Investor - options contracts - Help please!!!!

cphousered1

Hi this is my first post so apologies in advance!!

My elderly in-laws have entered into a contract with an investor after seeing an advert in the paper to sell their house quickly (they need to). This investor came (invited) to their home and they 'sold' him (no money exchanged) the option to buy the house at a fixed price within 6 months and then the right to excercise a 2nd option for a further 6 months from this date.

The rep. took photos of the property when they came round (without telling my in-laws) and have now marketed the property at £10K above the contract purchase price with an estate agent where 2 of the direfctors of the investment co. are also directors. I cannot see from the contract that there is anything wrong with it per se and, although there are clearly better ways to sell your home, I can of course see that the investor needs to make money by buying at below market value etc etc.

What I'm looking for, is advice about whether it is as legit as it looks or is there some 'catch' that I'm missing, other than the hefty fee if they sell it themselves. As I see it at the minute if the selling price drops below the contract purchase price then the company will just pull out of the option. As I say it's not ideal and (although it doesn't look too good to be true) if the in laws get the purchase price they'll be happy and that's nothing to do with me!

Also, I'm fairly sure that they can get out of it as we're only 10 working days on, although the contract says (cancellation in 5), as they have not been paid the £1 stipulated by the company who bought the option nor have they been left a copy of the contract or any advice about cancellation rights.

All advice about the legitimacy, contract ending, or anything else would be very much appreciated.

Many thanks

princeofpounds

Well it sounds no different to putting the house up for sale with an estate agent, only paying a large fee for the privilege and also giving up any 'upside risk' (as the finance terms goes) to the estate agent at the same time.

In what way would this guarantee a quick sale in any way? And surely it locks them in to only one sales channel.

It doesn't sound like there is a catch beyond it being an exceptionally bad deal.

I don't know enough about contract law or doorstep selling to know if there is a cooling off period off the top of my head. There is also a question of how regulated this sort of activity is, I suspect not much.

princeofpounds

There are doorstep selling regulations but they seem to involve transactions over a specific monetary value and I'm not sure how the option relates to this (the £1 is not the true value of the option, nor is it what your parents are paying, it is what they are receiving, so you might be covered despite the £35 limit).

http://www.oft.gov.uk/business-advice/treating-customers-fairly/doorstep-selling/

The specific transaction they are proposing does not seem to be an FSA regulated activity unfortunately.

However, if they have not been paid the £1 then it would seem there is no contract in force yet as there has not been any 'consideration', which is critical to form a legally binding contract. So there may be a contract law way out of this.

There may also be consumer law exit strategies too. It's quite likely the contract runs foul of 'unfair clauses in consumer contracts' in a number of ways, but this is quite a specific issue.

TrickyDicky101

I agree with PoP - why would anyone go for this deal? What do they get out of it? House hasn't been sold and looks like it will be sold via the usual means of thru an EA. What benefit do they get above putting it on with an EA themselves?

G_M

Run a mile.

And keep running.

cphousered1

Thanks to all, quick responses much appreciated.

Just to be clear, in-laws have not paid anything and will not pay anything provided they do not sell the house themselves. The fee only applies if it is not sold through their estate agency.

I agree that it's hard to see an upside for the sellers, other than the fact that they are quite happy with the amount offered (which they will have told the rep).

I wondered whether the inv. co will simply wait 4 weeks or so to see if it sells and then pay them the BMV that they've all agreed through one of their 'property development' arms. If this is the case (as ludicrous as it seems) the in-laws would be content!

Do all think they should just get out if they can and then seek an alternative quick sale option? Are there any that are any good?

paddyrg

Investor who doesn't invest, a contract they keep from you, and a consideration not paid. Sounds well dodgy to me.

Without the actual deal terms it's hard to know...

JQ.

TrickyDicky101 wrote: »

I agree with PoP - why would anyone go for this deal? What do they get out of it? House hasn't been sold and looks like it will be sold via the usual means of thru an EA. What benefit do they get above putting it on with an EA themselves?

People are gullible and easily persuaded. No doubt there was a high pressure sales pitch.