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Contract deposit and getting creative

Discussion in 'The Buying & Selling Process' started by pindipindi1986, 6th Aug, 2016.

  1. pindipindi1986

    pindipindi1986 New Member

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    Morning.

    Just looking to see what others might do in this situation.

    I have a property for sale and have come to a verbal agreement at this stage to sell to a buyer for $155000. The buyer wants to move into this house and pay rent while tidies up house has been living in. This house will then be sold. Has 1/3 share in house. Will get in region of $250k to $300k(his share) from sale. Expects it to sell within 3 months. He doesn’t have a deposit for my house. All of this is verbal and at face value at the moment. My question is this.

    I want to put in the contract for my house that if these conditions are met:

    · Pest done and accepted by buyer

    · Building inspection done and accepted by buyer

    · Buyers’ house sells

    and then if buyer pulls out of our contract, that he owes me $10000 from sale of his house. So this $10000 from the sale monies of his house acts as a deposit that isn’t paid at the time of signing the contract for my house.


    How do I best do this and is it legally binding?

    Also, I need to verify he has funds coming to him from the sale of house he is in. What is the best way to do this?


    Thanks In advance.
     
  2. Joynz

    Joynz Well-Known Member

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    Why not sell to someone else? Seems very complicated
     
  3. Agent30yrs.

    Agent30yrs. Well-Known Member

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    I think the best way to do it is, DON'T... Your getting into very muddy water and under no circumstances hand over possession of your house without an "unconditional contract" and a solid, non-refundable, deposit. A deposit bond might suffice, but even then.

    Seek quality legal advise :)
     
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  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Just see a property lawyer.
    Have a clause is which he forfeits deposit if he doesn't settle.
     
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  5. Marg4000

    Marg4000 Well-Known Member

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    But the buyer(?) doesn't have a deposit......

    I would only consider this if the property is difficult to sell and you don't have anything to lose by taking it off the market.

    Just make sure there is a formal lease and a standard bond.

    But a good contract solicitor is essential.
    Marg
     
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  6. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    I did something similar in 2000 but it was a dead market, about to turn though.

    Moved into a property as a renter for 3 months and then agreed to purchase on July 1st 2000 when the FHOG first kicked in. Try before you buy kind of thing

    No deposit or didnt sign anything. It was all verbal agreement. I was surprised the seller agreed and all went very well so depends on the person you are dealing with and yours and thiers specific circumstances.

    Could work but seems like more moving parts than my scenario.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Of course they do.

    You could have a 10% deposit with $1 paid now and the rest at completion. If they fail to complete they could be liable for the full deposit and sued if not paid. They have other property from which the rest could be recovered.
     
  8. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    You could also place a caveat on the potential purchasers property.
     
  9. pindipindi1986

    pindipindi1986 New Member

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    Thank you for all of your good replies. Much appreciated.
     
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  10. JacM

    JacM VIC Buyer's Agent Business Member

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    This sort of thing has been discussed before. One downfall can be that the buyer utilises the opportunity to "find" as many flaws as possible while living in the property as a tenant and force you to fix them as his landlord such that he doesn't have to pay for the fixes once he is the owner.

    As @Terry_w has said - tread with caution and not without legal advice and representation.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not without an equitable interest. But the purchaser may charge their property to you.
     
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  12. Lisa Gavrilovic

    Lisa Gavrilovic New Member

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    Hi there,
    The verbal offer seems very confusing and risky.
    No deposit, only 1/3 share in the house and a long settlement.
    If he or she owns 1/3 only what about other 2 owners?
    Subject sale contracts do need to be written up in the house contract perfectly! Sale price have to achieve, by what date it is unconditional and deadline and property details. Also the agent selling your property should check to see the subject house is saleable in the market in your area for the price expected.
    Building inspection is a right for a buyer but here in Adelaide we have it done in the cooling off period.
    Good luck with this all...
     
  13. Beelzebub

    Beelzebub Well-Known Member

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    Why can't the purchaser use a deposit bond?

    I've used one to purchase. Cost me about $300.

    The idea is that the company offering the deposit bond will guarantee the vendor (you) the deposit if the deal falls through. The bond holder will give you the cash and then chase the purchaser to get their money back.

    So your contract would have a $10k deposit payable at settlement.
     
  14. tobe

    tobe Well-Known Member

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    Deposit bonds will only be issued if the purchaser has either an unconditional loan offer or equity in another property sufficient for the purchase.

    On the face of it this purchaser doesn't fit the bill.

    I'd avoid the subject to sale clause. Just give them a settlement period they think would be enough to sell their house. Like terry said you can write the offer such that the buyer forfeits their deposit (already paid or not) if they fail to settle on time.

    Have a normal lease agreement if they want to move in before settlement, seperate from the sale contract.
     
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  15. Big Will

    Big Will Well-Known Member

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    Like others have said don't touch it.

    Unless their offer is amazing (which leads to if it is too good to be true), you are going to be up for a pretty hefty legal bill.

    I like Terry's get a $1 initial deposit (I would ask 1k min) and 10% in some time in the future. If they cant come up with the initial deposit then you need to ask yourself if these guys are for real.

    If you do proceed with it I would prefer (if legal) have the contract of sale and make a note that they will lease it from you until such time as they sell their with settlement 30/60 days from their contract date or by x date (whatever date you feel comfortable with).

    Again seek legal advice on this and I wouldn't skimp on the cost as this could get very messy.
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Probably have a licence to uccupy rather than a lease as there are minimum lease periods of 6 months generally