Hi guys,
I would like to know I've bought an apartment off the plan last year. But I may not able to settle. I'm already extended 4 weeks already. Now I'm just waiting for the bank for the last chance.
I just wanted to know what's the worst case scenario? I know that I will lose my 10% deposit and pay penalty. What else may happened? I've prepared myself for the worst day of my life.
Thank you guys.
Hi Andy
What's the issue with getting finance at the moment?
Was the property undervalued?
How many lenders/brokers have you approached? Which lenders have you approached.
If we have more details about that – we'll be able to offer some suggestions.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie,
This time has nothing to do with my broker. I've been dealing with him for a while and we had a meeting today. I think cos of my serviceability. I maxed out.
Cos I'm doing a small development in the mining town, I need a lot cash which I've already refinance a few of my properties.
Unfortunately, bought it off the plan last year and paid 10% deposit, I thought everything should be find.
Now, cos the mining slowing down so the rent decreasing, if the rent high then will be different story.
I also planning to sell one of my apartment soon. So that will free some of equity. But and again I have to pay CGT.
I will start tomorrow to have a new investment strategies.
Cheers
Andy
Which lender is it?
Regards
Shahin
TheFinanceShop | Elite Property Finance
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Andy
They could also sell the property for less than you paid and make you pay the difference and costs. Now I would approach the developer and explain what has happened and they may give you more time. From personal experience I think that when a problem like this happens the best thing to do is communicate because in most cases the developer wants to settle.
However you clearly are in breach of contract it cannot hurt to talk with them. Make sure you do this through your lawyer.
Nigel Kibel | Property Know How
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Hi Andy
You mention you have other properties and have a development of your own underway. Although I realize that under normal circumstances cross collateralising is something to avoid, it may be possible to raise finance to settle if you are willing to go down that path. when you consider the potential loss you face if you fail to settle, the encumbrance on your other property might be the lesser of two evils.
Good luck
Tony
Off the plan contracts are large and often complex.
As Nigel said, you will be up for all loses of the developer, sales commission advertising loss in price etc.
If the developer has not sold all the properties they may be more accommodating than if they are all gone. Dialogue is the key.
There is also some possibility that some part of the contract or the sales process did not comply and you may be able to walk. This takes time to determine and is usually not cheap.
good luck
RPI | Certus Legal Group / PRO Town Planners
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Get some legal advice as you may be able to legally terminate the contract.
If you don't proceed the vendor will often just take the 10% and leave it at that. But they could also sue you for any short fall.
I can point you to a recent QLD case where a developer was awarded approx $1mil for a small unit that didn't settle – value about $600k from memory.
You could be bankrupted from this so seek legal advice asap.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Hi Andy
You're not in Sydney are you? If so, give Terry a buzz for some legal advice.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Following up on Terry's post, yeah the developer can sue you for any shortfall on the contract price, and as his "price" is guaranteed he does not need to worry.
On one Gold Coast property they are sitting down with the buyers and trying to negotiate a decent outcome (some people say . go ahead and sue me …. and they explain to them how painful that will be)
Are there any 'Subject to' clauses in the contract?
I doubt it – not with an OTP purchase.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:I doubt it – not with an OTP purchase.Cheers
Jamie
But there would likely be clauses which could enable either party to terminate the contract if x is not done by y. x could be registration of sub-division with y being the date.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Yeah but none of the good old clauses that are applicable to non OTP purchases like subject to finance – assuming that's what Kong was talking about.
In any case, the OP should chat with you and see what can be done.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Good luck Andy. Certainly not a nice position to be in but definitely just be open and frank with the builder – I'm sure they want to settle just as much as you do.
There are often things that can be done.
I have numerous contracts that we are doing the conveyance on at present where my client (the buyer) could terminate up to the moment of settlement. These are usually due to the seller's agent or seller's solicitor stuffing up. And even when the agent stuff's up the seller's solicitor should pick it up, often they don't, I assume because a paralegal reads the contract rather than a solicitor. We use paralegals to do the administrative side, but a solicitor always reads the contract.
Seek legal advice
regards
RPI | Certus Legal Group / PRO Town Planners
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Thank you so much guys. I am in Sydney, my Solicitor in QLD. He pointed out to me today that ( like Terry said) they can sue me and they will try to resell the property. I have to pay the shortfall + my deposit + penalty the list goes on.
I've been trying to use Homeside cos I have a construction loan with them. That will speed the process quicker but the Val came back for that apartment was $25K less than what I bought it for. Anyway they didn't approved. Likely that I haven't start my development yet, so now I may put it on hold until that finished. I'm waiting from other bank and will see. I will give Terry a call for sure.
Will keep you guys posted this week. Thanks again with all the supports.
Cheers
Andy
Have you tried ascertain an upfront val via another lender?
Regards
Shahin
TheFinanceShop | Elite Property Finance
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Hi Andy
Two possibilities your broker and solicitor have probably already considered but worth a mention…
If you can come up with more money to add to your deposit the banks may finance your settlement with a lower LVR. Some options may be too risky to consider, but think outside the square and scramble… the loss if you cannot settle far outways exorbitant short term interest rates.
As Terry points out if X is not done by Y… this could include your sunset clause if the development is not done by date specified in contract. The developer has outs for this such as inclement weather, but contesting could buy you valuable time.
Consider contacting Terryw or Richard Taylor directly. I get the impression that what they don't know about finance in Australia could be written on a needle point.
Cheers, Tony
I second that about Terry and Richard. You're in good hands with those guys.
Jacqui Middleton | Middleton Buyers Advocates
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