I need some advice on a property I am looking to buy. The vendor is having financial problems and wants to sell before the bank takes his property. He is living in the property but it is not complete and doesn't have an occupancy certificate. Questions: Can I still claim the 50% new house stamp duty discount? I am an honest person and would like to offer him a fair amount for his house and finish the work myself and also to allow him to stay in the house as a tenant. Is it worthwhile offering him a lesser amount (enough to cover his loan) and allow him to stay rent free for a set period to get his finances together? Should I offer him a lease option?
Think i would give it a wide berth.
Unless you are seeking a very low lvr yourself you may that your Bank wont fund the deal if the property is only part complete.
Richard Taylor | Australia's leading private lender
Hi Tim,
There are plenty of these partially completed projects around (especially post GFC) and although they may seem compelling, there are a lot of complications. As well as the works to be completed there are also warranty issues, insurance, planning, and building control issues to attend to. The documentation can be expensive and time consuming, and as Richard alluded to, the bank will make their own judgements as to these risks.
Unfortunately what is needed is time to get the documentation and risk assessments in order. And time is usually what is most precious with these deals – the vendor wants a quick solution.
Thanks Christian and Richard. The house itself is completed but the driveway has not been concreted and the landscaping and a rear deck still need to be put on, does this change things?
Sounds like it's not too tough then. What you need to do is ascertain if the documentation is in order. Is there a current building permit, and if so what needs to be done to get a certificate of completion? Is there warranty insurance – you'll need this to be able to settle the property simply? From what you have said it seems that the documentation could be put into order fairly easily allowing for the property to be transferred. If you are serious about the deal you'll need to see your solicitor checks the docs thoroughly.
You have to be careful in buying something like this. If he goes bankrupt the creditors may start forcing and investigation of recent sales of his assets and if he sells it too cheaply it could cause you problems – may be unlikely, but still possible.
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
The contract of sale should have the building permit in it. You can also special condition a sale based on the provision of a certificate of occupancy by a certain date, otherwise you can walk away.
But based on his apparent financial difficulties, I wouldn't be giving him a deposit directly – his agent/lawyer should hold this on trust in case the contract fails and you want your deposit back.
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