unconditional house sale may fall through. Agent keeps commission?

Forums › Home Workshop DIY › unconditional house sale may fall through. Agent keeps commission?

1 | 2 | 3 | 4 | 5 | 6

1897 posts

Uber Geek
+1 received by user: 1402

#2493784 28-May-2020 16:32

Given they stand to lose $60k if the sale collapses, I hardly think they are playing games. I'd investigate why they want (need) the extension and go from there, especially if it had no material effect on me. They may have simply been over confident in their ability to borrow and not considered what if they were declined. Perhaps they are in an industry particularly effected by COVID and whilst you say its all been transacted during the current crisis, things are changing daily. Whilst interest rates are at historical lows, I expect banks are puckering up tighter than a fish's backside at the moment with people employed in particular industries now seen as high risk. This will be an evolving landscape for some time to come.

You could argue that you may be worse off in a deteriorating market, thats true if the deal collapses, but as you said, you had 2 other offers after a single open home both of which were higher. Are you hoping to collapse the sale, keep the $60k and sell to one of the other higher bidders, thereby profiting on the collapsed sale? Your legal right to do so, but seriously? 60k is a huge chunk of coin to lose and could lead to all other sorts of issues for the buyer.

Is there a legal process to go through to collapse the sale? Will it cost you and is there any comeback from the purchasers? Does the collapse happen on the day after settlement or is there legislation that dictates what must be done.

Lots of questions to be considered

Paul1977

5171 posts

Uber Geek
+1 received by user: 2192

#2493799 28-May-2020 16:56

If you make an unconditional offer, you better make sure your finances are sorted. The OP accepted a lower offer based on it being unconditional, and the purchaser knew what it meant to make an unconditional offer.

It sounds like the purchaser gets 12 days to sort their finances, and quite rightly suffer a financial penalty for each day they are late. If they can get their finances sorted in those 12 days, then the penalty amount they have to pay serves as a good lesson to them, and if they can't get the finances sorted in that time then they probably never will and will learn and even more expensive lesson.

dejadeadnz

2394 posts

Uber Geek
+1 received by user: 2287
Inactive user

#2493805 28-May-2020 17:03

People need to stop giving bush lawyer legal advice on the legal issues here. Again, as presumably the only actual lawyer in this thread and one who's reasonable familiar with the ADLS/REINZ standard form agreement widely in use, the agreement cancellation rights and the rights of the vendor to retain the deposit in the event the purchaser fails to settle are well known and well-established. If settlement doesn't occur on the date of settlement, the vendor's lawyer serves the purchaser with a settlement notice. Once served with the notice, the purchaser has 12 working days to settle. Whilst the purchaser remains in breach, interest in accordance with the terms of the S&P agreement is payable and must be accounted for even when the purchaser eventually settles. If the purchaser doesn't settle in accordance with the notice, the vendor may at his or her election do various things, including cancelling the agreement, retaining the full deposit, AND/OR sue for damages.

Anything else is just bush lawyering and unhelpful.

tdgeek

30048 posts

Uber Geek
+1 received by user: 9455

Trusted

Lifetime subscriber

#2493807 28-May-2020 17:04

We had this. Unconditional, deposit paid by buyer, 10%. Then we were told their lawyer to our lawyer that the time to get Kiwisaver will cause the settlement date to not be met. My attitude was these things happen, it was Dec 10, so that's out the door to well into January, so we allowed the extension, recieved about 7k penalty interest, thats fine. Admittedly we had already bought where we are now and moved in, so there wasn't a chain of deals drama. ironically where we are now they asked for an extension of a month as their new build was behind. We love the house, they are a nice couple so no problem.

