I need help! I bought a property in a NSW country town by auction from the NSW Dept of Housing. Six days later this property was vandalised. My bank valuer had not been to look at it yet. Now I have a big problem.
My solicitor is indicating that all the choices abelong to the Dept of Housing; and I have none, and the contrcat is binding and I have to continue with the purchase. However when I initially looked at the property and discussed it with my banker, he was happy to lend me the money. Now the property is no longer nice and also has the stigma/risk of vandalism, and he has indicated he is not happy to lend the money. I asked my solitior to convey this to the Dept of Housing, who are taking forever to respond. The Dept are getting quotes for the cost of the repairs and want to deduct them of the purchase price, however this seems unreasonable as I also had to ring builders in town to get compartive quotes (on advice of my solicitor), all the builders told me they have enough work for the rest of the year and I can't even get a quote done for another week!As such if I am forced to continue the purchase I will end up with a property that iIcannot rent out as I have to wait for a builder to become available. In the menaitme they have my 10k deposit.
Has anyone on this forum ever dealt with this, or would anyone be able to reccommend a good lawyer for me?
I no longer want to buy this property as cannot get finance and also was not intending to buy a property in such a sad state of repair. It seems quite unfair from the Dept of Housing to not just let me off the contract.Did you have a subject to finance clause? or even a building inspection?
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 have recently purchased a few properties from Department of Housing. We saw a few things we were not happy with in the contract, but as we bought at auction and could not make changes to the contract, we just had to take the risk that nothing happened to each place. It was a bit unnerving knowing that there was a clause somewhere that indicated that if anything is taken between the auction and settlement it is not their responsibility to fix or replace. I don't have any advice for you but I wish you luck. Your situation has made me think twice about buying straight from the Commission again.
There is no subject to finance clause, the housing dept uses their standard contract which I considered and even though I did not like it (especially the 28 day settlement) I decided to risk it. However there is a clause in it that says that prior to settlement the purchaser can inspect the property and it needs to be in the original condition (ie like at auction day). I just spoke to a few other solicitors, who all say that as the property now will no longer be as it was I should be able to get out of the contract. I suspect maybe my conveyancer is not able to deal with the complexity of the situation and will employ another solicitor if it is not sorted out on monday. I rang the estate agency manager and spoke with him, he indicated to me that the Housing Dept has the 3 options available and that they will offer me a choice between at least two of them and that it needs to be negotiated to everyone's agreement. So perhaps my conveyancer has not interpreted the contract correctly. Indications are either the Housing Dept repair the inside of the house completely as it is impossible to discern between original damage and last week's vandalism (and price of property stays as at the auction); or they deduct the cost of the repairs of the purchase price with a sweetener thrown in for the delay and hassle; or they let me out of the contract. As far as I know they don't have many builders so I suspect that if I don't take the sweetener deal (no thanks, the builders are booked out to the end of the year, I don't need a property standing empty) hopefully that will be the end of it. It has however been very badly handled and my property investor friends have watched on saying 'hmmmm don't think I will buy one of those'!
Dear Jensta,
How did your ex housing commissions work out?If there is a clause in the contract to the effect that the building must be in substantially the same condition as the day you signed the contract, then you have a way out of the contract.
In most states in Australia, the risk lies with the purchaser once the contracts have been signed. As soon as I sign a contract to buy a place I ALWAYS get insurance on it for exactly the reason you described above.
Good luck
K
Hi Zoe,
We've done OK so far with our properties. We bought 2 in country NSW that had boards on the windows to make it harder for vandals to enter but looked pretty damn ugly. At settlement we had no further damage to that existing at auction day. Rental yields are quite good but as yet have not found tenants (we settled 4 weeks ago). The problem is the houses are on predominently housing commission streets so others are reluctant to live there. Hopefully we will find tenants soon.
Just about to settle on 2 in outer western sydney. We've been out there a few times since the auction and it appears that the neighbours have helped themselves to the bins, some of the flyscreens and there are a few hooks around the building that indicate that something used to be there. Our agent told us to lock the screen doors after we left as the people in that street have been known to steal them if they are not locked. Fingers crossed all will still be in one piece for one more week for settlement.
FYI our valuations were conducted within days of the auction so we have had no problem at that end.
Why didn't you insure the property as soon as contracts were exchanged?
Not a bad idea!!
Hi Simon,
I did insure the day I bought, but insured it from settlement day onwards as according to my conveyancer the dept of Housing was responsible until it settled for the condition of the property. I guess in my ignorance I just assumed that if damage were done than I would have the option to get out of the contract. At the time of viewing the property I asked the agent about this; she told me that in the past when they have sold these and if they were vandalised prior to settlement than the purchasers were always let off as the Dept of Housing 'did not want to get a repuattion for being difficult vendor'.
