3 years ago I put a deposit on a block of land in Stage 8 (the last stage) in Tarneit, West Melbourne, that was to settle in 4 years. The developer informed me 5 mths ago that Stages 7 and 8 were to be developed before Stages 5 and 6 because of connection of services.
This has meant that settlement has been brought forward by a year and caught me out with some of my loans fixed until Jan 2012 so not being able to refinance without it costing me $15,000.
I stand to lose my deposit of $16,500 because of this. The settlement agent rang last Friday to let me know that settlement would now be on 3rd August 2011 (instead of 11th May 2012). I have not received this information in writing (surely that is necessary). I have been trying to find a nominee to take over the contract over the last few months and in discussing these changes with Real Estate agent and builders in the area, they think it sounds a bit dodgy.
If there is a Property Lawyer out the that knows the procedures in this situation I would welcome your advice.
Kind Regards
AnitaHi Anita
I'd suggest you talk with Lewis at:
Lewis O’Brien & Associates
Suite 113
89 High Street
Kew Victoria 3101phone: 03 9888 6388
fax: 03 9888 6366
email: [email protected]Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Thank you – I will. I hope he will be able to help.
Cheers!
AnitaI would have thought that if you have a contract with a [fixed] settlement date in 2012 then that is the date and not a day sooner UNLESS you agree (in writing)?
Re-read your contract and tell us what is says please.Colin,
It probably says something like settlement will take place within 21 days days of XXX. With XXX being registration of strata plan etc.
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
Sounds a little spongy to me…..check it out quick as a change of date of 12 months is not 'helpful'.
Very common with off the plan as the completion date is uncertain when entering 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
Thanks Colin and Terry
The Contract says “Settlement Date shall be the date upon which vacant possession of the Property shall be given by the Vendor to the Purchaser namely upon acceptance of Title and payment of the purchase price in full.
Payment of balance 14 days from the date upon which the Vendor’s Solicitor notifies the Purchaser or the Purchaser’s Solicitor that the Plan of Subdivision has been registered.”
However, when I complained that I had purchased in the Final stage of that development (Stage
and now Stages 7 and 8 were going to be settled before 5 and 6, this is the response I received via email from the Solicitor:“When you purchased in May 2008, we were advised by our consultant team that it could take up to 4 years to complete the entire project with the target of stages 7 and 8 being the last stages. We had to advise clients due to legal sunset clauses in the contract of sale that would be the maximum completion timeframe and this was the best estimate 2.5 years ago, however we have been able to move abit quicker through the civil construction stages. We were advised by our consulting engineers that stages 7 and 8 need to be completed before stages 5 and 6 due to a variety of reasons that mainly concern the connection of services, drainage and roadways with our neighbouring development at The Reserve. The settlement of stages 7 and 8 will be around May 2011, 3 years from when you purchased instead of 4 years as we believed in 2008. This is an extremely long settlement date, and I will be sending through the details of our preferred finance brokers in the new year.”
Do you think I have good reason to argue that I should get my deposit back ? I am running out of time now to get a nominee and will not be able to settle.
Regards
AnitaAnita,
You are in a binding contract and you agreed to the terms of the contract. There was always a possibility that they would settle early.
So I don't see a way out, unless the vendor has slipped up in the preparation of the contract and it was incomplete. Or the plan has been changed greater than the accepted amount, or the contract wasn't signed properly etc.
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
Hi Anita,
I sent you a private message in your inbox to discuss further.
Cheers,
MattWhen were you advised of this change in settlement date? It appears that they MUST have known for quite some time of the change in completion dates and have failed to properly advise you ASAP.
