Pulling out of 10% contract buy only paid $5%.. What now?

I bought a house.. $1,170m

The contract says this:

Price: 1170,000
Deposit: 117,000 (10% of the price unless otherwise states)
Balance: 1,053.000

Now the thing is they accepted 5% deposit.. So I have them $58k..

If I pull out of this sale do I have to pay the full 10%?

The grey area is that they agreed to a 5% deposit , but the contract says 10%

-Frank

 

If the contract stipulates termination penalty of 10% then that is what you owe

 

Frank pal...what are you doing to yourself?

 

Please consult your conveyancer/solicitor to advise you. You may not be able to pull out off the sale without losing that money.
Why do you want to pull out though?

 

You will lose your 5% and under the contract conditions you owe another 5% making a total of 10%. Additionally you can be sued for a new sales campaign and any shortfall in price next obtained.

 

Assuming you are discussing a property in NSW.

Depending on what the Contract states, it is possible that you can be sued by the Vendor for the deficiency on the resale value should the property sell at a deficit within 12 months following the termination for your breach of contract. You could also be liable for other damages arising from your breach as well as the reasonable costs arising from your non-compliance with the contract.

As regards liability for the full deposit, this will depend on the terms of the Contract. It is sometimes common when a vendor accepts a lesser deposit for a clause to be included which provides for the recovery of the balance of the deposit in the event of the purchasers default. A number of recent decisions of the NSW Supreme Court [Luong Dinh Luu v Sovereign Developments/ Australian Land Co v Tumut Festival Centre / Iannello v Sharpe] have held that contractual clauses of this kind may be unenforceable. The court has held that an attempt by the vendor to secure payment of the balance of the 10% deposit when the purchaser had defaulted, amounts to a "penalty" and should not be allowed.

From a practical perspective, even if a clause is held to be enforceable, presumably you paid a 5% deposit on exchange of Contracts for a reason, i.e. you didn't have the requisite funds to pay a full 10% deposit. Hopefully the Vendor would be advised that any attempt to recover the balance 5% and damages may not be commercially viable or successful.

Speak to your legal adviser as soon as possible to discuss.

 

I've noticed a few dodgy things.. Like the kitchen/laundry seems like on tradesman patched up the work of another.. Toilet is too close to wall in one of the bathrooms.. It was like they rushed the build..

The kitchen looks and feels like a flat pack kitchen that was slapped together to look good for the sale but on close inspection its crappy.

Being brand new I expect it to be perfect and it's not..

 

It definitely pays to have a close inspection when buying. I will always get as much time as possible to inspect a property and that could mean going back several times. After you get home you might start thinking more about the property away from the hype. Writing everything down that you have on your mind so next visit you can check them all.

From recently selling you get to look at it from the other perspective and that can provide valuable insight you might not realize when buying.

I would look at the numbers now, can you do a quick reno flip, even to just get your money back? The alternative is not that attractive to lose that much.

 

Will the issues cost more than 117k to fix?

 

That was my first thought.

$117K (and possibly quite a lot more) will pay for a new kitchen, laundry and bathroom with money left over.

Sounds like a bit of buyers remorse. Before you do anything focus on the good points of the property and the reasons you bought it. No property is ever perfect.
Marg

 

Agree.

We have built a house, and also bought brand new.

First year was constant expense to add all the little things to make the place work better.
Marg

 

I am suffering from a bit of buyers remorse I think.. , you're right.

I bought it and loved it originally, I only saw it once and was about to buy another so I had to move fast.. .. There were others interested I wanted to secure it and bought unconditionally.

Agent was nice enough and gave me the key to look around a few days later and on close inspection I noticed a lot of patchy work in Laundry, Kitchen, Upstairs Bathroom. A Laundry shoot gone wrong so they blocked it off in a bad way in the laundry below and put half a cupboard there to hide it.. Stuff like that. The laundry needs to be ripped out and started again it's just all wrong. Its mostly neat but theres just some dodgy work here and there. Its as if the owner ran out of money towards the end and just wanted to finish the build and sell.

But since I saw the dodgy finishes I started to worry about the construction. What if the construction is dodgy and it falls over in 10 years time? I know I have builders insurance for the first 6 years but what if something happens after that?

The home is at an angle going downhill backwards so I'm worried that retaining walls may not have been constructed properly..

All these negative thoughts are running through my head now..

I organised a building inspection for next Monday. I'll see how that goes..


-Frank