Cannot complete on off plan contract

dopester

Running_Horse wrote: »

More to the point, they contracted to buy a property four years in the future.

Four years.

Nothing to add other than consult a lawyer.

So? That is not illegal. It was their own decision based on the research they'd done, or inadequate advice they took.

I understand your point about adequate funds not being fully and legally in place. However if that was seriously applied, it would be the end of 25 year mortgages, because it is a legally binding contract in which both parties understand that the purchaser certainly does not have the full purchase price. The only difference with off-plan is that the period between exchange of contracts and completion can be very extended. However the principle remains the same.

And I reiterate what I said before - the developer will also have borrowings subject to contract. What is in place from a legal perspective in this case I believe, is regulated enough. The buyer must beware in any and all situations. The developer also operates under similar fiscal constraints.

In the developers position, they are borrowing money to build and sell a dream lifestyle, which comes at a premium. Buyers who want a piece of that are no more guaranteed that prices will go up, than somebody buying their council property at a huge discount.

The principle of long term borrowing is vitally important to any economy, and these types of loans must be protected by contract to ensure fairness between both parties. What that money is then used for is going to be based on a certain risk.

If there had been no (cyclical) downturn in values, this thread would not even exist.

The op needs legal advice, because here tomterm8 was thinking it's probably unenforceable, void the contract, deposit back... and escape without being responsible for taking losses of that pesky negative falls in value.

Another thread:

tomterm8 wrote: »

I would assume that the purchasors can't get a mortgage because the property prices have declined so much. In which case, I doubt a court could order specific performance, since if a contract becomes impossible to perform under the Law Reform (Frustrated Contracts) act 1943 they would be entitled to void the contract, and to recover a deposit paid.

Or roll in SilverCar's "professional confident" to sort the matter out.

neverdespairgirl

LandyAndy wrote: »

Not a lawyer by any chance?

PS: I know the answer;).

Yes, but not a property / land one.

Running_Horse

dopester wrote: »

So? That is not illegal. It was their own decision based on the research they'd done, or inadequate advice they took.

Not saying it's illegal. Just seems odd to commit yourself to buy something so far in the future in an uncertain world. No doubt many made money doing so.

dopester

Running_Horse wrote: »

Not saying it's illegal. Just seems odd to commit yourself to buy something so far in the future in an uncertain world. No doubt many made money doing so.

It seemed an uncertain world to a few people, but to others it was end of boom and bust, with house prices rising forever more year on year, because population rising, supply and demand ect.

Even the Wilsons are on record, I think, bragging how they bought off plan for years, then 18 months later the rise in value more than covered any extra deposit they would have had to chip in from their own money or from their own financing source.

Can't see the problem here. The only people losing out are those who chose not to over-extend their risk and join the party, when the music stopped with those who signed up to buy without securing credit in advance, and finding values have fallen are looking to be forgiven/let off ect, put on rescue schemes ect ect. - when they don't meet their commitments.

When_is_the_reset?

manintrouble wrote: »

Hi i need some advice. I am a first time investor in the off plan market. I invested my life savings (£30k) as part of a deposit in an off plan in 2006. Now it is time to complete the lenders have decided not to lend on contracts that were reassigned. My contract is 3rd in line.

A bought from the developer for £200k.
A sold to b for £280k.
B sold to me for £350k

i have no access to additional funds. I was relying on a mortgage to complete.

What is my worst case scenario ? will i lose my deposit or do i have a case ?

Any advice would be grateful.

My advice would be to run around in circles, screaming and waving your arms in the air.

Wouldn't do much good, but it would be funny to watch.

And possibly a better investment strategy than those you have chosen previously.