Buyer unable to get finance

Discussion in 'Legal Issues' started by CCHO2015, 29th Mar, 2019.

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  1. CCHO2015

    CCHO2015 Member

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    It's been a few weeks since the offer of the house became unconditional. However, buyer is requesting for further extension (for the 3rd or 4th time, hence they are paying penalty interest at present).

    Prior to contacting our conveyancer I thought I should ask on Propertychat what options we have as it is getting quite frustrating for us.

    I an starting to think what if they never get finance : /

    We were really hoping to sell the IP but now the market has changed. If we sell to another buyer in the current market we would make a loss of approx 50k or more. I heard from family friends that the buyer may have to pay for the loss we made. Is this true?

    Also, do we have the right to say that we don't want to sell anymore? Half of me is saying just rent it out again and plan to sell in the next boom do avoid all the headache.

    Seriously..if the buyer is struggling to pay even the deposit I don't know how they are going to pay for the currently penalty interest on top of that.

    Fingers crossed everything will go well for the buyers but I thought I should ask here if anyone had similar experience and what options they had.

    Thank you.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    No one here has seen your contract so hard to answer. You might be able to terminate the contract, keep 10% deposit (you imply, but don't say they haven't paid this), sell it and then try to recover any shortfall.

    Or you could just terminate and give them back their deposit.

    Ditch the conveyancer and get a lawyer.
     
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  3. Marg4000

    Marg4000 Well-Known Member

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    Contact your solicitor to establish whether you have grounds to rescind the contract.
    Marg
     
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  4. CCHO2015

    CCHO2015 Member

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    Thank you.

    Re deposit, no no deposit paid yet :,/

    Didn't realise how stressful selling is compared to buying..
     
  5. neK

    neK Well-Known Member

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    Why would you go unconditional without a deposit ???
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    That's a game changer.

    No deposit = they can't be serious. If they walk, you've lost alot of time and now are in a falling market.

    Either they stump up the 10% immediately (possibly more if they are after a licence) or you should terminate them and cut your losses.

    What sort of agent would get you to commit to a deal like that?
     
  7. CCHO2015

    CCHO2015 Member

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    Just heard back from the conveyancer:

    As the purchaser is default, you may issue a rescission notice at any point that you wish to end the contract & retain the deposit if the purchaser not be able to settle within 14 days of serving the notice....

    If we choose this option would the conveyancer chase the buyer for the deposit?

    My partner's been involved with the agent so I don't know the full story of how we ended up in this situation. I think the initial offer was subject to finance but after a month or so, if became unconditional as they were unable to settle hence the penalty interest commenced.

    It's all new to us..just never expected anyone to purchase house without finance sorted : /
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Conveyancers are not lawyers, they just transfer the title from A to B.
    You should seek legal advice.
     
  9. euro73

    euro73 Well-Known Member Business Member

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    What Terry said . I mean like, Monday morning .
     
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    It seriously makes me wonder whether they are able to enter into the contract if they have no deposit at this stage without taking from their super.
     
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  11. geoffw

    geoffw Moderator Staff Member

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    For the others - is it common to go unconditional without a deposit? I would have thought it inadvisable at minimum. When we sold, the purchaser offered 3% deposit, our lawyer told us to accept a minimum of 5%, as the REA earned their commission when it went unconditional.
     
  12. willair

    willair Well-Known Member Premium Member

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    The main disadvantage of being a real estate agent that's starting out in the game is,other people pay for their mistakes while they build up their reputation..

    As a lot of investors will find out if Labour wins,very easy to buy ,a lot different to sell..
     
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  13. Stoffo

    Stoffo Well-Known Member

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    I have to admit that with the last two properties I purchased I barely had a few thousand for the holding deposit :oops:
    I then drew down on equity to pay 5% deposit :eek:
    Then I approached the bank with a loan application :confused:

    So it does happen :cool:

    But, if after 5 days of signing the deposit isn't paid I'd be making demands :mad:
     
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  14. kierank

    kierank Well-Known Member

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    About 10 years ago, I signed a contract to buy a $1.3M property, with a $100 deposit :eek:.

    The vendor came back requesting a larger deposit. So, I upped my offer with an extra $900 deposit, payable within 5 business days, on the condition my latest offer was countersigned within 24 hours ;).

    It was. I couldn’t believe it. At least it lighten my wallet a wee bit :D.

    It certainly does and more often than most people realise :).
     
    Last edited: 30th Mar, 2019
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    An agent pushing for 0% deposit exposes the vendor having to pay the commission if the sale falls over. As a minimum, an amount covering the commission should be sought.
     
    Last edited: 30th Mar, 2019
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  16. MWI

    MWI Well-Known Member

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    Yes, totally agree, I always use lawyers in all my contracts or settlements, never conveyances, just to be on the safe side.... It's like private health insurance I pay but never wish to claim (it will mean I became ill!).
     
  17. Willy

    Willy Well-Known Member

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    You've got me worried.

    Just checked my agency agreement which states-

    The fee to which the agent is entitled shall be due and payable upon demand -
    upon termination of the contract by the principle if the sale is not completed owing to the default of the purchaser and the fee is the same or less than the amount of the deposit which is forfeited to the principle.

    I take this to mean that if the deposit doesn't cover the commission then the commission isn't payable.

    Am I reading this right?

    Willy
     
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  18. Blacky

    Blacky Well-Known Member

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    I think you’re being hopeful.

    My understanding is that you are liable to pay the commission if you terminate an unconditional offer!
    So you may lose the sale, and be liable for the agents commission.
    Your lawyer would need to chase the buyers down for the costs involved. But if they haven’t been able to pay a deposit, they probably don’t have much to be chased for.

    As per above. Lawyer up! Like. On Monday!

    Blacky
     
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  19. Willy

    Willy Well-Known Member

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    The buyers aren't liable for the costs involved, all they stand to lose is their deposit. From the wording in my agency agreement I'd be better off taking on the agent than the purchaser I believe.

    I'm not currently in this situation but if the sale was to fall through I would be. No doubt all agency agreements are different and your understanding may be correct in a lot of cases but I don't believe it is with mine. (I stand to be corrected on this)

    I'm suggesting that the OP check the fine print of their agreement to see how it is worded.

    Willy
     
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  20. CCHO2015

    CCHO2015 Member

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    Thank you for everyone's time and input. Selling was new to us. Really turned me off from selling in the future unless we know what we are doing next time...thought it would be a more straight forward process than buying. Anyways good news is I guess we got lucky..conveyancer wrote to us that everything is in order for settlement this arvo :)