Hi, This is the first time I have sold a house and I am struggling a little bit. It has not been a very smooth ride so far. The date for which the purchasers needed to have finance arranged has now passed but they still have not got it. They failed to notify anybody, it took me calling my conveyancer + real estate agent to find this out. Apparently they have 2 properties at the moment but both came back from valuation at less that what they got their pre-approval with. We had several decent offers on our house, but theirs had “pre-approved” finance on it with the best sale price. So naturally we went for that one.
Anyway, now we have arranged the purchase of a block of land (deposit paid), arranged a rental for us to move into as well has many other things that have cost money.
Our real estate agent had a long talk with the couple who explained that they are going for bridging finance now and trying to sell one of the houses. Settlement is 15th of January, and we are relying on the funds from our sale for our new block.
Is there any sort of protection for me? Can i keep their small deposit to cover my costs? It seems to me that they are the ones protected and stand to loose nothing. They have waisted a month of my time + i could have taken any number of other decent offers. What happens if i have to put the house back on the market, and i can only get a lot less that all the other offers i had previously? I could loose thousands because of these silly people.
Please help? tough times.
Thanks.
damn, mods move to help needed forum
You do not have a binding contract until all of the conditions are met. They probably should have notified you and asked for an extension or withdrew from the contract – it technically could be binding because of this and you may be able to sue them for the full 10% deposit. Best to check this with your lawyer.
But realistically it isn't sold yet so Keep it on the market and assume they will not go ahead. If you find another potential buyer notifiy the other party and see what they can do. Don't rely on the settlement for this one to happen on time as it probably won't.
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
ive probably lost all the other interested parties by now because its been a month since signing. When does their deposit become mine? I cant understand how these people can sign, pay a deposit, then when they can get finance they can just walk away no penalty. Mean while, i have lost other potential cashed up buyers, marketing, rent possibly my deposit on another property. Seems like i have no protection against people who dont care.
But that is what you agreed to by allowing a finance clause. You could have said you would only accept an unconditional offer which would mean the contract would be binding on signing and exchange.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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what about the fact that they did not notify us that their finance is not approved by the cut off date? 22nd of dec? Is this a breach of contract meaning we keep their deposit and recover costs?
The also put “pre approved finance” on the offer form which was obviously false.
Hi – I work in conveyancing in Qld. Pre-approvals are all well and good, but really aren't worth much at all. A buyer needs to have full unconditional finance approval. Here in Qld, you are not entitled to the deposit if the buyer has not approved finance – your only option is to terminate the Contract for their failure to provide evidence of approval of finance (or ask to extend). At the end of the day, you signed the Contact with the "subject to finance clause".
Ok, i just opened my mail. I have from my conveyancer a “memorandum of transfer” which has been signed and witnessed by the purchasers. Its just waiting for our signatures. Its a form T1 if that means anything. Surely this is a breach of contract?
I cant understand how i can loose so much, but they dont loose anything. I have no protection but they walk away with all their money scott free.
Not sure why they have signed that already when they were still waiting for finance.
I think you will have lost because you thought you had a binding contract when you didn't. You have assumed too much. Did you get legal advice on signing the contract?
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
why would i need legal advice on a standard contract? Subject to finance is pretty standard. But the events that have followed, such as not notifying us that there is a problem with finance before the due date, and signing the memo of transfer before finance is arranged is not standard, and i would have thought a breach in contract to the point where perhaps their deposit is forfeit?
What is the memo of transfer? If i sign it are they in a binding contract regardless of finance? Or are they breaching the contract by signing it before they have finance?
You should seek legal advise asap. Usually finance clauses have an expiry date well before settlement. If you haven’t notified them that finance was not approved then you may be locked in to the purchase. Depending on which state you are in you may have just 14 days to settle if they issue a notice to complete. If you don’t settle in the time they can keep the 10% deposit (or sue you for it) and try to resell and sue you for any short fall if they sell it lower. So quickly see your lawyer (not conveyancer) and take some advice.
