Buying a house - Real estate agents

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#1404588 12-Oct-2015 19:09

tdgeek:
eracode:
tdgeek: This doesnt cover the finance clause we are discussing but a good short read

http://www.propertygenie.co.nz/property-and-the-law/property-settlements

That's right - but it's talking about what happens if you don't go ahead and settle on an unconditional contract. What we have been talking about just above, is a conditional contract - conditional on finance.

If you fail to settle on an unconditional contract, all hell breaks loose. I know because I have been there and done that as a purchaser - and won against the vendor.

Ok. The contract on day one is legally binding. It has conditions, so it is unconditional, but that doesn't not make it a legally binding contract. Conditions are good. They serve a purpose. Finance being one such purpose. If you seek finance to a reasonable degree, and fail, the legally binding contract ceases to exist. It automatically lapses, that would occur when such evidence was accepted by the vendor, such as documentation. I am sure that in the real world, lawyers and banks manage this. If you don't reasonably attempt to secure finance, you may feel the contract lapsed, the vendor wont. And ultimately the court will decide if it went that far. In real life I expect both lawyers would hash this out and seek a compromise, otherwise the judge will decide if the condition was met or not met

Well put and I accept pretty much all of that. The inclusion of 'clause is solely for the benefit of the purchaser' will bend it that way and provides some control for the purchaser, which the vendor may have trouble acting against if they have accepted that wording.

Sometimes I just sit and think. Other times I just sit.

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#1404590 12-Oct-2015 19:13

tdgeek:
joker97:
tdgeek:
joker97:
tdgeek: Hopefully we wil get a correct statement on here. But I can't see the finance clause being the easy way out. Clauses are there to provide suitable options, not easy exits. I'd expect the enforcement to be, your bank faxes us to say an application for a loan, with deposit was made to the value of the contract and it was declined. I'd also expect that the period of the finance clause will have a date as mentioned, and on that date it goes unconditional. And if you can't fulfil the contract, which already existed once both parties signed, and you cannot show reasonable attempt to secure finance, I see penalty payments, such as a $ figure, interest until its sold, perhaps even a topup if it fails to meet the price that was breached. I've studied law as part of a finance degree, Company, Partnership, Torts, and the law is reasonable. Its not about creating easy out loopholes IMHO.

You obviously haven't bought a house. You can put whatever clause you want. Whether the vendor accepts it depends on his situation, or he may counter with some conditions of his. No finance when there is a finance clause means deal's off. Period.

Um I've bought a few houses, first when 19. Sold one the other day, this one soon, buying next year. The issue here is not about a finance clause its about what effect does finance clause have. If there is a finance clause, then you have to carry out reasonable efforts to get finance, if you don't, you lose. That starts with your deposit, usually 10%. You then pay interest until its sold. As one of my copy and paste posts show, you can also be liable for reduced property values if the value goes down. And any other costs that the vendor has lost by not recieving the settlement on settlement date.

But tks for the condescending-ness if there is such a word. Re read. Its about what do you have to do to exit a subject to finance clause.

My apologies. In my decadeof dealing with non commercial real estate, when someone can't get finance, the deal's off. I suppose the vendor is able to challenge what efforts were made to obtain finance etc if they wanted to, and, depending entirely on the wording of the contract. If it says finance that is acceptable to buyer, it favours the buyer. going 1 miilion into dept and living on $2 a day is definitely not acceptable to me. If it says buyer must show proof of rejection of finance from 4 big banks, then the outcome might be different.

The transcript you pasted I believe was a commercial one, and as such the stakes are higher, and the legal budget reflects that.

Apology accepted, subject to my mood after watching F1 tonight! No doubt, aside from this thread the finance side is more detailed, and more than meets the eye. Te main issue in this thread was the ease of existing contract using it as an easy out. If I'd been declined by Westpac, just, and that was it, I'd fail. If I was way short of the mark, possibly one bank would do. With the oft rumoured Auckland bubble bursting, this might well become reality for an unfortunate few. Im not sure how that would work out for any contracts signed and not settled and prices fall. I read the other day that a certain foreign group of buyers have gone off AKL.