Note: Is notification by email an approved method of notification within the terms of your contract? If not, then the clock may be able to be 'reset'.The developers have made a 'representation' [which you relied upon], that "the target of stages 7 and 8 being the last stages." You have relied upon these facts, namely that the projected would be completed in 2012 AND that stages 7 and 8 would be "the last stages". Added to this is the possibility that they have failed to properly advise you of any change in timing. Each of which may be grounds to:
A. Delay payment until 2012 or
B. Recind the contract in full (with a return of your deposit [plus interest?].As for th terms of the contract, it required three parts to complete:
"Settlement Date shall be:
A. the date upon which vacant possession of the Property shall be given by the Vendor to the Purchaser namely…
B. …upon acceptance of Title and…
C. …payment of the purchase price in full.
If each of these three things do not happen, then the settlement date may be postponed.Raise these issues ASAP and suggest that you would be willing to;
A. Complete the transfer at the new date but with a price REDUCTION of $15-20,000 or
B. Completing in 2012 as origionally agreed (noting the above material re changes in the terms of the contract and the represenations of their staff).
C. Taking this matter before the courts (which will cause delays of at least 2 years).Thanks Colin
Do I raise these issues with the Developers Solicitor or the conveyancer? If I suggest going to court with it how do I go about that and at what expense? Would it just be in the small claims?
Bear in mind I am in Perth.
So grateful for your advice.
Anita
Remember, every time you contact a [your] lawyer it costs 'you' money. Every time their lawyer gets involved, it cost 'them' money. So, if you send a letter to the seller [NOT their lawyer], they will probably (in the end), send it to their lawyer, all of which takes time (using the normal postal system). This can run into weeks and months as you go back and forth with questions, answers and clarifications…something they will not wish to drag this out over months. This could drag out the whole process until Jan 2012, your original settlement date.
Who is paying and instructing the conveyancer? If its you, instruct them to stop any further action unless and until this matter is sorted out and they receive written instructions from you [via registered post].
The suggestion as to going to court is only as a delaying tactic…which will cost them lost interest from now until settlement. If you loose, you will be liable for your [legal] costs, their costs, plus interest. But I suggest that it will never come to that.
Depending on the purchase price of the property, it will probably end up in the District Court (mid level in the legal system).
Going to court also takes a LOT of time away from everyone's normal business (making money) which is NOT paid for/compensated for by the courts (except for the lawyers 'reasonable' fees, as decided by the court).You can preempt them as well by making an offer [with an end date for acceptance] to settle (at X less the $15-20,000). If it looks like going to court, make this offer ASAP; this will take the wind out of their sails and be looked upon favorably by the courts.
Most courts will not allow costs if you made a 'reasonable' offer (say within 10% of what may be expected) which is rejected by the other party but later found to be adequate. Courts do not look fabably on any party (th seller) that fails to accept a reasonable offer and ends up wasting the courts time.
Most developers are also looking to settle each stage ASAP so they can get the cash and bank loans to complete the entire project; they longer the delay on your property, the longer the delay on completing stages 5 and 6 [with how many properties?].It doesn't appear that the settlement date has changed. The settlement date was dependent on the date of the plan of sub-division.
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
have you seen a registered copy of any sub-division plan? If not, then they have not completed their side of the deal so no settlement is yet required.
Iwould still seek compensation should they wish to push the matter and delay as long as possible.
Is the property a good deal? Can you make money on it by selling/flipping BEFORE the date of settlement? If so, go for it and still make some $.Hi Colin
I have not seen a registered copy of the sub-division plan. I have been in contact with Lewis O’Brian who was recommended by Paul Dobson and he has been extremely helpful. I have also taken your advice and tried to negotiate with the Developer solicitor but he was very blunt and would not enter into negotiation with me and then hung up on me!!! I have gone back to the guy who sold me the block in the first place and he is going to look into what he can do for me. I am hoping that I get somewhere with it before I lose my deposit!..
Anita
But did your lawyer get a copy of the plan?
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
Hi Terry
My conveyancer is the person the developer recommended so perhaps she has – as I am in Perth and they are in Melbourne. She just called me last Friday to say that the title had been registered, but I do not have that in writing still, not even an email. I thought that this would have been necessary, to be honest. Should I be using a different conveyancer?