Also Jensta interesing that you mention the boards, I actually requested boards to be put on asap to prevent this happening, as this appeared to be the only vacant house with no boards, again was told it is up to the vendor a(housing Dept) and they will get around to it. I guess one of the hassles of buying out of town, you can't just do a quick drive by and check that it has been done.
This would definitely be something I would recommend to future buyers
1) get boards as conditon of signing contract,
2) make insurance valid from day one, even if your conveyancer says you don't have to.Hi Zoe,
sorry about yr situation.
On the positive though if you are able to take up a possible option to still purchase the property a)having it fully renovated by the deprtment orb) purchase it at a much cheaper price allowing for extra equity for you after repirs done.
you may get an absolute bargain?!!By the way is this proeprty in a certain outback nsw town in the south area?
Its just alot of things you have mentioned ring a bell with some propertys that werre sold recently while i was in town and vandels came in the night of the sale(DHC)auction and burnt it .
any way just interested.all the best,
im sure yll get a fair deal in the end,but dont be anctious to get out at any cost as it might turn out to be a better deal in the end.Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Hi World Hunter,
Thanks for your thoughts. Unfortunately when I rang to get builder's quotes (to compare my quotes with agency quotes) 2 just laughed at me and said 'no way, we are way too busy' , a third was prepared to do a quote but said he was booked out until next year with jobs, so was happy to quote as long as he did not have to do the job anytime soon. As such even though getting a 'bargain', no point having an untenanted 'bargain', especially with the christmas/school holidays drawing near. Then I heard a horror story from a solicotor about the quality of these Housing Dept repair tradesman, one house had cardboard put in the walls (instead of gyprock) and was painted over, when tenants moved in they fell through the wall and injured themselves. Could you imagine! Then another thing that is really suspicious is that the damage was reported as being well over $5000, yet the quote comes in at $2800. And how interesting to note that the quote was obtained by the agent, the same agent that will loose their sales commission iffI get out of the contract. Another solicitor I just hired noted how a damage bill of more than 5% of the purchase price will let you out of the contract, so no wonder they quote ridiculously low! No doubt based on cardboard walls. Sorry, getting really cynical here.Worldchanger, what area are you referring to?
Sorry! Doing this at work so have lots of screens up at once….
Jensta,i was referring to broken hill NSW ,as it sounded like something sinilar that was happening out there after an auction recently.
Zoe ,you are so right in questioning
some of the "tradesmen" working for the housing commission.
I have met some of these guys and well i dont need to comment further than you have.I think part of the issue is alot of the tenants in these houses just wreck them evry few weeks litterally so they dont worry about the quality of the repirs as they will be back again to re do it in a short time.
But there are trademen available you just need to go to the local area and get to know some people and find someone word of mouth.Then you could on sell it even before renting it and make a profit.Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Hi guys,
Broken Hill has been mentioned to me several times (well more than several times) in my pursuit for a solicitor who can deal with this. Sounds like a lot of trouble there, lots of stories about places thrashed prior settlement. At the moment purusing the one (and only) quote, supplied by the estate agant on behalf of the Housing Dept to do the repairs. A glazier (yes! A glazier) has quoted $2800 to replace 5 internal walls and paint the patches on them. So much for getting a good builder, full paint and clean job! You have to laugh.Actually my on big tip for buying off the Department of Housing would be use a top notch solicitor, that way when it goes belly up you at least have someone on side.
At the end of the day, is buying ex housing commisson houses really worth it? I can understand looking for good cheap yielding properties but when the maintenance goes through the roof due to vandalism etc. is it worth it? please discuss further
I think buying ex-housing commission is worth it. I definitely wouldn't do it sight unseen or without doing some serious research into the area. Some of the properties are in OK areas, others not so good. Depending on what section of the Commission is conducting the sale, sometimes repairs are taken care of before the auction, e.g, one i recently purchased has the walls patched up and painted before auction.
The properties I recently purchased had boards on the windows so was more difficult for vandals to enter. Fortunate for us, there was no new damage to the properties on settement.
I guess there is always a risk in buying properties in low demographic areas, regardless of whether they have been purchased direct from the Commission or from a private seller. I have made between 40-60K on each property I have purchased, simply by picking them up cheaply. I have only had to spend between 2-10K on each property and they are now returning 8-9% rental yields.
Other investors I have spoken to have told me they would never buy this type of property, but it is currently working for us so it might be something we will continue to pursue. However, if you feel that you would worry too much about these properties sitting empty until settlement/tenants moving in, then maybe this strategy is not for you.
Well I am only starting out in this demographic, so hard to advise you. My first property is in a very nice part of town in a very classy suburb (bought as own home but moved out) The irony of it is that this place was damaged by bad tenants (during a domestic fight) and the agent gave them the bond back and did not tell me about the damage. It is now all sorted, but it did start me thinking that problems can happen anywhere, so why not go for the higher yields if you are going to be traipsing around Bunnings, make it worth your while…. But must admit this episode is testing my nerves!
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