OTP Contract of Sale Terminated - Initial Deposit Yet to be Returned

Hi All,

I've bought an OTP townhouse in Brisbane through Freedom Property and signed the contract of sale a year ago. However, the vendor has terminated the contract due to "financial feasibility" of the contract and subsequently sent a new contract of sale with an increase in the original purchase price. I didint agree to it and requested for a refund of my deposit.

Vendor's solicitors also sent over a "deed of acknowledgement" for me to sign, basically limiting my rights not to take any action against the vendor as a result of the contract termination. I didnt not sign it.

Its been over a month now since the initial contract of sale has been terminated and I've yet to received a refund on my deposit. Have called the vendor's solicitors to ask on the deposit refund status and they suggested me to liaise with my appointed solicitor. I called my appointed solicitor (recommended by Freedom Property), they said that the vendor's solicitor has yet to respond on the request of the deposit to be refunded.

I'm totally new to property investing, thus thats the reason why I joined Freedom Property, but that turned out to be a big mistake on my part. I'm just wondering what is the "reasonable time frame" for my 10% deposit to be refunded to me subsequent to being notified of the contract termination?

I understand that there may be genuine administrative delays when returning the deposit, but I dont know if (1) the recommended solicitors acting on my behalf is taking their sweet time or not proactively seeking for the deposit to be returned to me, or (2) the vendors solicitors is trying to play hardball and dragging their feet on this issue since I've not signed the deed of acknowledgement which they've sent to me (limiting my right to take further action against the vendor).

I'm seeking views / opinion of this community as to what are my real options if the deposit is still not returned to me promptly. I've been notified on 22nd Apr that the contract has been terminated and there is no real updates from anyone with regards to my deposit as to when it can be refunded. I cant be waiting for 3 to 6 months hoping that they will refund back my deposit.

 

Ask your solicitor whether there are any penalties in the contract with regards to delay in meeting financial obligations specifically return of the deposit.

Your solicitor knows the contract better than anyone here. Make sure you direct all your questions in writing and convey to them your concern about 'them not representing your interest' in writing and it's very likely they would take your queries very seriously from then onwards.

 

Normally this would be the case, however I'm wondering if there's a conflict of interest as his solicitor was recommended by the vendor.

 

There is likely a conflict of interest at play but proving it would be beyond OPs interest in the deal which is get their deposit back with no or little drama.

 

Probably best to get onto a new solicitor with this case.

 

The below is a snippet from the initial contract. It doesn't state any "timeframe" that the deposit needs to be refunded and I've gone through the initial contract of sale, it doesnt mention any penalties specifically if there's a delay in refunding the deposit. I cant see any penalties that is applicable to the seller in the initial contract.

Its just a hard lesson learnt here for me. Solicitor was recommended by Freedom Property. I should have obtain my own independent solicitor. Oh well.....

 

The ball is in your court. Get legal advice before signing the waiver. Once it's returned your deposit will make it's way to you.

 

Iinstruct your solicitor to write back to the vendor soliicitor chasing it up, and to cc you in and give you a copy of they original correspondence with them. They are holding the deposit on trust for you now.

 

Thanks for the advice, I have written to my appointed solicitor on this issue and they have stated that a "deed of rescission" needs to be signed. My appointed solicitor mentioned that only after a new replacement buyer is found and the contract of sale is executed, only will the vendor's solicitor refund the deposit back to me.

I'm confused on this. Honestly, I dont know whether this is indeed the common practice in Queensland or I'm being taken on a ride here...

Best I stay away from buying OTP properties for the time being...

 

from what you have written that doesn't appear to be correct. You should consider legal advice from another lawyer.

 

Just sharing a "snippet" of what my appointed solicitor wrote to me.



Have even called the solicitor who's suppose to act on my behalf and they have informed myself that the vendor needs to have a "replacement buyer" to replace me before my deposit can be refunded back to me. The fact that the vendor was the one who terminated the contract of sale in the first place.

I may have to seek another litigation lawyer next week....

 

The vendor has terminated the contract, a replacement buyer isn't going to happen as they aren't proceeding with the build.

Your contract is not contingent upon a new buyer being found as the vendor has advised that they're not proceeding.

You need to mutually recind ie sign the notice.

 

Vendor is still proceeding with the project, they are now selling the townhouses at a "higher price". Project has not been abandon / stopped.

 

They have rescinded due to "financial feasibility" - what does this mean?

Is your solicitor connected to the vendor in some way?

 

I've been informed that the project costs has gone up substantially and vendor terminated the contract of sale and subsequently increased the initial selling price.

After what I've gone through, it seems that the developer + freedom property and my appointed solicitor are "one team". Very Frustrating and disappointing.

Each time, I call my appointed solicitor to discuss on the progress of my deposit refund, Freedom Property will call me and persuade me to sign the new contract of sale, which I've refused to do so. Thus, thats why I think all parties involve are "dragging their feet" when it comes to refunding my deposit.

 

Yes, you need a separate lawyer and should report your current one to the law society.

 

If that's the case, you're the only loser in this situation. Do not rescind and hold the vendor to the original agreement.

Buyers who purchased a new land release in Sydney innerwest at Haberfield. The land hasn't been approved by council 20 years later. 4 buyers are still holding out for completion at the contract value.

 

There seem to be a few issues here to breakdown.

Firstly:

This may or may not be correct advice. If it is the wrong advice, it is very badly wrong. If the vendor purported to terminate the contract, they likely did so in writing (either by letterhead or email) sent to your solicitor. If it turns out that the contract has been validly terminated, then the advice re: vendor having to mutually agree to rescind is wrong to a level quickly approaching gross negligence.

If it turns out that the vendor has not actually given notice terminating the contract, and for whatever reason your solicitor is sending confusing messages to you about the vendor considering a termination (vs actually terminating) then maybe, potentially, you might need to work out a mutual rescission.

Ideally, your solicitor will have sent you a copy of the notice from the vendor terminating the contract. If you have agreed to pay them for conveyancing services, this letter would almost certainly form part of your file and you are entitled to request a copy to work out for yourself (or brief another lawyer) if there was actually formal termination or not.

This could very well be a breach of your legal professional privilege if the solicitor is even disclosing to other parties that you are speaking with them about the termination process, without you positively instructing them to do so. There is some leeway here in that a solicitor would be expected to keep an agent abreast of the conveyancing process, but it sounds like this is going well beyond it. If this is the case, you may also be able to report them for unsatisfactory professional conduct, but there are probably no damages which would actually flow from it - so it may be worth looking into but the deposit seems like the more important issue.

Without viewing the entire conveyancing file, there probably is no specific advice anyone can give you beyond "maybe".

 

Wow! If the purchasers pass, does the interest in the block of land form part of their estate?