When developer refuse to sell last minute.

After paying holding deposit, and working on building contract and design with non refundable money spent, When everything is ready and time to exchange developer cum builder refusing to sell/exchange in the last minute.
Is there anything I can do?

 

Do you have a valid contract?

 

I have the contract and have signed but it has not been exchanged yet. They were “waiting” for building contract to get ready and exchange together because they refused to sell land alone. So when we worked on build design/contract for months and when finally it was ready, they said they do not want to sell anymore.

I have lost money, not to mention many opportunities along the way and if I go back now I am easily paying more than 100k for the same thing due to crazy market.

 

This is occurring a LOT in many areas with increased prices and scarcity of land.

 

Anything I can do?

 

Zammy you need to be speaking with your solicitor, not asking on a forum IMO.

 

If NSW, you only have an enforceable contract if exchanged.

 

Then it seems like you dont have a Contract.

Thats probably why the other side hasnt signed.

 

Lesson is exchange and be decisive. You cant pay a deposit and expect them to sell it to you if you dont have a contract. They can pay the deposit back and make an extra $75-$100K easy money. Land was in high demand in March 2020 and hasnt improved at all - Its got worse. I know in the 6 months to March 2020 Box Hill had risen $100K and its now possibly $180K up. Land developers bought forward a lot of land that was pending civils and registration that has been snapped up off the plan. Now there is a gap and only a trickle of releases and land developers are not even selling to builders. They are auctioning it or getting buyers to pre-register by prepaying a deposit !! for first option. In Box Hill when 10-15 lots are released they last minutes. Once developers would pay a builder to sell their land now they want to be paid by the builder on top of the higher price. Its pushing prices up $100K - $150K and there is plenty of demand behind it.

 

Can a vendor break out of the contract after it has been exchanged?
What I found so far is, purchasers can "sue" for damages if the vendor decides to not proceed with the contract.
Basically, the damages are "your deposit" and the legal cost you have incurred so far (which is may be 1.5k). That is not much of a liability for the vendor to have a "change of mind". They may be losing 1.5k max, however, purchasers can lose the entire 10% plus if the market has gone down, any difference.
Am I missing something?

 

You said you haven't exchanged any contract though .......

I would be politely asking for my deposit, legals and all incurred costs associated with this purchase be refunded !

Surely you have enough emails to prove an agreement was reached (as deposit was paid), it may not be a contract but shows intent, going legal with it might cost you more than you stand to lose

 

When a buyer doesn't want to complete the seller can generally keep the deposit, and potentially any loss they suffer on the resale.

When a seller doesn't want to complete the buyer could sue the seller to force them to complete the sale. Generally this doesn't happen though because of the costs and hassle involved. They are more likely to just go and buy a new property after getting their deposit back.

 

See your first post.....you said it wasn't exchanged.

So, contracts are exchanged? Or NOT exchanged?

 

What it sounds like is the vendor refuses to sign.

 

Yes, but he then asked if they could break contract if they'd exchanged.

 

Sorry guys for the confusion, I should have probably asked on a new thread. I did understand that the contract has to be exchanged for it to be "binding". I got that part and I was asking for a hypothetical situation. When I was going thru the contract and doing a bit of research myself, what I found is that when the purchaser breaks the contract, the penalty seems to be higher (losing up to 10 % deposit, difference in the sale price later if the price of the property dropped in value when seller made the sale later and so on). But for the vendor, it seems like just returning the purchaser's deposit and then perhaps the conveyancing cost. This seemed unfair to me as a buyer would lose much more than the seller. And most cases I suppose, the buyer would let go as they would not want to drag it down to the court which would mean lots of legal fees and waste of time, etc.

 

Yeah I agree that it's lopsided

 

Thats the risk of buying from a developer. But in this market.... take it or leave it.

 

That's the fun of buying land and building. Everything is totally geared toward the developer and builder. You either accept it or buy established.