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Delayed settlement

Discussion in 'Legal Issues' started by Michael_T, 8th Oct, 2015.

  1. Michael_T

    Michael_T Member

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    Hi All

    Looking for some advice and guidance on options to help a friend out of a sticky situation.

    Property purchase is in Victoria.
    Went unconditional on a property, which was being submitted for subdivision approval (by vendor) at the time of purchase. (May)
    Unfortunately, contract of sale states settlement is [specific date] or 14 days after the vendor gives notice to the buyer of the registration of plan.

    As his circumstances may change and impact his financal position, is there options for him to get out of the deal without financial disadvantage or can the vendor keep dragging this process for however long they want - which has already been 6 months and counting.

    Thanks
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Depends on the terms of the contract.

    often there is a sunset date which allows either to pull out if some event doesn't occur by a certain date.
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    As @Terry_w said, there is a sunset clause that lets you and the vendor out at a certain future date. If however, that date is not reached and the vendor requires settlement, and the purchaser cannot get the funds to settle, then:
    1. The vendor gets to keep the 10% deposit the purchaser has paid
    2. The purchaser could also be sued for the difference if the vendor has to sell for a lower price, to someone else
    3. The purchaser could try throwing themselves on the mercy of the vendor (tears etc) and see if the vendor will rescind the contract - an unlikely outcome.
    The purchaser could try to on sell the property before settlement becomes due, to someone else, if the current contract allows.
     
    Perthguy likes this.
  4. Michael_T

    Michael_T Member

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    Great advice all round, Appreciated! Even the throwing their mercy at the vendor ;)

    So if there is a sunset clause, and for example the future date is 18 months, then the purchaser is locked in with no exit without financial loss and the vendor can take up to 18 months to submit the subdivision?
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Pretty much. Often a case in a rising market that the developer doesn't lift a finger, enacts the sunset clause and sells for a higher sum and the purchaser gets their deposit back without any interest.
     
  6. Be Developer

    Be Developer Property Developer Business Member

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    If vendor submitted plans for subdivision, it shouldn't be any trouble completing the transaction.

    However, as a safety measure, upon on successful subvison and once new titles are issued, you can ask your solicitors to lodge a cavet on property.
     
  7. KateAshmor

    KateAshmor Victorian conveyancing lawyer Business Member

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    Melbourne
    In Victoria, the standard sunset clause for an off-the-plan contract is 18 months. It can be longer or shorter, but that must be stated in the contract. If the property is not completed by the end of the sunset period, the purchaser can terminate the contract.

    The contract can be terminated sooner by the purchaser for a limited number of reasons, including if there are significant changes to the property being built compared with the design in the contract.
     
    S.T and Perthguy like this.