Need Suggestion on Property Contract Exchange

Lpaulw54jrn on 04/03/2017 - 01:23
Last edited 04/03/2017 - 01:24

Hi guys,

My wife & I is in a messy situation.

  • (Around 3 weeks ago) Inspected a house, love it, gave an offer, the vendors accepted it and we paid 0.25% holding deposit and awaiting contract exchange;
  • Passed it to our solicitor and lender(CBA), both found out there are two caveats on the property, both against to have the contract exchanged prior caveats are lifted (or documents provided they would be lifted prior settlement);
  • Also found out one of the vendor (the husband) was declared bankrupt, who held 5% of the property, the rest held by the wife and they would like to do a double-transfer (husband -> wife -> My wife & I);
  • (1st March 2017) After weeks of numerous phone calls/SMS/Email, the husband transferred his 5% to his wife, and vendor's solicitor finally promised to provide caveats withdraw document prior cooling off period, our solicitor added a clause to allow us to rescind the contract if that condition is not met and their solicitor agreed the clause;
  • (Around 5PM 1st March 2017) We signed the front page & initialled all the updated clauses, sent the scanned copy to agent, and prepare to send the hard copy to our solicitor first thing the next day;
  • The vendor's solicitor sent an email agreed to proceed with the contract exchange;
  • (Around 6PM 1st March 2017) The agent sent us an email saying the contract had exchanged successfully;
  • (Around 6:30PM 1st March 2017) The husband (who no longer hold any share of the property) sent email to their solicitor, our solicitor and the agent, asking for 100k more or he's going to walk away from the contract;
  • (Around 7:30PM 1st March 2017) Phoned the agent, who said that since the contract had been exchanged, and the husband had no share at all, the deal would proceed as if nothing happened;
  • (2nd March 2017) Gave our original copy of signed front page & initialled clauses to our solicitor, who sent the hard copy to the vendor's solicitor in the afternoon (with the front page undated);
  • (3rd March 2017) Our solicitor received a (we presume) the hard copy of the vendor's contract, with the front page dated as 1st March 2017;
  • Our solicitor contacted us saying that the contracts were not exchanged correctly, and both party could both claim they were not done right and walk away in the future;
  • Turns out the agent held the original signed front cover from vendor and dated the contract on 1st March 2017, without receiving our original copy of the contract;
  • Agent said he's been exchanging contracts this way for a very long time without any issue; while my solicitor says he did not have the legal authority to date the contract;
  • Our solicitor insists on having the contracts exchanged properly, by contacting the vendor's solicitor, trying to get him (who now holds our contract) to date the contracts;
  • Now the vendor's solicitor says he need further instruction from the vendor; given what happened previously, we are assuming they are trying to ask for a higher price;

This is the first time we are purchasing a property, and we are totally confused by what is happened. It would be great if anyone could have some suggestions here. Thanks.

Financial

Comments

  • captobvious on 04/03/2017 - 01:29
    +1

    Our solicitor insists on having the contracts exchanged properly, by contacting the vendor's solicitor, trying to get him (who now holds our contract) to date the contracts;

    Do as advised, this probably needs to be done of the bank my reject
    if the pricing changes then renegotiate or be prepared to walk away.

    • paulw54jrn on 04/03/2017 - 01:36

      Thanks for the suggestion; I have no idea which side's saying is more reliable now..
      I mean the agent says he had been doing this for a very long time, and none of the solicitors / bank had second opinions for all the properties he worked on previously..?

      • captobvious on 04/03/2017 - 01:37
        +4

        the lawyer and your bank are probably the only entities with your best interests in mind.
        Agent.. meh - really dont care what the agent has to say, he just needs to get with the program. I've purchased and sold many properties and if someone is going to screw it up it will be the agent or the vendor.

        • paulw54jrn on 04/03/2017 - 02:00

          ahh. will keep that in mind…
          Thanks!

  • garetz on 04/03/2017 - 03:38
    +1

    Never assume anything, the contract should be witnessed when signed and dated, usually by a justice of the peace.

    The solicitor and banking agent legally need to put your their client first, and should have your best interests at heart, its their obligation.
    The real estate agent always has their own interests at stake, they want the sale to go through so they get their cut.

    Sounds like something dodgy is going on here, there is real risk here, i would just walk away.

    You should report the agent to the relevant authorities as well, what he did is cause for losing his license possibly.

    • paulw54jrn on 04/03/2017 - 08:43

      Thanks for the suggestion!

    • djkelly69 on 04/03/2017 - 12:49
      +2

      The solicitor and banking agent legally needs to put you first, and should have your best interests at heart, its their obligation.

      Fixed that for you. The bank protects their interests, not yours.

      • garetz on 04/03/2017 - 18:31

        I guess you could say that, before banks were publicly listed they had a fiduciary responsibility to their customers, now they also have a responsibility to their shareholders to maximise profit which can be conflicting interests.

