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Possibly going to loose my 10 percent deposit!

Discussion in 'Property Finance' started by LCK, 20th Jan, 2016.

  1. LCK

    LCK Active Member

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    Hi everyone

    Just wanted to share, and perhaps get some advice

    About to settle on a place in the gold coast on Monday. Will be refinancing my existing debt of $245000 (with AMP) to ANZ as well as the new loan with ANZ also ($285000).

    AMP have made up lots of ******** excuses about the form not being correct, and something about the "packet" not arriving at their solicitors to release the debt in time for settlement. Now I have just been informed that in QLD the seller can keep the 10 percent deposit and take me to court if settlement is not done on the due date. Both loans need to settle at time as the existing property is being used as security for the new debt.

    Has this ever happened to anyone here before? I told me broker I am happy to pay 20 percent deposit and not use my current property as security but he said the paperwork would not be done in time

    What are your thoughts?
     
  2. Hodor

    Hodor Well-Known Member

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    I'm not sure about qld. They can charge you interest on balance still remaining. You should let them know asap that settlement will be delayed, delays with finance are not uncommon.

    I don't believe they can cancel straight away, See a solicitor asap to confirm.
     
  3. Bran

    Bran Well-Known Member

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    You usually pay interest til it settles, from vague memory, 9% p.a accrued daily.
     
  4. RPI

    RPI Property Lawyer, Town Planner Business Member

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    They certainly can. Time is of the essence, if you are in a position to settle at 4:01pm on the day but couldn't settle by 4:00pm then vendor can terminate and keep deposit.

    Most vendors are reasonable and extend but you do have to be aware that they don't have to.

    I am more than happy to do a call now and discuss if that might help you sleep tonight. Pm me your number, no charge, no identifying comments through here etc.

    Has your solicitor sussed out the other side's position on an extension? They may just have had to inform you it is possible but then gone to seek an extension which 999/1000 you will get.

    We would normally try and escalate it with the bank, say that vendor won't settle and we will hold them liable for loss etc. Alternatively look for holes in the contract. At this stage you have a heap of time on your hands to prep if need be.
     
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  5. JDM

    JDM Well-Known Member

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    This situation is very common and as RPI mentioned, the seller will grant an extension of the settlement date in most cases.

    If the seller is not agreeing to an extension of the settlement date, your solicitor should start looking into the contract and whether the seller was ready, willing and able to effect settlement. You would be surprised how often there has been a technical error that would prevent the seller from terminating the contract and forfeiting the deposit.
     
  6. LCK

    LCK Active Member

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    Thanks guys.. I'm not despairing yet, however I still can't come to terms with how Queensland can let this be a law
     
  7. JDM

    JDM Well-Known Member

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    The whole 'time of the essence' concept has been widely debated in Queensland. There is often talk of abolishing it, however the talk has never gone any further than that. In larger commercial deals time of the essence isn't such a bad thing, however in residential transactions it can lead to some devastating outcomes for people due to matters outside of their control (usually being their bank).
     
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  8. Marg4000

    Marg4000 Well-Known Member

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    Having bought and sold more than a few properties in Qld I have found that variations to settlement date are not uncommon.

    Formally request an extension, you will probably be successful.
    Marg
     
  9. Truly Exotic

    Truly Exotic Well-Known Member

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    Ive had a few bad experiences with qld contracts and extensions. Once i almost lost 50k deposit for a one day delay.

    The other time i wasnt in danger of losing however due to a few poor vals etc etc i had to extend 3 times. It wasnt a good feeling with the cloud over your head. I did have to pay thousands in penalty interest as well as legal fees for the other side

    Hope they change the laws
     
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  10. Omnidragon

    Omnidragon Well-Known Member

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    Don't think the law should change.

    The vendor shouldn't have to take on anyone's financing risk. If I contract to sell something by a certain date, I do so while taking the risk of not marketing to any other buyers for several months.
     
