Hi all,
I have a colleague with a frustrating situation. He has signed a contract on a house in Melbourne’s inner south-east. The property he purchased is an established house, with a strata title unit being constructed and separately sold in the back yard. He is not buying the rear house/unit.
There has been a delay in the construction of the rear unit and the release of the plan of subdivision, and therefore settlement must be delayed. However he has already given notice at his current rental and cannot get out of moving.
So… he asked if he could occupy the property until settlement. The vendor came back with a licence agreement requiring payment of $300/wk which is not taken off the final sale price to allow occupation. This is more than the house would have rented for, and it appears he lacks the rights of a tenant.
Is this daylight robbery? Or is the vendor likely to be just trying his luck.
Is this normally enough to warrant cancelling the original sale contract?
The second issue is that there is a sewer inspection opening from the rear unit projecting into his carport. This impacts on the clear width of the carport, and he is concerned about the risk of damage. This was not on any of the information provided at the time of signing the contract.
His solicitor isn’t being as helpful as he hoped, therefore I’m referring to the brains-trust of propertyinvesting.com!
Any comments would be greatly appreciated!
kavan applegate
architectA license agreement is the normal way a delayed settlment is handled.
You are correct, it does not give your friend the normal rights of a tenancy agreement.
The reason is that if he fails to settle, he can be kicked out (I know he wants to settle, but things happen.)
Since the delay is due to the landlord not being able to settle, he should be offering a preferential rental not a punative one.
As for if he can get out of the contract, it is depends upon the settlemnt terms. It usually says something like 14 days after issueing of the new plan of subdivision, so he may not have an out.
Michael Yardney
METROPOLE PROPERTIES
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FREE subscription http://www.metropole.com.auIt may be enough for your friend to cancel the contract or sale – if that is what he wants. It would depend on the wording of the contract. Really this is an off the plan type purchase (it is a subdivision) so the vendor would likely have covered for delays in the contract.
You friend may have to seek the advice of a better solicitor.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
BTW, there was an article about getting out of contracts in a recent API magazine.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Has he tried negotiating with the vendor to reduce the rent or have it accredited to the sale?
Without knowing the details of the current property contract it’s a bit hard to comment – but it sounds to me that the vendor is in breach if the settlement is delayed because of his building works – which should leave your friend with the upper hand.
Maybe he should get another solicitor if his current one is of no use.
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