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Didn`t think about this
Pobby
Posts: 5,438 Forumite
During a conversation this weekend it appears that an aquaintance is trying to pull out of a deal on a new build flat. He is a btl guy and has a fair bit of equity in his properties. It transpires that the developers are going to try to force him to complete by sueing him for the full amount. I guess they could do that.
Another fine mess hpi has got `em into.
Another fine mess hpi has got `em into.
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Comments
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I think you can do that in Scotland but not in England. In Scotland I think if your offer is accepted it is basically a verbal contract that you will buy the property but in England anyone is free to pull out of the deal as long as it's before exchange of contracts. Chances are that he would have put down a deposit on a new build and he won't be seeing that again but I seriously think that the developers will be wasting their money trying to take him through the courts (they are getting desperate at the moment aren't they!:eek:).1st Aim = Pay off Virgin CC - £3929.110
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Think he put down £10,000 deposit. Totally agree that the builders must be completely bricking it by now. It is a typical new build flat, instant negative equity job and I hear that a great many who have put deposits down are now trying to exit.
I can see the whole lot ending up as a white elephant.0 -
I am sure that #2 is right, but under normal circumstances you pay a deposit at the point when you exchange contracts, and putting down a deposit is pretty good evidence that a contract exists.
However, I doubt if a court would award the developers anything more than allowing them to keep the deposit.0 -
Voyager2002 wrote: »However, I doubt if a court would award the developers anything more than allowing them to keep the deposit.
Why?
I'm no expert on housing law, but the usual contract rule is that the person who didn't breach it is entitled to be put in the position he would have been in had the contract gone ahead, a with a duty to mitigate his losses.
So if the flat originally exchanged at £200k, and was later sold for £100k, why can't the builder sue for £100k?...much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
From what I hear there are up to 20 parties trying to pull out and have solicitors trying to find a loop hole to allow them to do so. Anyway, said aquaintance is in the Phillipines right now looking for more ``investment`` oppurtunities. Hey ho!0
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I don't think it's any different to when you put a deposit down on a holiday, just because you put the deposit down doesn't mean if you pull out the travel company can make you pay for the whole holiday as it can be sold on to someone else but they will keep your deposit.neverdespairgirl wrote: »Why?
I'm no expert on housing law, but the usual contract rule is that the person who didn't breach it is entitled to be put in the position he would have been in had the contract gone ahead, a with a duty to mitigate his losses.
So if the flat originally exchanged at £200k, and was later sold for £100k, why can't the builder sue for £100k?
When you put a deposit down on these new builds (a friend of mine did this exact same thing a couple of years ago) you don't enter into a contract to exchange at that point only one that means the developer can withold that deposit if you do pull out before your exchange of contracts. The developer doesn't have a leg to stand on and I wouldn't be suprised if he knows that if he doesn't try to force these peoples hands he'll go under before the year is out. If your friend waits until then they should be able to pick it up at auction on the cheap, harsh I know but that's reality at the moment!1st Aim = Pay off Virgin CC - £3929.110 -
Tbh, there must be so many property developers in panic now. Where I am there are loads of half completed develpments that must be loosing hundreds a month. These places seem to take an age to complete. I have seen stuff that is now over 2 years in completion. We can only think that the develper has had to get refinanced.
In other cities they have completed develpoments far quicker than here and have sold on I guess.0 -
If you're a builder on the verge of bankruptcy then threatening to sue people who have put down deposits may be a win-win situation.
If they succeed fine they keep going; if they fail, well they were going to the wall anyway."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
marshmallow79 wrote: »I don't think it's any different to when you put a deposit down on a holiday, just because you put the deposit down doesn't mean if you pull out the travel company can make you pay for the whole holiday as it can be sold on to someone else but they will keep your deposit.
No, they can't make you pay for the whole holiday, but if they go on to sell the holiday at half price at the last minute, they might well be able to sue for half the price.marshmallow79 wrote: »When you put a deposit down on these new builds (a friend of mine did this exact same thing a couple of years ago) you don't enter into a contract to exchange at that point only one that means the developer can withold that deposit if you do pull out before your exchange of contracts.
It depends. Sometimes people do actually exchange, there are loads of posts on this on the main housing board ATM....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
When I read the original posting, I made the (most likely correct) assumption that the man had in fact exchanged.
Once you have exchanged, especially on a new build, that contract will include a clause that says if you don't complete then you lose your deposit and are responsible for all the readvertising costs of the developer AND you are usually also still liable for the difference in price from what you were going to pay and what the newly-found buyer will pay.
e..g
£200,000 property
£20,000 deposit put down on exchange.
You lose £20,000.
Developer then advertises it again and eventually finds another buyer:
£140,000 - eventual price it subsequently sold for
£5,000 - ongoing advertising and associated costs to find that buyer
So probably the bill is:
£200,000 - £20,000 - £140,000 + £5,000 = £45,000 you still owe.
Because that detail was included in the exchanged contracts. The original buyer signed/agreed to this.0
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