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Misleading Ad?

Discussion in 'Legal Issues' started by WilliamK, 16th Mar, 2016.

  1. WilliamK

    WilliamK New Member

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    Know someone going through an issue with a purchase of an apartment that was off the plan. The advertisements for the apartment via the real estate agent clearly show a 2 bathroom apartment (layout clearly represented on the material used to sell the apartment), along with a mention of 2 bathrooms, bedrooms etc.

    When purchased, was given these very clear drawings of the apartment, along with a contract (which contained in it a very small and not very clear plan of the apartment, which was apparently what the builder used to build.)

    Now the issue is that the house is nearly ready, and the builder gave the purchaser a walk through. Upon walking through the purchaser was shocked, as the material shown from the real estate agent was not to plan of the actual house. (It didnt have 2 bathrooms, laundry in a different spot).

    The builder has refused to refund the deposit, as they built according to plan, however, the purchaser does not want the property, as a key requirement on purchasing it in the first place was the 2 bathrooms.

    What are everyones thoughts on this and how do you see this eventuating? As legal help is being sorted.
     
  2. thatbum

    thatbum Well-Known Member

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    Glad your friend is getting legal help - they should probably rely on that mostly.

    There's many ways it could go on the information provided - both good and bad for your friend.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Is it worth more or less than the purchase price now?
     
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  4. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    Wow that's not a good situation! I'm not a lawyer so I won't try to give you an answer.

    I would give these guys a call, I'm sure they will know they best way to go about it.
    Complaints - REISA
    or
    Complaints and feedback

    From my very quick research real estate agents don't come under an external dispute resolution ombudsman (as a broker I fall under the Credit & Investments Ombudsman). Which sucks because they could help mediate a solution with out bringing the lawyers in.

    Also from what I can tell it can be handled in small claims court (Home) so that's a positive.

    Wish your friends good luck, and let us know how it goes!
     
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  5. York

    York Finance Broker Business Member

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    Your friend signed a contract. What did the contract specify? It is common for the final product to differ from the original design or buyers expectation. Specifying 2 bathrooms then only getting 1 is a bit of a stretch though. I'd be looking at the contract again and speak to a lawyer to clarify position before settlement.
     
    Last edited: 16th Mar, 2016
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  6. Xenia

    Xenia Adelaide Property Manager Business Member

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    If it varies from what was agreed he may have cause to pull out of the contract on the grounds of misleading and deceptive conduct.
    A valuation would help, if there is one bathroom instead of the stipulated 2, then it would affect valuation, may then decide to renegotiate a lower price.

    Hope it works out well but definitely get specific legal advice.
     
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  7. JDM

    JDM Well-Known Member

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    This will really come down to wording in the contract and the State the property is in. In the absence of a remedy arising from the contract, there would likely be a common law claim and potential a claim under the Australian Consumer Law (if bought for personal use). The relevant factor is also whether the remedy would be damages (sounds like not what is wanted in this case) and/or a right to terminate.
     
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  8. WilliamK

    WilliamK New Member

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    Thanks for all your opinions and help.

    The purchaser isnt confident the property is worth more now, especially with only 1 bathroom.
     
  9. neK

    neK Well-Known Member

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    These dodgy developers do it all the time. Advertise x and sell y.

    Best to check the council da and minutes to see what they are actually allowed to build. Marketing material is just marketing material.

    I've called up council myself to ask about such practices, they pretty much say the onus is on the buyer to look it up themselves.
     
  10. WilliamK

    WilliamK New Member

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    Just a follow up on the matter. After sorting legal help and the lawyer making contact with the builder, they agreed to refund the deposit and void the contract. So apart from legal fees, it turned out as best as can be.
     
  11. larrylarry

    larrylarry Well-Known Member

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    This issue is common but always look at the contract closely before signing. The developer would always have clauses that favour them such as giving some leeway to modify the original plan by a certain percentage.
     
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  12. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    A colleague of mine bought OTP in Castle Hill. Not only will there be a large number of very similar apartments around, but he showed us photos of it before it was due to settle.

    Mostly looked good except one of the 2 bedrooms has a irregular shape so the window for the room is accessed via a ~2m long x ~1m wide space. Just a weird design and I don't understand why anybody would design it that way. Too narrow for a study nook so I think its dead space.
    Would turn off a buyer like me.
     
  13. larrylarry

    larrylarry Well-Known Member

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    I think most experienced investors here would avoid OTP unless it fits their strategies. There seems to be an uncertainty with the end product in some cases. If the finished product is worth more now after completion I find that most buyers would hold on to them and flick them later despite some discrepancies.

    We also advised clients what they're getting themselves when explaining the contract.