Forums / Getting Technical / Legal & Accounting / Vendor is not letting me terminate the contract after Building inspection

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Viewing 17 posts - 1 through 17 (of 17 total)
  • Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    Hello Everyone

    I am looking to buy my first investment property & has hit a big rock. I had a contract for a 400K house(Which is a normal price for the that type of home in that suburb).
    But I found some problems in the house in my building inspection report. There is water ponding underneath the house & there is a drainage problem & there is minor decay & wet patches as well. But the property is only 3 years old so I was not expecting this.

    So I pulled out of the contract but the vendor is refusing to repay my deposit & insisting that the builder will fix the problem as the house is under warranty/guarantee. But I do not want to go ahead with a 3 year old house with drainage problems in Flood pron area.

    Please advise if I can pull out or the vendor can stretch this situation to court(well the vendor has intentions to go to court on this)

    Please advise as my dream of property investing is facing a big challenge of legal action even before it started.

    Thanks in advance.

    Profile photo of DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    Hi,

    Better get a lawyer! I thought that if the wording for termination on grounds of the building inspection report was along the lines of "building inspection uncovering a structural fault' then you have no hope. If the wording is along the lines of "subject to the building inspection report being satisfactory to the purchaser" type thing then you could get out of it. I would consult some very good legal advice on this as quick as possible. On something like this it is worth every dollar to get good advice.

    Good luck hope it works in your favor.

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
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    Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    DWolfe

    Thanks for the comment, I check my contract & it says ” if the report is unsatisfactory to Buyer, The buyer must act reasonably.”

    So one thing is clear that I can terminate, only issue is weather I am being reasonable or not.

    What are your views on this, is it reasonable for me to terminate contract for a 3-year old house whcih has drainage problems???

    Profile photo of DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    I would be running with you I have to say. How good is the builder? How good is their warranty next time? How quick and easy will it be to repair?

    Will they repair everything like damage to walls or floor boards or will they just fix the initial problem? Will you have a fight on your hands getting the repairs done if it is not written (very well) into the contract that the vendor must get all the repairs done before settlement? What happens if you settle then are not happy with the work?

    Why is the vendor really selling? What else is wrong with the building? How much damage is there really? There are a lot of questions you need to ask yourself and a really good legal advisor. There is no point trying to get out of it if there is one drip because of a cracked pipe due to building settlement or something simple to fix and patch up. I would get legal advice on this. Even if you think you are totally right, even if everything is nice-nice between the vendor and you I would still get some really good advice especially since the words 'court', 'refusing' and 'vendor' have all been used to you!

    Good luck please let us know how it goes so we can all learn with you.

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
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    Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    Thanks for that & Yes I will posting the updates

    Yes, I am going to contact the solicitor(actually my conveyancer is also a good solicitor as well).

    This is not one drip, the house had some internal paint problems which I knew & i was okay with that. But Since I have seen the pictures of underneath the house which shows me a big pothole, un-even surface, some rubbish, wet patches & some water as well. The carpet is coming of because of excessive moisture etc.

    I am from engg. background so can understand that the whole earthwork needs to be re-done to raise the underneath of house & also due to the shape of house still there needs to be overhaul/upsizing of drainage system. I cannot understand how can a good builder make sides of house higher than the level underneath a suspended floor??

    I do not like the idea of buying a (2-3 years old) house for a good price.which is
    1. in a area which is 1800km away from me,
    2. is a flood zone
    3.not built by a good builder

    I am fairly positive about situation, as I am looking at it from the seller point of view as well, he cannot sell it to anyone else, if he is in contract with me.

    Thanks

    Profile photo of DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    Wow! That red flashing light is really going off. Run!

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
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    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,190

    I think the wording of that special condition was a bit vague. Is it reasonable to be worry about such a problem?

    You may be able to terminate the contract on other grounds though. eg some of the required reports may have been missing etc. Better check with your solicitor

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of bellzbellz
    Participant
    @bellz
    Join Date: 2009
    Post Count: 10

    From your post about "the buyer must act reasonably" – is the property in Qld?

