Hi,
Hopefully someone here can help me out with my situation.
I accepted an un-conditional cash offer for an investment property, and settlement was SUPPOSED to be July 1st, 2010.
The buyer has said they are still looking for "finance?" and settlement has been delayed. I would think an unconditional cash offer would mean they have NO CHANCE of getting out of buying the property, according to contract law???
The buyers are currently paying $x amount per day interest, but I want to settle. I have just given them the mandatory 14 days to settle, but my question is….what are my options if they dont come up with the money???
Ive been told if they want out we can organise an out of court settlement for…say 10% of the propertys value, considering their deposit was very small at 1.5%.
Has anyone got any ideas about this???
Im about to see a solicitor, but thought I would ask here first.Thanks very much for any replies, I understand its not legal advice, just an opinion.
It will essentially come down to the contract that they have signed. Take a look at the clauses that deal with delays or exits. Assuming that they signed it (and it was all legit), then surely you would have legal rights. Are you using a solicitor for the sale?
In all honesty, forget the opinions – go straight to your solicitor!
It all sounds nice in theory but if they only had 1.5% deposit one would think that they might not have too much cash (might be looking for a 95% lend with FHOG etc).
Contract law / any law means diddly squat if they have no money. Even if a court orders them to pay 10% – if they don’t have it they can’t give it…
Did you use an agent?
If they were a cash buyer they should of had the depoist. If not confirmation of finance should have been required.If you used an agent they have let you down buy not qualifying the buyer. If you did not use an agent it is a good example of why maybe you should have used an agent…
If you go down the legal path do some homework. It they couldn’t afford to buy – make sure they can afford to settle any legal claim. Otherwise cut your loses and find another buyer.
Hopefully they come up with the finance!
The standard is that you can sue them for 10% – but this will depend on the wording of the contract. Did u have a special condition in there saying you will accept 1.5% but the full 10% deposit is due at settlement? You can also sue for costs.
But, as Banker says, you can get a judgment but this won't mean much if they have no cash or other assets. They will just go bankrupt.
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
A small deposit doesn't mean they havn't any money, A smart operator will put down a small deposit for a few reasons, why give someone else your money to hold onto, because if something happens and you can't get the funds well you may only loose a few thousand or if the agent goes broke then you will struggle to get your cash back and if you do it will take ages. So he/she may still have cash, try negotiate a deal with the purchaser and get as much cash as possible from them, but get your lawyer to do this.
But if they don't have any money and can't pay then there is no point in going to court as it will be expensive and the end result may mean your out of pocket, $5k $10kAgents are legally required to hold all deposits etc in a trust fund. If the agent goes belly up fair trading comes to the party (agents compensation fund).
You are correct in that an unconditional contract means that is is not subject to finance.
Generally speaking, and depending on the state, a contract for sale says that if a purchaser fails to proceed with a contract, they forfeit their 10% deposit. However, some recent court decisions have found that the purchaser only forfeits the deposit they have actually paid. Those cases have very specific circumstances that may or not be similar to yours. Just beware that just because a standard contract may say that the purchaser forfeits a 10% deposit, that may not necessarily be the case.
Your options are as follows:
1. Issue a default under the contract on the basis that the purchaser has failed to settle in time. This gives the purchaser a certain timeframe to remedy the default (ie, settle), failing which you will terminate the contract. The time to remedy the default varies from state to state.
2. Allow the purchaser to continue to find finance and upon settlement, pocket the extra interest incurred.
It might be worthwhile to talk to the REA to find out what the buyer is like, eg, do they appear to be financial. what are the reasons for not being able to get finance etc etc.
If I was in your shoes and I didn't need the settlement money urgently, I would let the purchaser continue to try to find finance for another month or so. If I thought that the purchaser wasn't going to be able to get finance, I would terminate the contract and put it on the market.
Just bear in mind that by the time you terminate, put it back on the market and find another buyer, it may take several months. It may be worthwhile just being patient with the current purchaser for a bit longer.
Cheers
K
Looks you need to go back to the market.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