However, re the OP's situ, if there was going to be delays, cost, and potentially a loss due to a lower future sell price, Id be wanting to hold all the deposit, for some fair compensation for being dicked around (unconditional finance is uncondtitional finance) and in case a loss on future sale incurred to recover that, much like heavenlywild was subject to.

snnet

1413 posts

Uber Geek
+1 received by user: 556

#2493810 28-May-2020 17:07

So the purchaser went unconditional despite needing to provide conditions such as subject to finance? What an idiot. I don't think an extension is agreeable either. They plainly lied, and you could have picked another buyer who may have had finance conditions but would be paying more. The whole thing about being unconditional is a smooth transaction. My first home purchase was subject to finance, the vendor had other offers but still picked me so it's not like having conditions rules you out of the running

Handle9

11922 posts

Uber Geek
+1 received by user: 9674

Trusted

Lifetime subscriber

#2493814 28-May-2020 17:26

dejadeadnz:

People need to stop giving bush lawyer legal advice on the legal issues here. Again, as presumably the only actual lawyer in this thread and one who's reasonable familiar with the ADLS/REINZ standard form agreement widely in use, the agreement cancellation rights and the rights of the vendor to retain the deposit in the event the purchaser fails to settle are well known and well-established. If settlement doesn't occur on the date of settlement, the vendor's lawyer serves the purchaser with a settlement notice. Once served with the notice, the purchaser has 12 working days to settle. Whilst the purchaser remains in breach, interest in accordance with the terms of the S&P agreement is payable and must be accounted for even when the purchaser eventually settles. If the purchaser doesn't settle in accordance with the notice, the vendor may at his or her election do various things, including cancelling the agreement, retaining the full deposit, AND/OR sue for damages.

Anything else is just bush lawyering and unhelpful.

Yip. Whatever the OP does they should absolutely have their solicitor serve the settlement notice if they don't settle. This starts the clock and gives all the power to the OP to extend, terminate or enforce the contract. It also puts massive pressure on the purchaser to sort their sh*t out.

I wouldn't have too much sympathy for the purchaser, it's their problem and if they are stupid enough to sign a contract they can't settle due to finance bad luck to them. As OP said they rejected a larger offer for an unconditional contract - they valued the unconditional nature of the contract and therefore are entitled to have it executed.

The agent is acting completely ethically - their contract is for an unconditional contract to be executed, not for the house to be sold. They haven't done anything wrong so are entitled to their commission.

I may seem a bit harsh but if you sign a contract it needs to be executed. NZ is far to slack on this sort of thing (although much better than other countries).

Apple TV

Stream your favourite shows now on Apple TV (affiliate link).

heavenlywild

5091 posts

Uber Geek
+1 received by user: 901

Trusted

#2493823 28-May-2020 17:31

To me, based on a similar experience, if the purchaser can't settle and obviously don't have the funds to, don't keep feeding your solicitor the fees because no legal letter will magically find the funds for the purchaser.

To go after them and their assets etc you would need to take it to court. That alone is going to cost tens of thousands and you may not get a cent back.

Handle9

11922 posts

Uber Geek
+1 received by user: 9674

Trusted

Lifetime subscriber

#2493826 28-May-2020 17:41

sen8or:
Given they stand to lose $60k if the sale collapses, I hardly think they are playing games. I'd investigate why they want (need) the extension and go from there, especially if it had no material effect on me. They may have simply been over confident in their ability to borrow and not considered what if they were declined. Perhaps they are in an industry particularly effected by COVID and whilst you say its all been transacted during the current crisis, things are changing daily. Whilst interest rates are at historical lows, I expect banks are puckering up tighter than a fish's backside at the moment with people employed in particular industries now seen as high risk. This will be an evolving landscape for some time to come.

You could argue that you may be worse off in a deteriorating market, thats true if the deal collapses, but as you said, you had 2 other offers after a single open home both of which were higher. Are you hoping to collapse the sale, keep the $60k and sell to one of the other higher bidders, thereby profiting on the collapsed sale? Your legal right to do so, but seriously? 60k is a huge chunk of coin to lose and could lead to all other sorts of issues for the buyer.

Is there a legal process to go through to collapse the sale? Will it cost you and is there any comeback from the purchasers? Does the collapse happen on the day after settlement or is there legislation that dictates what must be done.

Lots of questions to be considered

From memory the OP has lost their job and was looking to use some of the money to live on. They rejected a significantly larger offer due to the unconditional nature of the contract. They are also out of pocket for the agent commission, which the agent will keep.

The OP is 40k out of pocket (22k+18k lower offer) due to the purchasers negligence.

