Purchaser not completing contract of sale.

Evening, quick question in relation to a contract for sale where the purchaser has failed to complete and is in breach of the contract.

Bit of background property in Western Sydney purchased by purchaser contracts signed and exchanged 10 day cooling off period put in place this cooling off period was Extended on 3 occasions before going unconditional some 25 days after contract signed. Issues with broker. Deposit Bond was arranged however lodged a few days later after unconditional approval due to delays with the bank the settlement date was due to take place on the 5th of April 2017.

Since this date I have been provided with no new settlement date and with advice from my conveyancer a notice to complete settlement was issued on 20th of April 2017

Since this notice was issued purchaser has unable to provide a settlement date and is required to settle by 3 p.m. on Friday the 5th of May 2017. Some 16 days after notice issued.

Today I received notification that they believe they still will not be able to complete by this time due to the bank having some issues with their identification and documents however they have had more than enough time to complete in my opinion.

If I was to terminate the contract I would have to sue them for the deposit and breach of contract obviously everything is different with courts but based on the information would I have a good chance of winning.

Just seeking some advice from more experienced property investors about what i should dp next. I will be speaking to a solicitor in the next couple of days thank you.

Kind Regards

 

@Doors. Speak to a solicitor sooner rather than later.

If the purchaser repudiates the contract, then the agent is still entitled to their commission.

Will you be in a better position if you put the property back on the market or will you be selling at a discount to the previous contract price?

Was the notice to complete validly issued?

 

You would just keep their deposit or claim it from the deposit bond company.

 

@Terry_w Doesn't the vendor's solicitor need to instruct the release of the funds to the agent?

How does it work cashing a deposit Bond?

 

Hi. Thanks for thr replies. We were thinking of issuming a termination after the date due for conpletion being 5th May as the contract is in breach.

The price probally hasn't moved much since we sold. We got close to asking price to maybe it would sell for a little bit less if we were to relist.

Notice issued currently allowing 14 days plus one for service and extras for public holidays etc.

Terry would the claim be via a solicitor? Or just claim via deposit bond?

 

Once they have been given appropriate notice the deposit now belongs to the vendor so they could instruct the agent to release the deposit. The agents get worried about this for breach of trust so they may be reluctant.

With deposit bonds the vendor would just contact the issuer. Not sure what they would require.

 

This is not a forum question. It needs legal advice.
Not seeking legal advice is really going to hamper the outcome.

Legal remedies for your loss can exceed the deposit. The Collette case in NSW saw a far larger damages claim BUT dont bet on it.

 

Personally, I'd transfer this matter to my lawyer.

It sounds as though you will likely be entitled to the deposit, but you need to be very careful in how you rely on the Notice to Complete, and how you terminate the contract. If you wrongly terminate the contract, there may be legal issues for you down the track.

There are a number of other issues such as agents commission and additional damages (either under the contract or generally) but you should discuss these issues with your lawyer.

Good luck with the sale!

 

Just as someone who has been on the other side of this.

Being an overseas purchaser of my last property, where the bank lost my god damn application and so took 2 weeks to get the loan process started (had pre-approval already), then they took about a week to get it processed and a few more days to get the offset account setup for me to transfer my cash into to be used with the loan as a single payment to the vendor, then I found out that I could not increase my transfer limit on my HSBC account because my signature from 15 years ago did not match and I had to go into a branch to sign documents to change transfer limit, which I could not do because I would have to fly half way across the world to get back to Australia. So 7 more business days to make the transfer (11 days including 2 weekends).

My point is - they are not trying to play games and screw you around - they have legitimate problems. It is an overwhelming amount of stress to have paid such a huge deposit that most people spend 2 years saving up for, only to have it on the line because of these screw ups that were mostly not in your control or not something you could foresee.

I know you are going to do what you are going to do - I just wanted to point out just because you legally can serve a notice of termination (and I am sure a solicitor would suggest you do that) and put their money on the line to take it from them, you still have an option to be a human being in all of this. We all have **** happen to us in our lives and it is out of our control if the other person does their best to take advantage when we are down. But sometimes you are the other person and you actually do have control of how it plays out.

 

@Anthony Brew - point taken however the op has their reasons for selling and obviously needs to complete. They may be in the same predicament with deposit paid on a Qld property and will lose it if they don't settle on the appointed day. If they had difficulty stumping up 5% deposit big a hastily arranged deposit Bond maybe the op is saving the defaulting buyer from a world of grief.

 

Yes I agree that OP should recoup any actual losses because it is not his fault, and if that ends up being the full cost of the deposit of the person trying to purchase his property, then yes so be it.

However I don't think this is the case since OP said "they have had more than enough time to complete in my opinion", and for the majority of cases this is not the case, which is why I wanted to say that just because legally he can screw over another person, that he still has the option to have some compassion, because there are lots of times in life that he will be on the receiving end of these types of situations - and how would he like to be treated at that time.

But point taken - if it does in fact end up costing him $50,000 or whatever the deposit is, by a situations such as himself trying to complete on another property, then yes I think it is fair and reasonable.

 

I would talk to legals to see what is my rights and then u can decide what actions to take, either take their deposit or wait for them. However one thing i learn from property markets is most of the case, when u are on the wrong side, the other side would take advantage of it, and they don't care how hard you save ur deposit.

 

How does it work if the deposit or some of it was kept by the vendor after the buyer defaulted with regard to fees for solicitor, agent and advertising fees legally in NSW? if the agent was on a xxx% commission, are they entitled to the same xxx% of the deposit or xxx% of the full sale price? What about costs like advertising and also solicitor fees? Personally if it happened to me I would pay what I had to for these mentioned but if they were not legally required to pay then I would still pay the agent and the solicitor a good chunk for their time anyway. I would also not keep all of the deposit if I thought the buyer needed the money but I would keep some to cover some expenses. The biggest issue I could see is having to decide to continue to try to sell or take it off the market. At this time of year time is important too with the end of the tax year approaching.

 

@Gonx - the agent would probably put their hand out for the entire commission (2-3% + GST), conveyancer would also have a pile of extra charges in addition to the conveyancing work. There probably won't be much left of the 5% deposit.

 

It would depend on the terms of the contract with the agent. Whenever I have sold a property I have made it so that I am only liable to pay commission if the sale actually settles.

 

Ok,makes sense but do you mean (2-3% + GST) of the full sale price of the property or (2-3% + GST) of the deposit? Please tell me it is the latter .. my solicitor works on payment only if place sells and a set fee plus searches. I would not expect any other fees unless they warned me first. There is bank fees but that would not apply anyway if the sale fell through.

 

Talking about commission to agent, usually it would be say ~2.2% to 3.3% of the sale price of the property. That figure includes the GST.
So if you got a 5% deposit, you mightn't keep much of that deposit.

 

Depends on agency agreement. Many agencies will charge a fee ($500-$1000, perhaps auction costs and marketing costs ? etc) and offer a new agency agreement and relist and release to proceeds to the vendor. Some dodgies may try to claim it and charge their fee. Fair Trading take a dim view in most cases and consumer law rights can be enforced. (misleading and deceptive conduct)...Source a REA