My gratitude for your kindness.

Now let's day i have $30,000 which is a 10% deposit for a 300k house (yes it's a different world outside of Auckland).

So Upon Showingg up in court i now have $14,000. Less than 5%. What is the judge going to rule when i show them what my bank manager then says?

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#1404591 12-Oct-2015 19:13

On Topic

Whats everyones thoughts on deadline treaties?

We will be selling where we are now in coming months, I toyed with that idea. The place next door sold like that privately. Agents do it as well for the standard fee.
To me it seems a buyers nightmare, you are really forced to offer your top dollar off the bat. I assume that the seller cannot or should not discuss offers with other buyers?
I guess its a good option for a private seller. The other argument being that marketing wise, an agent can get more exposure, plus an individual wont have the knowledge to easily market it well, what sort of photos on the sign, where best to advertise, tips and tricks. (Houses always look bigger when agents arrange them) Found that out with a new place we looked at recently, and the one we just sold. Im many ways, set a top reserve and let an agent do it properly by auction or offers over $X and accept the fee?

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#1404592 12-Oct-2015 19:15

joker97:
tdgeek:
joker97:
tdgeek:
joker97:
tdgeek: Hopefully we wil get a correct statement on here. But I can't see the finance clause being the easy way out. Clauses are there to provide suitable options, not easy exits. I'd expect the enforcement to be, your bank faxes us to say an application for a loan, with deposit was made to the value of the contract and it was declined. I'd also expect that the period of the finance clause will have a date as mentioned, and on that date it goes unconditional. And if you can't fulfil the contract, which already existed once both parties signed, and you cannot show reasonable attempt to secure finance, I see penalty payments, such as a $ figure, interest until its sold, perhaps even a topup if it fails to meet the price that was breached. I've studied law as part of a finance degree, Company, Partnership, Torts, and the law is reasonable. Its not about creating easy out loopholes IMHO.

You obviously haven't bought a house. You can put whatever clause you want. Whether the vendor accepts it depends on his situation, or he may counter with some conditions of his. No finance when there is a finance clause means deal's off. Period.

Um I've bought a few houses, first when 19. Sold one the other day, this one soon, buying next year. The issue here is not about a finance clause its about what effect does finance clause have. If there is a finance clause, then you have to carry out reasonable efforts to get finance, if you don't, you lose. That starts with your deposit, usually 10%. You then pay interest until its sold. As one of my copy and paste posts show, you can also be liable for reduced property values if the value goes down. And any other costs that the vendor has lost by not recieving the settlement on settlement date.

But tks for the condescending-ness if there is such a word. Re read. Its about what do you have to do to exit a subject to finance clause.

My apologies. In my decadeof dealing with non commercial real estate, when someone can't get finance, the deal's off. I suppose the vendor is able to challenge what efforts were made to obtain finance etc if they wanted to, and, depending entirely on the wording of the contract. If it says finance that is acceptable to buyer, it favours the buyer. going 1 miilion into dept and living on $2 a day is definitely not acceptable to me. If it says buyer must show proof of rejection of finance from 4 big banks, then the outcome might be different.

The transcript you pasted I believe was a commercial one, and as such the stakes are higher, and the legal budget reflects that.

Apology accepted, subject to my mood after watching F1 tonight! No doubt, aside from this thread the finance side is more detailed, and more than meets the eye. Te main issue in this thread was the ease of existing contract using it as an easy out. If I'd been declined by Westpac, just, and that was it, I'd fail. If I was way short of the mark, possibly one bank would do. With the oft rumoured Auckland bubble bursting, this might well become reality for an unfortunate few. Im not sure how that would work out for any contracts signed and not settled and prices fall. I read the other day that a certain foreign group of buyers have gone off AKL.

