Steve McNight is the champion for offering small deposits, i think $500 is his corporate policy. Good on him.
But i am selling a commercial property and the purchaser has offered an equally small deposit. My concern is not so much the deposit – but my agreement with the selling agent, when i read the clauses i note the agent is entitled to the full commission on exchange. But say the situation arises, where exchange takes place, but settlement falls through. My reading of the agency agreement is – i will owe the agent the full commission, but i have no leverage over the purchaser for extracting the full 10% deposit i will be contractually entitled to, And further – what leverage is there over the agent to continue selling the property once they have received their commission? (Assuming i honor my contractual obligations and nobody else does).
Is there anybody familiar with this situation? thanx
Just because you have an offer on the table with a minimal deposit doesn't mean that you need to accept the terms of the offer – your counter offer will reiterate that the deposit must be %, price $Y, settlement can be Z days (throw them a bone).
Interesting that commission is payable upon the sale going unconditional – is this the agent's form or the REI standard form or a special condition? Either way, this means that you are parting with $$$ before settlement and the agent walks away being fully paid upon exchange of contracts.
Your only leverage with the purchaser will be through your solicitor – contact them asap to advise of your rights. If you accept $500 in lieu of 10%, this is a change to the terms of the contract of sale and you will only be entitled to the amount of the deposit unless you sue for completion or loss of value if you subsequently sell for less.
That's the thing about purchase contracts that many people don't realise – They are not set in stone and every part of it can be negotiated. In an ideal situation the contract can be varied back and forth until both parties are happy with the terms and are equally protected. If you don't like the terms you are being offered send it back with some changes until you either walk away or get the terms you are happy with.
Your counter offer could be a 2 part deposit.
$500 when buyer signs contract
balance at this date or event
Make sure that the combination of the 2 covers the agents deposit and the date happens before the event that triggers the agents commission being payable.
D
RPI | Certus Legal Group / PRO Town Planners
http://www.certuslegal.com.au
Email Me | Phone MeProperty Lawyer & Town Planner
You must be logged in to reply to this topic. If you don't have an account, you can register here.