Anita
As long as they send items to your conveyancer it will be enough. The same as sending them to you.
They should be acting in your interest and should be independent of the developer too.
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
If you want to delay further, sack the conveyancer the wait for the seller to contact you directly. They MUST communicate that to you in writing.
I would also suggest that their 'appears to be a conflict of interest' with the seller recommending the conveyancer (they must have done work with them before and wish to do work with them again in the future). You need somebody working for YOUR interests, especially if you are paying them out of your pocket. Ask them (in writing) how many other projects they have dealt with, with the same seller; over what period of time, how many millions of $'s in projects has that involved? If they refuse to tell you (due to a 'conflict of interest' or 'privacy issues' you have your answer. If you suspect a conflict of interest, you may have grounds to NOT pay them any fees at all, including costs incurred (search fees etc).
By sacking them, they whole process starts again from scratch…delaying the process further.Forget going thru their lawyer; as you see, they do not appear to be dealing with you in good faith.
The seller has an obligation to contact you and to provide ALL the material matters withing the contract BEFORE you have any obligation to pay.
Before they can make any attempt to 'take away' your deposit, they must do everything to abide by the terms of the contract; it required three parts to complete:
"Settlement Date shall be:
A. the date upon which vacant possession of the Property shall be given by the Vendor to the Purchaser namely…
B. …upon acceptance of Title and…
C. …payment of the purchase price in full.
If each of these three things do not happen, then the settlement date has to be postponed.Stick to your guns in regard to the 'representation' that the seller's reps mad you you, that the project would be completed in stages with yours completed last. This MUST have also been set out in writing in their sale to you?
If they were to change the timing of settlement in a major and material way by the change of stage timings, they should have informed EVERY buyer at the time of that decision in writing. This would be easy to prove in a court of law via minutes of directors meetings, council applications, communication with their builders etc.
As for the 'deposit', is it a 'part payment' or a 'deposit'? There is a difference and will have different effect as to the handling of the return of the funds if the sale is not settled or they wish to retain the funds.
If memory serves me, a 'part payment' may be retained (but only up to the value of the difference between your buying price and the eventual sale price to another buyer; which they MUST make every effort to get the MAX price so as to reduce your losses) v's a 'deposit' that must be returned in full to you.Before they can terminate the contract, they would also have to send to you a 'notice to complete' within 14 days (usually, read the contract). This will again give you additional time, time that they do not want to waste as itmeans additional legal costs and lost interest and possible los of additional bank financing to complete the last stages of the project.
What does the contract say in regard to the time frames to make good settlement after they have registered the project etc?Only deal with the seller direct (in writing). Write only to the CEO, the person that has the power and authority to make decisions, anyone else is a waste of time and effort.
If their lawyer contacts you by phone, refuse to talk with them but ask them to put their communication in writing. Always keep a diary of anything said; write it down immediately the call is completed noting the date and time (start and finish). Use words like…"They said 'words to the effect of'…."I said 'words to the effect of'. It is NOT possible to remember 100% of any conversation.
Always follow up any conversation with a written record (by 'snail mail') to the other party as a record of conversation (for possible later court use). This will ensure that things do not get 'lost in translation'.
Notify the seller that all communication must be sent to you by POST, specifically excluding email as a means of communication; this will slow the process up further as 'postal' delivery isassumed to have taken place 2 days after posting but email is instant. This will add at least 4 days to any communication (almost a week each time).At the very end, offer to settle immediately BUT with a $15-20K DISCOUNT, noting that you have incurred additional costs due to the MISrepresentation of the seller (in that your property would be the last to be completed). This is your trump card; play is hard, play it often, stick to it.
and now Stages 7 and 8 were going to be settled before 5 and 6, this is the response I received via email from the Solicitor:You must be logged in to reply to this topic. If you don't have an account, you can register here.