Terryw
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[email protected]https://www.propertyinvesting.com/forums/property-investing/help-needed/4329862
What about this terry?? This is from the other persons perspective…. not related to mine, but similar.
You should never sign a contract without getting legal advice. you had better talk to your lawyer asap.
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
Delamar wrote:You should seek legal advise asap. Usually finance clauses have an expiry date well before settlement. If you haven't notified them that finance was not approved then you may be locked in to the purchase. Depending on which state you are in you may have just 14 days to settle if they issue a notice to complete. If you don't settle in the time they can keep the 10% deposit (or sue you for it) and try to resell and sue you for any short fall if they sell it lower. So quickly see your lawyer (not conveyancer) and take some advice. Terryw Discover Home Loans Ph: 02 96333 599 [email protected] https://www.propertyinvesting.com/forums/property-investing/help-needed/4329862 What about this terry?? This is from the other persons perspective…. not related to mine, but similar.Yes, you could have a binding contract if they didn't notifiy you they were pulling out. You had better talk to a lawyer, not conveyancer, about this as you may have to sue them.
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’m surprised that the onus would be on Delamar to sue. Surely the other party has paid a deposit that you are entitled to if they never settle. It would be up to the other party to sue you for the deposit back if they felt they had a case against you for breach of contract.
Note I am just saying how I think the system should work, not how it does work. If it doesn’t work that way the seller has no protection and the deposit is meaningless.
They would have paid a small holding deposit which she would be able to keep, but not the full 10%.
Delmar, please tell us the wording of the finance clause.
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
Special conditions
(clause 14)SC1 Finance
SC1.1 This contract is conditional upon the Purchaser obtaining, on or before the date specified below, approval in writing for a loan in the amount specified below (or such lesser amount as the Purchaser may accept) at the interest rate specified below and otherwise on such terms and conditions that the lender requires acceptable to the Purchaser, to assist in the purchasing the property (“the approval”). Upon notification of the approval to the vendor this conditional provision will be satisfied and notwithstanding that the lender may subsequently withdraw the approval the Purchaser will be bound by this Contract.SC1.2 The purchaser will use best endeavors to obtain the loan.
SC1.3 In the event that approval is not obtained on or before the latest date for approval and provided the Purchaser has not waived this special condition and communicated such waiver to the Vendor in writing then either party (but, in the case of the Purchaser, provided it has complied with SC1.2) may immediately terminate this Contract by giving notice in writing to the other party.
SC1.4 In the even of termination of the contract pursuant to SC1.3 and provided the Purchaser has complied with SC1.2 all monies paid by or on behalf of the Purchaser shall be repaid to the Purchaser.
SC1.5 In the even of termination of this Contract pursuant to SC1.3 in circumstances where the Purchaser has failed to comply with SC1.2 the Vendor will be entitled to the deposit which is forfeited and proceed against the Purchaser for damages for breach of contract.
Latest date for approval : 22nd December
This doesnt mention anything about what happens if the purchaser neglects to notify anyone about failed finance, It just states that they have to do so on of before the date. They have continued with the sale like they have finance with the signing of the memo of transfer. These clowns have already started sending their mail here also.
What happens if i sign the memo of transfer and send it to the conveyancer? Does this mean they have my house with out finance, or does it mean they are bound to the contract regardless of their finance?
1.3 says they may (or you) terminate the contract in writing. Did they do this? If not you may still have a valid contract.
If they did then it looks like the contract is over.
The transfer doesn't really have anything to do with the contract.
You had better see a lawyer asap – but they will all be on holidays till mid Jan.
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
And what state are you in?
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
Sorry, what state is the property in?
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
Its in SA. And no they have not terminated the contract they didnt even notify anybody until i asked. They are trying to sell one of their houses and obtain bridging finance. Isnt bridging finance even harder to get than a normal loan?
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