[grrr]
Hey all,
I need a solution please.
I have recently had a drama unfold that I simply cannot believe!I signed a contract for a house and paid a deposit of 5% with a 45 day settlement.
Settlement was supposed to happen on June 1 2006, However I received an email from my solicitor stating that the Vendors lender is not discharging the mortgage as the sales price did not cover the outstanding mortgage + final discharge fees etc.
My Solicitor says that I can either:
1. Sue the vendor for damages including 12% .annum on the outstanding sum.
2. My deposit has been released to pay commissions to real estate agents (should havebeen paid by vendor).I actually did a sales history search prior to placing my offer and found the sales price to be $1,000 less than they paid. I was thinking that the lender would have required a sum between 5-20% from the vendor to secure the funds….. Unless the vendor has cross collateralised the house with another transaction.
My questions are… who is at fault here?
Have I done my doe?
What could I have done to prevent such a thing happening?
What can I do to resolve this?
Can I stamp a black mark on this guys credit rating?
Would it even be worth going through the process of reclaiming my deposit + Expenses + damages?
Can I place the deposit in the hands of the debt collectors?I need to act fast I think and would appreciate any suggestions or similar experiences to reflect on and get some perspective!.
Cheers
KiwiLooking For 10 – 15%+… on your Cash? goto:
http://www.kiwilogic.bizHi Kiwi
This actually happened to me a few years ago. What I did was negotiate with the agent to take a lesser commission (he wanted to save the sale and get at least something out of it).
In your case you may be able to do the same, depending on how much the shortfall is. You can get a copy of the mortgage throught the land titles office, so you know how much you are dealing with.
The owner may have got a 95% loan initially, and then an increase while the market was high. Then the market dropped.
There is not much you can do. Either give up or complete the purchase by putting in more money, and then chase the remainder from them.
You cannot just put something against their credit file. You will first need to take them to court, sue them, and get a judgement – should be easy to do on your own.
Terryw
Discover Home Loans
Parramatta
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http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
My deposit has gone ….. Should my solicitor have done this search to protect me? Or is it something I should have done?
Thanks
ShaneLooking For 10 – 15%+… on your Cash? goto:
http://www.kiwilogic.bizKiwi
Who approved the release of deposit?
The deposit was used to pay agent’s costs, so what happens if the sale falls through? Agent will probably have a clause in there to enable them to keep the deposit. You would have to chase the vendor for it.
Don’t think you can blame the solicitor for anything.
How much is the shortfall?
The lender won’t be happy either. They may have to face a loss if they foreclose on the property and then sell it for less, so you may be able to negoitate with them. You can find out who the lender is by doing the mortgage search.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
Can the agent take the buyer’s deposit even though the sale will not go thru? Is this the case in all states? How can you avoid it happening again?
Sorry this is happening to you Kiwi and thanks for sharing your situation with us.
Ros
Hey All,
I have looked through my sales contract (NZ Transaction) and the agent must get thier commission payment from Vendor … not Buyer … however they have released the deposit to the vndors solicitor and they are trying to find out where it is.
Cheers
KiwiWhy Rent? Rent 2 own!
http://www.rent2ownaus.comHi Kiwi
I’m flaberghasted that this situation came about. More so that a bank can refuse to release a mortgage should the sale price (+fees) not cover the mortgage. I would have thought the bank would have no choice but to release the mortgage and go after the vendors for the difference post sale. Obviously this is not the case. Also that your deposit is not refunded in full as you are not the defaulter in the contract. Your solicitor should be able to recover your deposit in full….although I imagine they will take their fees.
Keep us informed of your progress as I’m interested to see where this goes.
Ben
Sorry to hear of your situation Kiwi,
Thank you for sharing and providing forwarning for others, tho I can’t see how this could have been avoided. I’m surprised anyone would accept an offer that didn’t cover their mortgage![confused2][offtopic] Terryw,
You mentioned that we can do a mortgage search, forgive my ignorance, but where and how?Cheers4Now
MichelleHi Kiwi,
Wow I also didn’t know this could happen. I just assumed like Ben that the bank would chase the vendor for any shortfall. Do you know how much short the sale is from the mortgage, I mean how much are we talking about here $5000, $50000 or ????
Michelle you can do a titles search yourself (for a fee) through either RP Data or ABR.Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”1. Instruct your solicitor to get your money back, thats what they are for to protect you.
2. The 5% deposit must remain in a solicitors trust account until settlement, if settlement does not occur you get your money back.
3. You can negotiate with the bank, and any short fall could be covered by the vendors, other wise they will go further into debt and incur more cost.
D
Hey Kiwi
Interesting situation, all sorts of surprises pop up in this game aye?
All the best in finding a solution…..thanks for sharing.Hey all … UPDATE!!!!!
***TRANSACTION COMPLETE***
All Sorted out now. Vendor got accross the line and we got compensated for the delays.
Cheers
KiwiWhy Rent? Rent 2 own!
http://www.rent2ownaus.com
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