        However when push comes to shove if a bank puts their own interests, like selling you on a product where the bank makes profit from you, but you lose money, the bank if sued will lose out in the end. It's not only unethical but its also illegal.

  • spal on 04/03/2017 - 07:08
    +1

    I think you have got sufficiently sound advice. You are in luck that your solicitor is switched on and working in your best interest. It is Vendors obligation to provide a clean title, so no caveats. If husband has passed on his share to his wife, then the wife can sell the property, only after the date the title is updated. Include a clause that the Vendor to provide evidence of ownership and the right to transfer the property and the contract would proceed after that time. Also, with all this extra work involved your solicitor may charge you. Negotiate a clause for reimbursement of these extra expenses too. Also subject to finance clause, because the bank may not like the transaction if the vendor cannot pass on a clean title.
    Regarding the real estate agent, put things down in writing, insist on signing the revised contract in presence of the vendor. If they want to sell and there is nothing to hide they will accept your reasonable request. If not walk.

    • paulw54jrn on 04/03/2017 - 08:43

      Thanks for the suggestion! will do as instructed by the solicitor.

  • [Deactivated] on 04/03/2017 - 09:14
    +1

    Sorry things got complicated for you. If they bump the price I would walk or offer them less than the original by the same amount.

    Do smile though, that almost everyone buying a house goes through issues that aren't in the dreamy movies or on ads. I met my first neighbour by him trying to trick me out of an easement :)

    • paulw54jrn on 04/03/2017 - 09:28

      Sorry to hear that..

      I've email the agent, stating the vendor solicitor would have everything they need to exchange the contract, if they didn't made up their mind by next Wednesday, I would just walk away :)

  • Almost Banned on 04/03/2017 - 10:37
    +1

    From your description it sounds like if this deal falls through you may have a claim against the agent - maybe giving him notice to inform his insurers might help his motivation…

  • djkelly69 on 04/03/2017 - 12:38
    +3

    I assume this is in NSW given your profile location and the sounds of what is happening?

    1. Having caveats noted on someone else's title doesn't really concern you. The (standard) contract says that it is up to the vendor/s to ensure that a withdrawal/s are provided at settlement, or you don't have to settle. It may be prudent to try and satisfy yourself that they will be able to do this, but at the end of the day they aren't required to provide any evidence to prove this so you may be wasting your time.

    2. It is most unlikely they have been able to register the transfer of the husband's share to the wife already, given the caveats noted on title (and presumably a mortgage as well). More likely a special condition would be added to the contract to provide the two transfers at settlement as you mention initially.

    3. If husband is actually bankrupt, he would have a bankruptcy trustee/guardian acting for him and signing documents on his behalf. So it is largely irrelevant what the husband says.

    4. Solicitor is correct that unless the parties have agreed to it, you shouldn't be exchanging on a scanned front page, it should be the original signed copy. Easily resolved, but obviously you now have to wait for the Vendors to confirm instructions to their solicitor to proceed. FYI most agents have little idea what is correct for the contract side of things, they just do what they have been shown by someone else (who was likely also doing things wrong) or what they have always done.

    5. The bank could not care less about how the exchange took place. As long you provide them with a copy of the front page of the exchanged, signed (by the vendor) contract and whatever else they ask for, they will be happy (with the contract side of things at least).

    • paulw54jrn on 04/03/2017 - 15:47
      +1

      Thanks for the comprehensive advice :)

      • Regarding the caveats; both solicitor and the banker mentioned it doesn't really have to had the caveats withdrawn prior cooling off, but they do want to see some sort of document indication it/they will be removed prior settlement (want to see caveats withdraw application prior cooling off we suppose), took their advice as it seem logical at the time, didn't know it's not completely necessary;
      • there are extra clauses added for share transfer;
      • Good to know it would be irrelevant; our solicitor did mentioned he has checked with the bankruptcy trustee who is okay with the deal;

      A rough idea of how to exchange contract after talking with our solicitor:
      - Both party sign contract front page & initial special conditions page leaving the contract date to be blank;
      - Purchaser's solicitor send the original copy to the vendor's solicitor;
      - Vendor's solicitor confirm both contracts are exactly identical and date both contract;
      - Vendor's solicitor sends the vendor's original copy to purchaser's solicitor;

      Is what he said/my understanding correct? Not that I don't trust him, it's just I can't find anything online about the exact procedures/steps involved in exchanging contracts..

      Thanks!

      • djkelly69 on 04/03/2017 - 16:00
        +1

        Seems fair enough regarding the caveats - as I said, it can be prudent to check it so everyone doesn't waste their time.

        Yes, you are spot on with the exchange procedure. Can also be done in person (ie. solicitors meet up to do it) rather than in the mail, but depends on where the solicitors are located, etc.

        • paulw54jrn on 04/03/2017 - 16:02

          Thanks! it clear a lot of confusions

        • djkelly69 on 04/03/2017 - 16:05

          @paulw54jrn: No problems. Hope they sort it out and you get your contracts exchanged this week!

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