Hi all, my situation is as follows.
NSW property.
Parents purchased property off the plan 3 years ago.
We cannot afford to settle and would like to just forfeit the deposit.
Settlement was in November.
Notice to complete was also sent end of month.
In the notice of completion it was stated that the deposit would be forfeited and they would sue, do property developers sue? And how long do they have to sue?
It’s been 3 months since settlement date.
Signed contract, renegged on contract, thought it's best to ask OzBargain rather than a lawyer…
If they can prove damages, they can sue.
Seeing as division and construction cost is very easy to quantify, they have a very strong case against you.
Moreover, considering how much property prices have cough adjusted over the past 3 years, it might also make a lot of sense for the developer to sue.
Depends on where though. Where I am, it has recovered and is on a massive climb again.
Still, if the dev can sue, they probably will. Moe money is good money.
In the notice of completion it was stated that the deposit would be forfeited and they would sue.
How much was the deposit vs what's stipulated in the contract as the penalty for non-settlement? If it's not much, they probably won't bother. If I was in your situation, I would've started by telling them straight out that I have no money to settle (instead of sitting there for three months hoping that they don't do anything). They may not sue if they know you've got no money.
Has the property gone up in price?
If the developer sued, it would be primarily be for the loss incurred on reselling the property, plus various legal and marketing fees. If the parents bought 3 years ago, I'd be worried about how the property price and values have changed since then.
Isn't that what the deposit is for? Why should they sue on-top of the deposit? That doesn't happen in normal house buying/selling why should it happen with a builder? Just seems strange to me.
If they wanted to recoup those costs when the contract is exited they could have just explicitly stated it.
Why should they sue on-top of the deposit? That doesn't happen in normal house buying/selling
Sure it does. And it is explicitly stated.
You don't understand contract law.
A deposit is paid to secure a benefit under a contract (in this case, a property). It doesn't immunise you from liability under a contract.
If you violate a contract, the other party can sue you for all reasonable damages incurred as a result of your violation. That includes what they lose in selling the property at current market rates.
They probably couldve just forfeited the deposit had they sought to terminate the contract before settlement.
I think its too late for that now because the situation changes on settlement date and the legal right to cancel the contract ends.
The notice to complete usually allows you more time to settle but you cant just ignore it.
It would probably be best to approach the developer and explain that your parents can not settle on the property and negotiate the compensation to pay.
If the developer reaches the stage where they have engaged and paid for lawyers to take action against your parents that might just have to run its course and your parents will be liable for damages and legal costs.
do property developers sue?
Lol. That's a big Yes.
Get legal advice right now.
Yes they will sue, they will wait till settlement date, and once you dont settle, they will sell the property on, and they will sue for the difference between the sale price and the price you agreed to pay at settlement. You might also be required to pay all their legal costs.
Danger here is the developer selling to a friend for a song.
To clarify the situation, we have spoken to the lawyers. (The ones who were used by both us and the developers in exchange of contracts and deposits).
No third party lawyers were involved.
They have advised us to do nothing at all and that they have never experienced any developer suing the purchaser. And that the notice to complete was to intimidate and make us settle.
The deposit was $100k and the property value has not changed since purchase.
We are happy to cut our losses. Would just want to know if there is a time period and how long usually would they have to sue if it does happen.
(The ones who were used by both us and the developers in exchange of contracts and deposits).
They have advised us to do nothing
they have never experienced any developer suing the purchaser.
the notice to complete was to intimidate and make us settle.
property value has not changed since purchase.
https://www.youtube.com/watch?v=OWwOJlOI1nU
Go somewhere else and get actual proper legal advice.
If you still have $100k equity in the property (based in your claim if has not changed in value) sure there must be a better resolution than just throwing away the $100k?
It's not equity. It's a deposit. That's how deposits work…
? If OP has paid a deposit of $100k then he has that amount of equity/ownership in the property. That's what is called equity
@Ocker: Except the deposit and settlement are essential terms that forfeits the entire deposit amount to the vendor upon repudiation.
That's why it's called a deposit.
@Typical16-bitEnjoyer: Lovin' the negs. I'd love it more if a negger could backup their view that a deposit is equity :)
@Typical16-bitEnjoyer: Yes, you are right. The deposit will only turn into equity once the property is settled. Currently it is not settled.
@sabracad: Negative.
Guess you couldn't find anything anywhere to back up your view.
You may wish to brush up on Division 3 of the Sale of Land Act in your state. :)
@Typical16-bitEnjoyer: No need for me to brush up at all - it's not my problem.
You can split hairs if you like but the comments are presupposing settlement would proceed as this is the logical option - in the absence of any groundbreaking circumstances any alternative would be moronic.
@sabracad: It's not logical as OP has said it won't be settling. The "groundbreaking" circumstances for an alternative, ie. forfeiture, are general conditions in the contract :)
See if you can on-sell the property. If the property value hasn't changed and you're looking to forfeit the deposit, you might be able to get a quick sale with a discount and still recoup some of that $100k.
E.g. give a $30k discount, pay $20k selling commission, and you're still $50k ahead.
Ah, I see, you have already sought legal advice on the matter but are now consulting with the real experts
I have found it interesting and educational.
$100k…What a f'ing waste.
Rip, may the 100k fall into wiser hands
OP why did your parents not attempt to sell the property before the completion period, after they realised they couldn't / didn't want to settle?
100k is a lot of money to just let go
Tell your parents to hit me up next time they want to throw away $100k
Take out finance, settle and then sell. Surely that's better than dropping $100K for nothing.
Nobody here can advise you
Read the contract !
I strongly suggest you talk to your lawyer or conveyancer about this ASAP and get proper advice. Call them right now.