Resale Guarantee for original purchase

Discussion in 'Legal Issues' started by RedMarty, 16th Nov, 2019.

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  1. RedMarty

    RedMarty Well-Known Member

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    Hi all,

    Not sure if anyone has undertaken this but we have gone through a property group service (name withheld) who have a guarantee to buy your property back at the original price if you are in financial difficulty and the property is maintained in a reasonable and saleable condition. Has anyone here know how legaly binding this is and i think i will be in a fight with the interpretation. If the property group say no to us, is getting legal advice worth it as there is a $55,000 difference what we bought it for and the valuation.

    Any advice or suggestions would be much appreciated.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    I'm assuming the price difference of $55K is not in your favour (as in the house was valued less than what your contract says?)
    If so, can you pull out of the purchase? I wouldn't proceed if the valuation came in that low, could imply this 'property service group' gets paid $55K commission on the house they're selling you...
    Definitely worth seeking legal advice
     
  3. Terry_w

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

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    What documentation did you sign?
    I'd say a slim to nil chance they would buy back.
     
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  4. Lindsay_W

    Lindsay_W Well-Known Member

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    Just thinking about this, why would the valuation being lower than what you paid be defined as financial difficulty/distress?
    I would think that 'financial distress' would be defined as lost job/can't afford the repayments anymore or similar?
     
    Last edited: 16th Nov, 2019
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  5. Trainee

    Trainee Well-Known Member

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    Who provides the guarantee? A $2 company with a similar name? Or theres a letter of credit by a reputable bank?
     
  6. RedMarty

    RedMarty Well-Known Member

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    I think I need to clarify more from my OP. I've had this property for 3 years and the valuation has gone from 385k to 330k. The property group who chose this property for me are so confident in their acquisition of property that they guarantee the original purchasing price to sell back to them as long as the two conditions are adhered to.
     
  7. RedMarty

    RedMarty Well-Known Member

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    My family's financial position would put us in that boat.
     
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  8. Lindsay_W

    Lindsay_W Well-Known Member

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    Have you asked the property group as yet? Probably the first step, legal advice would be worth it in this situation I reckon.
     
    Last edited: 16th Nov, 2019
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Was this property group a developer, spruiker/promoter or an independent buyer's agent paid by you?
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Capital growth has been less than expected (on their modelling), the initial sale price was hyper-inflated (which included a hefty profit for the developer, commission etc) so growth hasn't covered the realisable price.
     
  11. RedMarty

    RedMarty Well-Known Member

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    This property group is quite large and is Brisbane based. They do the contract, act as seller for developer and get the loan as well.
    The name has been mentioned here on property chat several times in other threads.

    I am awaiting an answer from them but I don't feel optimistic.
     
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  12. Lindsay_W

    Lindsay_W Well-Known Member

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    a one-stop-shop = warning bells
     
  13. Scott No Mates

    Scott No Mates Well-Known Member

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    You've been duped by a well oiled machine by the sounds of it. The guarantee won't be worth much if the guarantor company has disappeared post-development.
     
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  14. Lindsay_W

    Lindsay_W Well-Known Member

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    I get that but you misquoted me ;) - "why would the valuation being lower than what you paid be defined as financial difficulty/distress?"
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    @Lindsay_W the circumstances of the mortgagor bears no relationship with the valuation unless the circumstances have been disclosed to the financiers. Even then, it will only be relevant if the bank has taken possession of the property.
     
  16. Truly Exotic

    Truly Exotic Well-Known Member

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    Given that im not too familiar with anything OTP, are buy back clauses common in the industry,
    first time ive heard of it to be honest
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

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    Almost as common as rental guarantees, free cars or other useless incentives which are used to bolster the sales price but not add value.
     
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  18. Truly Exotic

    Truly Exotic Well-Known Member

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    ive heard of all the incentives you mentioned, except this buy back guarantee!

    surprised there havent been any "builder refuses to buy back at purchase price" type threads on here!
     
  19. Lindsay_W

    Lindsay_W Well-Known Member

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    I still don't think you've understood my question :confused: I completely understand that the circumstances of a mortgagor bears no relationship on the valuation, that's not what I was saying or asking ;)
     
  20. Lindsay_W

    Lindsay_W Well-Known Member

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    It's definitely not common but probably used as a 'sweetener' to get the buyer to agree to the initial purchase.
     
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