Off The Plan Property-Cancelled By Vendor

LFresh0ffTheBoat on 28/06/2017 - 10:06

We put a deposit on off the plan property 1.5 years ago.
Few months ago we got a letter from the Builder’s solicitor stating that they can’t continue the project due to their financial condition.
As below;
“We refer to the abovementioned matter and have been instructed that our client is not able to proceed with the present Plan of Subdivision due to being unable to sell the allotments of the said Plan.
Due to lack of sales, our client has not been able to obtain finance to find further development of the project and we are instructed to request your client’s confirmation that the Contract of Sale be terminated by mutual agreement with all deposited monies paid by your client to be returned to your client without deduction.
Could you please seek instruction and let us have your reply as soon as possible. ”

We agreed to withdraw the contract and deposit to refund. But after 3 weeks their solicitor send another letter stating that they can proceed with the project if we extend contract time by 1 year. We denied as we already put an offer to another property.

Later builder wanted us to pay their legal charges for cancelling the contract or they will hold our deposit.

Our solicitor suggested to pay the fee and get the deposit back and seek legal advice later and we did the same.

Is it worthy to lodge this to VCAT? Or do we have any other choice?

Financial

Comments

  • QW3RTY on 28/06/2017 - 10:12
    +7

    Sounds like an absolute mess on the developer's hands. Happy that you managed to get free of the situation.

    Our solicitor suggested to pay the fee and get the deposit back and seek legal advice later and we did the same.

    I'd stick with the advice provided by the solicitor. You should now pursue the developer for the legal charges, noting their previous offer that deposited monies will be paid back to the depositor without deduction.

    • Fresh0ffTheBoat on 28/06/2017 - 10:17

      Thank you for your reply.
      They asked us to pay legal fee separately to their trust account and we got receipt saying "On account of costs & disbursements".
      Then they paid our deposit monies.

    • bdl on 28/06/2017 - 10:29

      This.

  • tsunamisurfer on 28/06/2017 - 11:00
    +2

    This was probably the right thing to do because it seems there is a risk that the developer is financially unstable, if they went down with your deposit it would be terrible.

    At least now you are only exposed for the legal fees.

  • endotherm on 28/06/2017 - 11:14
    +6

    Buying off the plan was discussed on The Checkout recently https://www.youtube.com/watch?v=1ky25sSb6ZA.

    You should be entitled to interest payments for your deposit. I don't know why you would be responsible for their legal fees when they requested the termination. I'm not sure I like your solicitor's advice, but I won't argue with it as I don't know all the details. Just because the builder is asking for you to pay his costs doesn't necessarily mean he has any right to do so. I notice it is the builder demanding the money and holding your deposit to ransom, and the solicitor is simply offering you an extension. Usually demands would come from his solicitor, which makes me think it doesn't hold a lot of weight.

    Why would you ask for opinions on the internet when you already have legal advice?

    • Fresh0ffTheBoat on 28/06/2017 - 11:50

      Vendor was not ready to release monies without paying legal fees so my solicitor may have suggested to go that way.
      And we had settlement with new property in few weeks time.

  • Kail on 28/06/2017 - 12:03
    +3

    I would definitely demand:
    - legal fees reimbursed
    - interest on the deposit

    Because the cancellation was 100% requested by the developer, not you. Don't let them steal your money.
    I would at the very least want to walk away without having to pay any fees whatsoever. They cancelled, not you.

    • Fresh0ffTheBoat on 29/06/2017 - 08:49

      thanks, is it worth lodging claim to VCAT?

      • Kail on 29/06/2017 - 11:25

        Whether VCAT is the correct place to go, I am not sure.
        If you think it's the best place to lodge a claim then definitely. I would want those legal fees back at the very least. I would also ask for deposit interest but you can always drop that later as part of the negotiation. Maybe have a good look at the laws around buying off the plan and what happens when the contract is broken by the developer. See if you can find it written clearly what each party is and is not entitled to.

      • endotherm on 29/06/2017 - 18:26

        I would say yes, you are entitled to all that interest money, let alone the extra money in fees that was extorted from you to retrieve what you were legally entitled to in the first place. You could risk the builder crying poor and going out of business, not being able to repay it. I doubt that is the case as his solicitor has indicated he is still trading and is intending to still be in business a year later. Your deposit money was supposed to be held in trust, and released by the solicitor once the contract was cancelled. That is why these trust accounts are required to be set up this way, so that one party can't access it or deny it without the other parties consent. It looks like he just illegally held your money in a private account (or already spent it), and refused to give it to you unless you paid more money and complied with his terms.

        Once again, you have your own solicitor in this matter, use him! Ask HIM whether you should go to VCAT. It will be better advice (and legally protected) rather than relying on opinions on internet forums.

  • 87percent on 28/06/2017 - 12:57
    +3

    what's the likelihood of the developer realising that the property is worth more than they originally sold off the plans for and wanting more money?

    • aragornelessar on 30/06/2017 - 20:00

      Yeah, dont be surprised to see it back available for sale!

  • [Deactivated] on 28/06/2017 - 14:04

    That's the risk you took m8

    Developers are all shonks

  • Ughhh on 28/06/2017 - 17:16
    +2

    Later builder wanted us to pay their legal charges for cancelling the contract or they will hold our deposit.

    Wtf, extending the contract is changing the original contract terms, thus they broke/cancelled the original contract first.

    • Fresh0ffTheBoat on 29/06/2017 - 08:47
      +1

      Yea, but we had to pay to get our deposit back

      • Ughhh on 29/06/2017 - 13:35
        +1

        Isn't this Basically extortion? They cancelled/changed the contract, thus you shouldn't be responsible for their legal charges nor should you lose your deposite. Not a lawyer here, but maybe seek a different lawyers opinion?

  • altomic on 29/06/2017 - 09:02

    bikies

    how much was the fee?

  • lehatu on 11/07/2017 - 22:23

    geez man, to bad to hear this as a Property Consultant myself

    As anyone suggested, pay the fee first to get the money back then go for VCAT if possible, of course, check with your solicitor to know if the cost of doing so and the interest you receive is worth it

    Next time check with the developers' history first, there are now lots of bad/first time dev from "other" country (you know what "other" is) or just go with a good developer (check their finished projects), that's why my company only work with big developers lol, these things can happen

    All the best guys!!!

  • Toons on 11/07/2017 - 22:39

    Slam them on their Facebook page nothing hurts them more i've seen a few crumble over pressure from the truth.

    People will stay away they will lose contracts

    It's got sweet FA to do with them the developer screwed it

    Next you will have the architects and consultants they don't stop trying to leech and at the end of the day we all know it's a con they count on a percentage to fold to the demand

    When it's you that is owed money all costs associated with it including interest accrued while your money was sitting in holding

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