If it was me I'd be putting every form of pressure on the purchaser to settle and then keep the deposit. It's totally reasonable and legal to do so without some form of very compelling reason otherwise.

kingdragonfly

11984 posts

Uber Geek
+1 received by user: 12867

Subscriber

#2493832 28-May-2020 18:01

You are correct sir. I was laid off.

However I did find a lower paying job, outside Wellington, so I'm grateful for that.

I moved without an employment contract, which was pretty risky, and a little stupid. But it worked out.

dejadeadnz

2394 posts

Uber Geek
+1 received by user: 2287
Inactive user

#2493834 28-May-2020 18:07

heavenlywild: To me, based on a similar experience, if the purchaser can't settle and obviously don't have the funds to, don't keep feeding your solicitor the fees because no legal letter will magically find the funds for the purchaser.

To go after them and their assets etc you would need to take it to court. That alone is going to cost tens of thousands and you may not get a cent back.

I think that's right insofar as pursuing for damages goes. But to retain the deposit, the OP must follow the notice to settle procedure.

MileHighKiwi

782 posts

Ultimate Geek
+1 received by user: 581

ID Verified

Lifetime subscriber

#2493875 28-May-2020 19:26

What sort of bloody idiot makes an unconditional offer if they dont have the cash?!?! No sympathy.

Quic Broadband

Move to New Zealand's best fibre broadband service (affiliate link). Free setup code: R587125ERQ6VE. Note that to use Quic Broadband you must be comfortable with configuring your own router.

heavenlywild

5091 posts

Uber Geek
+1 received by user: 901

Trusted

#2493878 28-May-2020 19:32

dejadeadnz:

heavenlywild: To me, based on a similar experience, if the purchaser can't settle and obviously don't have the funds to, don't keep feeding your solicitor the fees because no legal letter will magically find the funds for the purchaser.

To go after them and their assets etc you would need to take it to court. That alone is going to cost tens of thousands and you may not get a cent back.

I think that's right insofar as pursuing for damages goes. But to retain the deposit, the OP must follow the notice to settle procedure.

Yes, agreed. Let the solicitor do their bit to keep the deposit but I wouldn't seek damages.

Handle9

11922 posts

Uber Geek
+1 received by user: 9674

Trusted

Lifetime subscriber

#2493881 28-May-2020 19:44

wellygary:
kingdragonfly:

I might be a little unsympathetic to the buyer since he's, well, not a Kiwi.

He has to have citizenship or a residence class visa to purchase residential property.

So if he was eligible to buy they house he's pretty much as "kiwi" as most people around here...

If he didn't have PR then this is what may have tripped everything up,

Do Real Estate agents check this on offers? or is it simply assumed that purchasers understand the rules?

There is documentation provided to sellers and purchasers and of course there is a contract.

Given that we are not talking about a $5 transaction failure to understand the contract or take suitable advice falls in either penny wise pound foolish or moron category.

Either way it's bad luck for both the vendor and purchaser. The vendor has done nothing wrong but now has a mess to deal with, the purchaser has made a significant financial mistake and should wear it.

Batman

Mad Scientist
30012 posts

Uber Geek
+1 received by user: 6217

Trusted

Lifetime subscriber

#2493913 28-May-2020 20:52

wow watching with interest (no pun intended)

dejadeadnz

2394 posts

Uber Geek
+1 received by user: 2287
Inactive user

#2493930 28-May-2020 21:51

bagheera:

Every time I have signed a purchase agreement, the first thing the agent has said - "this is a legal document that is binding, I strongly suggest that you talk to a lawyer before signing." If the agent has not done this, then they could be in trouble but if they have, and the buyer decides not to, then they should lose everything, plus the difference in the sale price if it sells for less. most people will be buying another house with the money from the sale, and when it an unconditional agreement, then bank etc are happy due to it being a legally binding agreement.

Agents in Auckland (certainly in my experience anyway) will rarely warn you to get a lawyer. Nor are they required to. Seriously, people need to get real here: a house purchase is the largest investment that most people will ever make. I as a lawyer (not a property lawyer) have always paid for advice every time -- that should tell you something. There are lots of things in deposited plans/titles and the like that can trap the unwary; same with LIM reports. What's a few extra hundy to a grand on a house purchase? You have to pay for conveyancing anyway.

1 | 2 | 3 | 4 | 5 | 6