    I would say you are being reasonable if the house has issues such as you have described, but it would also depend on whether they have changed the terms of the building/pest inspection clause to limit to "structural defects" like a previous poster has said.

    Can you get out of the Contract on finance?  Not being satisfied with the terms of your finance approval perhaps, as standard contracts in Qld also state that finance approval must be on "terms satisfactory to the buyer".

    Good luck.

    Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    Yes, the property is in QLD .

    I think that is good idea to exit on finance condition. I will check this with my solicitor,

    By the way my solicitor has same views that my case is very strong. BUT THEY ARE LAWYERS right!!!!!!

    Thanks for the reply……

    Profile photo of NBSNBS
    Member
    @nbs
    Join Date: 2010
    Post Count: 60

    I'm just new to this stuff but I thought it was standard to alter the clause of a building and pest inspection report to say something in the contract like "subject to being satisfactory to the purchaser " and same as finance suitable to purchaser. 

    I slowing learning about investing but I'm learning a lot quicker a few words can cause you some grief   did the report indicate what is the drainage issue is ie broken pipe, drainage from neighbours place, and as for being a flood pron area which area are you talking about if you don't mind me asking.

    Hopefully you can exit on finance, although if there is any (structural) cracks in the house from the drainage issue this may also be an option. How in-depth is the report?

    Hope all works out for you. 

    Brian   

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,850

    Being in a flood prone area may affect the insurance that you are able to get (but that is another issue). The question of reasonability will revolve around whether you would proceed with the contract If the identified defect with the drainage to the house is rectified/or didn't exist? If you would purchase, then there is little wriggle room. If for example, you were assured that the builder was to rectify the defects prior to the date of settlement would you still purchase the property? If so, make this a condition of settlement.

    Profile photo of businessglobalbusinessglobal
    Participant
    @businessglobal
    Join Date: 2005
    Post Count: 118

    Are you in the cooling off period? Get your solicitor onto this immediately, and make sure that the agent has not released the deposit and it is being held in their trust account and I would be onto this Monday asap, as agent cannot release the deposit to anyone until instructed by solicitors- ACT ASAP

    Profile photo of I-dream-housesI-dream-houses
    Member
    @i-dream-houses
    Join Date: 2010
    Post Count: 24

    your solicitor should be able to tell you of other loopholes including:

    1.the agent's  failure to draw your attention to certain documents and clauses when presenting you the contract , (buyer's acknwledgement etc.; 2. failure to provide certain documents (27c, sustainability declarations, etc); and so on.

    Profile photo of keikokeiko
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    @keiko
    Join Date: 2008
    Post Count: 513

    Who is holding the deposit?

    Vendor

    agent

    trust

    If its the vendor you could almost kiss that good buy.

    Profile photo of gurjjeetgurjjeet
    Participant
    @gurjjeet
    Join Date: 2010
    Post Count: 18

    hey Guys

    I am gonna get my deposit back, heard from the agent, they are releasing the deposit on vendor’s instructions.

    So what actually happened?????

    I think the agent played a role in this whole drama,

    I am new to this game & had a pre-approved finance, He knew it & (My assumptions only) that he told vendor to refuse my reasoning for termination & put some pressure on me for the purchase.

    But because I hit back strongly & told them that I will spend money in court than buying this property so they backed off.

    Another trick, I asked agent about another property I saw from his listing & showed some interest in that. & that worked too.

    Thanks a lot for your inputs, they really helped me!!!!!!!!

    Profile photo of DWolfeDWolfe
    Participant
    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    A win! Here's to not buying duds! Good on you.

    D

    DWolfe | www.homestagers.com.au
    http://www.homestagers.com.au
    Email Me

    Profile photo of sonyasalsonyasal
    Member
    @sonyasal
    Join Date: 2008
    Post Count: 421

    Just a question, you said that one of your concerns was that the house was in a flood prone area, why then had you even put an offer in if this was of concern to you. be careful to do due diligence on any furture properties that you are looking at..

    Sonya

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