My gratitude for your kindness.

Now let's day i have $30,000 which is a 10% deposit for a 300k house (yes it's a different world outside of Auckland).

So Upon Showingg up in court i now have $14,000. Less than 5%. What is the judge going to rule when i show them what my bank manager then says?

As in you had the deposit, and now you haven't, hence cannot buy due to that? How did you lose the 16?

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#1404600 12-Oct-2015 19:38

Lawyers' fees

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#1404602 12-Oct-2015 19:43

joker97: Lawyers' fees

1. From buying the house/selling your old one?
2. For this court case as you backed out of the contract?

Sorry, just trying to pick the situation

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#1404616 12-Oct-2015 20:07

When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

Basically running around being d*ck with contracts is a good way to get sued. Fortunately most people aren't as it really does just waste other people's time.

If you want a chance to get out of the contract, in my experience most vendors are ok with conditional contracts that give you a chance to withdraw if they are short term (7-14 days) and offer a cash out clause where the vendor can accept another unconditional offer and give you a few days to go unconditional.

Also if you are a vendor bear in mind you are obligated to pay the commission on an unconditional contract to the agent even if the purchaser doesn't settle. Never accept a contract where the deposit is less than the agents and solicitors fees.

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#1404620 12-Oct-2015 20:17

tdgeek:
joker97: Lawyers' fees

1. From buying the house/selling your old one?
2. For this court case as you backed out of the contract?

Sorry, just trying to pick the situation

Court case

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#1404621 12-Oct-2015 20:18

Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

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#1404627 12-Oct-2015 20:30

joker97:
Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

If the purchaser doesn't complete an unconditional contract then they are responsible for compensating the vendor for their losses incurred under that contract. They don't have to buy the house but they will have to pay any costs incurred as a result of them not buying the house -eg the agents fees, interest lost, costs incurred in chasing the money, the price difference if the value of the house etc. We went through this when selling my grandmothers house in a rural town when the purchaser chose not to settle. It cost them about $40k settlement on a $150k house as values dropped in that town.

It's a bit of a moot point as generally the deposit is paid when you go under contract.

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#1404628 12-Oct-2015 20:33

joker97:
tdgeek:
joker97: Lawyers' fees

1. From buying the house/selling your old one?
2. For this court case as you backed out of the contract?

Sorry, just trying to pick the situation

Court case

You'd actually have paid the deposit, 10% down on signing. So the court case will have to look at why you aren't going ahead. Id have thought that the lawyers would have worked together to get the deal done, and why you can't, I assume get a mortgage. If you tried to,but failed and had evidence of that, there is no need for a court case, so you wouldn't be there. If you could get a mortgage then backed out, the deposit will be held, to cover the costs of the vendor. If there was a non house reason why you couldn't go ahead, lost job, had your house damaged and not fully insured etc, thats a reasonable case to be in position of not being able to secure finance or deal with the finance if you had arranged it. At the end of the day, courts in tort cases (civil law) are reasonable, they don't favour one party over the other. Fair and reasonable, from every angle.

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#1404629 12-Oct-2015 20:37

Handle9:
joker97:
Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

If the purchaser doesn't complete an unconditional contract then they are responsible for compensating the vendor for their losses incurred under that contract. They don't have to buy the house but they will have to pay any costs incurred as a result of them not buying the house -eg the agents fees, interest lost, costs incurred in chasing the money, the price difference if the value of the house etc. We went through this when selling my grandmothers house in a rural town when the purchaser chose not to settle. It cost them about $40k settlement on a $150k house as values dropped in that town.

It's a bit of a moot point as generally the deposit is paid when you go under contract.

Thats correct. I feel where Joker is heading is what is reasonable, and can the person in the worst position i.e. the buyer if there are finance issues, fight against the seller and the courts. I believe fully that is not an issue. I am sure in many of these cases they get resolved by lawyers, banks, all trying to salvage a situation. There may be options to decrease deposit should an unrelated issue hit the buyer, extend the term, have a repayment holiday.

