that vendor must get the permit signed off before settelment date. So wouldn’t this mean the vendor is in breach of the contract? I am chasing this up. There is a default interest clause in the contract, but I am not sure who would be liable to pay the interest (?)
Regards,
Ozi
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