Recind - Off Plan Property

PAP_2

Hi,

I'm in a bit of a sticky stituation and was hoping someone could give me a bit of advice.

I had exchanged contracts on an off-plan flat in May 2006. At the time the flat was valued at £250k and I had paid a 10% deposit to the developers.

The flat has been delayed for over two years now and just recenlty (few weeks back) recived a letter from the developers to complete on the purchase.

However, the value of the flat has fallen significantly to £190k, and I am only able to get a mortgage for 90% of the current value. I am unable find any more money or any other finance/loans to cover the £60k gap, therefore I am unable to complete the purchase.

As a result, the developer have now "recinded" the offer and are taking me to court for £60k (difference in original value of £250k and current value of £190k) plus any legal costs.

Could someone please tell me where I stand legally and what my options are? Any advise is welcomed!

Much apprecitated,
PAP

Conrad

That sounds awfull

I dont really know what to say other than go bankcrupt. My brother did and it really is no big deal (dont belive all the scaremongering).
Other than that just tough it out and go to court. Mt instinct is they cant win, but I'm not sure.

silvercar

Speak to your solicitor. There is always a risk in exchanging contracts on a property that won't be ready for such a long time. Your solicitor should have advised you of the risk.

I very much doubt the builder wants to stand up in court and demand you honour the contract. After all the 250k was never the value of the property. At the time you signed the contract it was a hole in the ground, now its built its only worth 190k.

IMHO the builders are using this tactic to renegotiate the price. Tell them you will go bankrupt and they get nothing but a property still to sell. Tell them you can afford to buy it at a reduced price and they make their sale.

Incisor

Conrad wrote: »

... I dont really know what to say other than go bankrupt. ... My instinct is they cant win, but I'm not sure.

I think that they would win, but it would not be an easy win for them and they might not get it entirely their own way. Going bankrupt is an option, may be a preferable option is to threaten to go bankrupt?

Otherwise, OP could write to them and offer the available funds and ask builder to finance the difference. This would mainly provide correspondence to put into the court record. OP needs a good solicitor fast - not the conveyancing solicitor if this was recommended by the builder - to develop the delay angle. If the developer still has flats to sell, publicity about the builder delaying for 2 years and then suing may do their chances of selling the rest more harm than winning in court, so a threat of publicity may be effective.

ruggedtoast

PAP wrote: »

Hi,



Could someone please tell me where I stand legally and what my options are? Any advise is welcomed!

Much apprecitated,
PAP

Legally you have signed a contract saying you'll buy the flat. How you finance this is your problem. The developer is so late in building it I think you have reason to be cautiously optimistic that if it did get to court, you would escape with the loss of your deposit.

SouthCoast

Have you discussed the situation with the solicitor who advised you to sign the contract?

kennyboy66_2

I doubt if bad publicity would prevent a developer at least starting legal action.

Depending on your circumstance you need to weigh up the possibility at least of going bankrupt. An alternative may be to make the developer an offer to get out of the contract, obviously you need to do this through a solicitor.

If you had say only a £10k deposit and no other assets, the offer of £10k and the threat of bankruptcy if it wasn't accepted may be the best course of action.

Jake'sGran

In view of the current climate and the fact that the government are trying to help people in difficult situations with regard to housing I don't believe you would lose in court.
People are asking if the solicitor advised you to sign the contract but I'm surprised he would have come into it at that time (very long time since I bought a house). On reflection, signing a contract is a legal undertaking, but I still think there are extenuating circumstances. To be frank I have not heard of people exchanging contracts in this country such a long time before a house is built. As there are so many empty apartments and houses now which builders have no chance of selling so I believe the your's is pushing his luck by suing. He must know he cannot gain by it. In N.Ireland a builder is selling his empty properties at half the original price and the reporter mentioned that this may be the way it goes in certain parts of the mainland.

puddy

exactly, it wasnt an exchange was it??
he paid a deposit,

however, time and time again, and probably more to come, we see these posts by people who have paid a deposit on something that then wasnt completed until years later, and then the builders are wanting the same price that the person agreed to then, on an incomplete project, how can this be?
you can bet your life that if prices had doubled in that time, they would be asking you for more money

i cant understand why they can get away with it, or at least think they can get away with it

PasturesNew

jenner wrote: »

you can bet your life that if prices had doubled in that time, they would be asking you for more money

i cant understand why they can get away with it, or at least think they can get away with it

No they wouldn't have been asking for more money. The price was agreed. It is not the builders problem if things have changed for the person or in the market. The price was agreed. Nobody was forced at gunpoint to agree the price being asked. A purchase was made.

They get away with it because it's legal. The price was agreed.

Now, as it turns out, there's a lot of this going on and prices have fallen. But the price was agreed.

The OP now needs to try to do what has been suggested above and get a post-exchange reduction in price, which would be down to the discretion of the builder. The builder might decide a bird in the hand is worth more. The size of the development might also make a difference. If it's 4 flats the developer will make a different decision to if he's sitting on 400.

But ultimately, at some point in time the OP legally agreed and signed to buy a flat at £X. And now the developer is simply asking for the balance of the money.

There are rights and wrongs at all sorts of levels in the discussion of this type of purchase and way of doing things, but ultimately the OP (an adult of sound mind) made a decision to buy that flat at £X... and if the flat was now valued at £300k he'd be practically falling over himself to complete all that paperwork.

My thoughts are with the OP.

Incisor

jenner wrote: »

exactly, it wasnt an exchange was it??
he paid a deposit,

however, time and time again, and probably more to come, we see these posts by people who have paid a deposit on something that then wasnt completed until years later, and then the builders are wanting the same price that the person agreed to then, on an incomplete project, how can this be?
you can bet your life that if prices had doubled in that time, they would be asking you for more money

i cant understand why they can get away with it, or at least think they can get away with it

From the OP: "I had exchanged contracts on an off-plan flat in May 2006. At the time the flat was valued at £250k and I had paid a 10% deposit to the developers."

For a new build, there are 2 deposits. One to secure the plot and the other paid when the contract is exchanged.