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#1404636 12-Oct-2015 20:54

tdgeek:
Handle9:
joker97:
Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

If the purchaser doesn't complete an unconditional contract then they are responsible for compensating the vendor for their losses incurred under that contract. They don't have to buy the house but they will have to pay any costs incurred as a result of them not buying the house -eg the agents fees, interest lost, costs incurred in chasing the money, the price difference if the value of the house etc. We went through this when selling my grandmothers house in a rural town when the purchaser chose not to settle. It cost them about $40k settlement on a $150k house as values dropped in that town.

It's a bit of a moot point as generally the deposit is paid when you go under contract.

Thats correct. I feel where Joker is heading is what is reasonable, and can the person in the worst position i.e. the buyer if there are finance issues, fight against the seller and the courts. I believe fully that is not an issue. I am sure in many of these cases they get resolved by lawyers, banks, all trying to salvage a situation. There may be options to decrease deposit should an unrelated issue hit the buyer, extend the term, have a repayment holiday.

Agree, as most people who genuinely get into issues get slack from all involved. There are also two scenarios here, which I think are being discussed - one of which you can legitimately withdraw Fromm the contract and the other where you have to beg.

1) Enter into a contract, which you think you can complete, subject to finance. Before it goes unconditional your circumstances change, due to something unforeseen, and you can't get get finance. This you can, and should, withdraw from.

2) You enter into a contract, finance is ok and you go unconditional. Something changes after you go unconditional and your finance falls through. This one you have a problem and are reliant on good will from all involved.

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#1404643 12-Oct-2015 20:59

Handle9:
joker97:
Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

If the purchaser doesn't complete an unconditional contract then they are responsible for compensating the vendor for their losses incurred under that contract. They don't have to buy the house but they will have to pay any costs incurred as a result of them not buying the house -eg the agents fees, interest lost, costs incurred in chasing the money, the price difference if the value of the house etc. We went through this when selling my grandmothers house in a rural town when the purchaser chose not to settle. It cost them about $40k settlement on a $150k house as values dropped in that town.

It's a bit of a moot point as generally the deposit is paid when you go under contract.

When did the SAP go unconditional? The buyer cannot confirm finance. Not a cent is paid. The vendor takes him to court to investigate his finance. Waste of time and money for the vendor.

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#1404658 12-Oct-2015 21:14

joker97:
Handle9:
joker97:
Handle9: When you enter into a contract you are generally obligated to take all reasonable endeavours to satisfy the contract. This has been upheld a number of times by the courts. The article below is quite a good summary.

http://www.lawlink.co.nz/articles.php?articleid=110

With joker97s example above you would in all likelihood be up the creek without a paddle. You would have to prove why you didn't have the money and probably all your financial and email records would be discoverable.

So the judge rules one must buy the house. How is one going to buy the house? By paying $14,000? He can rule all he wants, the buyer can't afford the house.

If the purchaser doesn't complete an unconditional contract then they are responsible for compensating the vendor for their losses incurred under that contract. They don't have to buy the house but they will have to pay any costs incurred as a result of them not buying the house -eg the agents fees, interest lost, costs incurred in chasing the money, the price difference if the value of the house etc. We went through this when selling my grandmothers house in a rural town when the purchaser chose not to settle. It cost them about $40k settlement on a $150k house as values dropped in that town.

It's a bit of a moot point as generally the deposit is paid when you go under contract.

When did the SAP go unconditional? The buyer cannot confirm finance. Not a cent is paid. The vendor takes him to court to investigate his finance. Waste of time and money for the vendor.

That's not what you wrote though - you wrote about the money disappearing before you went to court, not before you tried to get finance. If you read my post immediately above you can see I agree with you.

The reason that a vendor would do this is if you made a high offer and you changed your mind or the market moved and they couldn't get that price again.

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