Problems with house sale

Discussion in 'Legal Issues' started by geoffw, 18th Jan, 2022.

Join Australia's most dynamic and respected property investment community
  1. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    So we've just sold our PPOR after almost 28 years.

    There was a granny flat being let out, separate from, and a good distance away from, the main residence.

    The GF resident had a lease in place until November (an 18-month lease at her request) - so it was a condition of sale that she be allowed to stay. In fact, it's a legal requirement that she be allowed to stay.

    We exchanged in November, with settlement on January 20.

    Yesterday (Monday 17) we were notified that the purchaser was aware that the tenant was still in place. The contract apparently stated vacant possession, despite the purchaser being told when viewing that the GF would have a tenant until November. He was seeking a $50K penalty.

    The agent reminded the purchaser that he would at least be receiving rent - $17K until the end of the lease. The proposed penalty was reduced to $30K.

    It appears that our agent informed solicitors that it was vacant possession.

    It appears that we have no choice but to reduce the price by $30K. We're too close to the line to do much else.

    We are going to seek 50% compensation from our agent, but we don't like our chances.

    (The price we achieved was very good, with the agent playing two potential purchasers off against each other).
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    Have a chat with your solicitor especially if you've got an instruction to the agent of the same in small email or if the lease was included in the COS.

    Sounds like it could still hold weight if it were a genuine mistake not a misrepresentation of the situation.
     
    Stoffo and geoffw like this.
  3. vbplease

    vbplease Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,575
    Location:
    Brisbane
    As per the contract and lease agreement? Wouldn’t this be all that matters?

    The agent mentioning it being vacant possession was just verbal? Doesn’t sound solid to me.. I’d let the solicitor know that no compensation is coming and the agent can sort out the sorries
     
    Stoffo, Gockie, Joynz and 1 other person like this.
  4. Shazz@

    Shazz@ Well-Known Member

    Joined:
    24th Jun, 2018
    Posts:
    1,310
    Location:
    NSW
    Sorry to hear Geoff, but why was the solicitor taking instructions from the agent? Contract terms should have been discussed with you? I usually get a checklist from the solicitor with one of the questions being about vacant possession or not.
     
    MTR and geoffw like this.
  5. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,606
    Location:
    Sydney
    If it says the tenant is under a lease on the contract they have no grounds to challenge. If they don't settle you can ask for a notice to complete if they can't they lose the deposit.
     
    Piston_Broke and geoffw like this.
  6. jaydee

    jaydee Well-Known Member

    Joined:
    25th Mar, 2016
    Posts:
    889
    Location:
    Perth
    They are taking the ****!

    Delay settlement on your terms. Play their bluff that you might not settle at all (until court action if necessary).

    As an option offer to pay the current tenant $10-??k to move early (better in their pocket than the Buyer).

    The Buyer seems to be trying to put one over you if they were aware of the GF lease.

    I would willingly lose money to someone other than the Buyer if they tried that on me.
     
    Last edited by a moderator: 18th Jan, 2022
    KayTea, Piston_Broke, Joynz and 2 others like this.
  7. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    Thanks for the responses.

    We've been talking to the solicitor. Who is on holiday, and talking, but difficult to get hold of.

    They won't budge on the basis of misrepresentation. The contract says ...

    The vacant possession instruction to the solicitor is in writing. And hence in the contract of sale. Purchaser wants MIL to live there, hence the compensation now that she can't.

    I was ok with the agent instructing the solicitor. I've dealt with this agent for almost 20 years and he's always done a great job.

    The market has cooled a little since the sale. Apart from the possibility of penalties, withdrawing the sale may also involve a bigger loss than settling for the lower price.
     
  8. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    Was your instruction to the agent in writing as well?
     
  9. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,934
    Location:
    Brisbane
    That sucks Geoff. I've no idea if you can get anything back from the agent, but I do like the idea of offering the GF tenant $10k to move, and keep the rest for yourself.

    It really hurts when life slaps you around like this. And the purchaser who was told the GF was rented for several months months who has now turned the tables on you... well, have they heard of karma?
     
    The Y-man and geoffw like this.
  10. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    No.

    The ad for the property mentions that it's tenanted, but there's no lease term mentioned in that ad.

    The property was managed by the same agent, so he was well aware that it was tenanted, and it was something discussed between us several times. He is not saying at all that he didn't know it was tenanted.
     
  11. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    It wouldn't really be possible to get the tenant to move out in two days. Tenant has a property to move into at lease end (off the plan) so doesn't really want to move. The tenant and child have been there for five years, I don't really want to disturb them.

    The agent said that he had discussed the possibility of moving out with the tenant, but the tenant says that this didn't happen.
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    So the agent acknowledged that he ballsed it up.

    Weigh up whether you'll be dealing with this agent again & burn them, or mutually agree a settlement & keep dealing with them for anything else you still have with them.

    Your solicitor can issue instructions not to disburse the commission from the agent's trust account until this is resolved.
     
    wylie, geoffw and Shazz@ like this.
  13. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    I won't have to deal with this agent again. We've moved from the Canberra area to Newcastle, and don't have any more property in the region.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,672
    Location:
    Australia wide
    Why did you agree to such terms if it was not the case/
     
    Hetty and Paul@PAS like this.
  15. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    The main house was vacant, and I didn't realise the consequences of "vacant possession". I just thought that yes, it would be vacant. I rely on experts to get the details correct.
     
  16. SatayKing

    SatayKing Well-Known Member

    Joined:
    20th Sep, 2017
    Posts:
    10,729
    Location:
    Extended Sabatical
    I'm saddened to read that @geoffw. A kick in the guts for sure.
     
    Hetty and wylie like this.
  17. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,101
    Location:
    Sydney or NSW or Australia
    Burn them, they can pay the lot - you owe them nothing now as it's their mistake.

    I would also be grilling the solicitor for not having checked or advised that having included a current lease in the COS, no mention was made that you'd need to serve notice or that you couldn't provide VP.

    Why would it be included in the contract if it was to be VP?
     
    qak and wylie like this.
  18. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    I don't think the solicitor was ever aware that there were two structures on the property, or that one was rented.
     
  19. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World
    i would have thought re agent should provide buyer with the lease as part of the sale/documents?
     
    willair likes this.
  20. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    11,655
    Location:
    Newcastle
    That's a fair point, thanks. I'll raise that with our solicitor.