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  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The laws don't need to change. Contracts are negotiated between the parties so if you don't like something you can negotiate it out, or in.
     
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  12. Truly Exotic

    Truly Exotic Well-Known Member

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    Yeah but stuff happens. We arent talking about a 50 dollar transaction. Plus there are other parties involved as well.

    I did ask my lawyer (cant rememebr if i got an answer or not) but what would happen if on settlement day one of the offcies caught fire or there was a seige. According to qld law the vendor would still be able to keep the deposit
     
  13. vtt

    vtt Well-Known Member

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    You could make up all sorts of what if scenarios to try and prove your point. We could have a zombocalypse and you would still lose the deposit (though you may have other worries).

    Look at it this way. Seller has the property and buyer signs the contract to buy. Seller then takes the property off the market thereby eliminating a chance of other buyers making a better offer. S/he has made a contractual agreement with you, with settlement on X date.

    It's not the seller's problem if your bank can't complete on time or if your lawyer's office caught fire. The seller and you have a deal. If the seller can't provide the property to you on time and in the condition it was purchased then there are penalties. If the buyer can't come up with the money in time then there are penalties.

    It's all very reasonable to me.
     
  14. Marty McDonald

    Marty McDonald Mortgage broker

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    Its is ridiculous to me that with all the consumer protection laws in place around virtually anything that carries a risk of a consumer losing $$ that this manages to slips under the radar. Only in QLD it seems.
     
  15. LCK

    LCK Active Member

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    I can understand if the buyer gets cold feet or loses their job and needs to forfeit the contract.. Fair enough they loose their deposit..

    However the only reason I could have lost my deposit in this scenario was the previous lender purposely holding up the refianance..

    For most people a ten percent deposit represents more money than they will probably ever see again.. If I had lost my deposit it would cripple me not only financially, but also emotionally.. That ten percent was about 3 years of working 2 jobs 7 days a week.. Thankfully after hounding AMP they decided to release the funds the day before settlement so all is good with the world again..
     
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  16. ellejay

    ellejay Well-Known Member

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    I had similar delays with AMP. I'd nearly chewed all my fingers off by the time they finally had everything in place. Glad you got it sorted, crazy situation to be in.
     
  17. Truly Exotic

    Truly Exotic Well-Known Member

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    Like i said its not a 50 dollar transaction.
    Its not such a black and white world but i do get your view. A contract is a contract.

    However in all cases of the law there is a degree of common sense and reasonability.

    Like the lemon laws in the usa and more or less here

    You buy a car and the car spends 5 of the first 6 months in repairs you can get a new one or replacement. Without governemrnt or common sense prevailing the car manufacturer could say. Well we can repair it till the end of time and there is nothing you can do with it......

    But hey a contract is a contract right?
     
  18. jaybean

    jaybean Well-Known Member

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    It's a gut wrenching wait until settlement day.

    My stress levels were off the charts when this happened to me. I can't imagine what it would be like now in a post-APRA environment.
     
  19. Omnidragon

    Omnidragon Well-Known Member

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    I haven't done my law for a long time. But isn't there a test on whether the party is repudiating the contract or rescinding the contract? If it was merely a mistake of some sort, or an act beyond their control such as a fire at the lawyer's office, would've though that's ok?
     
  20. vtt

    vtt Well-Known Member

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    I get your point too, this is a lot of money but there are two parties to this transaction. It's quite possible that the seller is relying on these funds to arrive on a certain day, perhaps they need to pay for another property and delays mean they pay penalties. Why should they be out of pocket because your bank can't get it's you-know-what together?

    Comparing a transfer of money from party A to party B is completely different to purchasing a car that turns out to be a lemon. I don't even see the parity there. One is a contractual transaction and the other relates to a faulty product.

    If you buy a car that turns out to be a lemon you have certain rights under the car's warranty and in some countries they also have specific laws governing this.

    I do empathise with your situation though and am pleased you managed to get it sorted