- Originally posted by Terryw:Originally posted by The Mortgage Adviser:
……..
As for not paying a deposit, as a vendor, if I did not receive a deposit, I would not consider it a valid contract as no ‘consideration’ has been provided by the buyer and I would sell to anyone else who offered me more and paid a deposit. I don’t think I would lose in any court on the grounds of ‘no consideration’ by the initial ‘buyer’.
………Rob, I think you will find that consideration does not have to be in the form of a deposit. If someone has signed a valid contract, then the consideration is the promise of payment. So a deposit would not really be necessary.
But I am no lawyer.
Terryw
Discover Home Loans
North Sydney
[email protected]Thankyou terryw,
This is my point I some how failed to be able to get across.
Here in W.A if you put in your an offer to purchase it is just that an offer to “Purchase” (to go all the way to the end and purchase.)
Now that said, To get an out of an offer to purchase you must have “subject’s to” these “subjects to” are your keys out of the deal.
Ok we still have deposits, showing your commitment to the deal and so on.
But the offer , (contract) is a 100% valid contract with “NO DEPOSIT”
All our contracts have been “NO DEPOSIT” and we are on Planet Western Australia.
Agents May try to get a Deposit out OF Me (Us) but at the end of the day they know that the offer is a 100% valid contract with “NO DEPOSIT”You as the vendor have some options up your sleeve as well, you can tell this hoon with no deposit to go take a hike, But if this hoon is offering to give you all the cash your asking and this hoon’s subject’s to are not un reasonable then who would be the fool not to take this Offer.
Oh and by the way I learnt about “No Deposit” when working in Real-estate in QLD.
Regards.[oneeyed]
In my opinion, ‘consideration’ in contract law must be something of tangible value. A promise is not something of tangible value. In any case, I consider the ‘promise’ to pay a certain amount as the offer. For example…
Buyer A OFFERS Seller A 100k with conditions.
Seller A ACCEPTS Buyer B’s OFFER with those conditions.Where is the ‘Consideration’?
West, No Deposit has been around forever and a day. It comes down to negotiation and what motivates the parties. As I said earlier, I would not waste my time with someone who would not pay a deposit. The only exception may be where the person demonstrated they had a lot of equity available from where the funds were coming and were just illiquid at the current time.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksRob
“Consideration is the price paid for the promise”.
eg A agrees to sell X to B for $100,000.
Lets analyse this a bit futher. There are two parts:
A’s promise to transfer title of X to B.
B’s promise to pay $100,000 to A– B’s consideration for A’s promise is the promise to pay A $100,000 for X
– A’s consideration for B’s promise is transfer of title of X to B.Deposits don’t come into it. And I think there would be a valid contract whether a deposit was paid for or not (provided other conditions were met.
Accepting a nil deposit certainly wouldn’t be a wise thing to do however.
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
ps. I am not a solicitor so don’t rely on my post as I may be wrong!!!!!
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
I break down property contracts to include two parts. The first part is the exchange which I believe the deposit is the consideration. The second part is settlement where the obvious happens.
Another reason why I believe this is because a purchaser can pull out. The loss of deposit only applies in States where the legislation states this. Even WA has this after the standard subject to clauses are surpassed.
In any case, there may be legislation in place to cover the issue of no deposits as property contracts are the only ones that must be in writing.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksJust reached a price that both us and the vendor are happy with on a 3br double brick unit in complex of 9. Price is $112,500 and the RA is happy with a $2000 deposit. Most banks wont loan above 95% of the value of a property, so at this rate the deposit will need to be in the mid 5,000’s. What benefit do I get from only putting down a $2000 deposit to start with?Borg.
What’s the benefit to you Borg? Not much unless you have a few deals on the go at once and don’t have the cash.
We should not forget the standard contract for sale of land read in conjunction with the relevant legislation provides for remedies over and above the deposits.
I would not get to bogged down on that issue.
In the senario of falling prices the vendor may be able to seek specific performance of the contract. This would be a more suitable solution. The subsequent bankruptcy and any effect on this senario is a bit too complex to be lumped in here.
Cheers
Don, I think you have it back to front. The purchaser is the only one who can seek specific performance on the contract. The vendor gets to keep the deposit (and chase up to 10% of the contract price) and that is it. That is the point behind my argument of securing your entitlement by taking a deposit.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksIn NSW, the only thing a vendor can do when a contract falls over is recover the deposit they are entitled to – 10%.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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