Seller special condition on contract

Discussion in 'Legal Issues' started by Samj, 12th Oct, 2021.

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  1. Samj

    Samj Well-Known Member

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    If I have the following Special Condition from seller, does that mean I won't get my initial deposit (usually around $1000) on finance or B & P fails?

    The parties acknowledge that if the deposit that is held by the stakeholder is an amount less than the commission and advertising payable to the Vendor's Agent and the vendor irrevocably authorises and directs the Purchaser and the Purchaser's Solicitor to pay the Vendors Agent from the balances of purchase monies contemporaneously with settlement, the balance of commission and advertising to the agent.
     
  2. Terry_w

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

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    no
     
  3. Samj

    Samj Well-Known Member

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    Thanks Terry, just to be clear, so I can still get my deposit in case of condition failure?
     
  4. thatbum

    thatbum Well-Known Member

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    Who drafted that? It doesn't make sense to me.
     
  5. Samj

    Samj Well-Known Member

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    I have received a contract with this special condition :)
     
  6. Terry_w

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

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    I have no idea, but that clause doesn't mention it.
     
  7. Samj

    Samj Well-Known Member

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    Hmm, I'd thought this clause is all about the deposit...?
     
  8. Terry_w

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

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    read this bit again
    vendor irrevocably authorises and directs the Purchaser and the Purchaser's Solicitor to pay the Vendors Agent from the balances of purchase monies contemporaneously with settlement,
     
  9. Samj

    Samj Well-Known Member

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    Thanks Terry, I think I got it. It's not about my initial deposit :)

    I can't understand why they add this rubbish as sellers special conditions. Looks like no harm for me. I'll get my solicitor to read it in simple English for me tomorrow.
     
  10. HenryC

    HenryC Well-Known Member

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    May I ask which State is that? Because I know in some States the AGENT can add in special conditions to the contract other than a lawyer...This just doesn't make any sense, I will get the lawyer to review this clause for sure...
     
  11. Samj

    Samj Well-Known Member

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    QLD
     
  12. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    It is poorly worded but I think the gist of what they were trying to write (and failing so I suspect the REA wrote it) is that the deposit that is held by the REA trust can be used to pay the REA commission and marketing AND if their claim is more than those funds then they can authorise the buyer to use part of the funds to pay the REA.
    In otherwords the buyer may be directed to create one cheque for the REA and one for the seller rather than one for the Seller and the seller than pays the REA.
    As it stands it is a pile of gibberish that doesn't make any legal sense.
     
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  13. Samj

    Samj Well-Known Member

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    That makes sense, thanks a lot!
     
  14. Stoffo

    Stoffo Well-Known Member

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    Isn't this what usually happens anyway ?
    Buyer pays deposit to REA who holds that amount in trust account, at settlement the deposit is released often less any amount of commission owed to REA ?

    *Ok, it's been a very long time since I've sold, and that was in Vic !
     
  15. Samj

    Samj Well-Known Member

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    I have got the clarification from agent. Thanks all for your replies.

    ----------------
    The deposit is held in agents Trust Account, if your purchase doesn’t proceed the deposit is refunded, if sale proceeds, the commission owed is calculated allowing for the amount of deposit held in trust
    For example: if commission of a sale is $10,000, and a deposit of $2000 is held in trust, balance of would be owed to Agent would be $8000
    -------------------
     
  16. Terry_w

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

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    The agents wants to make sure they get paid.
     
  17. Terry_w

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

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    The agent is the trustee holding it for the seller and purchaser, they need some sort of authority to actually pay the money to themselves.
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Many solictors will recommend the default deposit clause be removed prior to exchange. Paying the agent should come from the vendor when it settles and not be used prior in the event things go pear shaped. eg the vendor dies, the ATO or a crime agency sizes the property etc. Who knows their mortgage and other charges on title eg unpaid rates, land tax etc may exceed sale proceeds and the agent wont know that. Remote risk but still the vendors problem to pay their agent.
     

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