Should seller pay for my rent, whilst waiting for chain to complete and exchange contracts?

princeofpounds

gettingtheresometime wrote: »

As a matter of interest how does it work in Australia?

Yes - this. I am also curious.


Chains can be silly but they exist for a reason, which is to prevent people being temporarily homeless between selling their house and buying the next one.


How does the Australian system overcome this issue?

Smodlet

princeofpounds wrote: »

Yes - this. I am also curious.


Chains can be silly but they exist for a reason, which is to prevent people being temporarily homeless between selling their house and buying the next one.


How does the Australian system overcome this issue?

I've always wondered that too... The sum total of my knowledge is gleaned from a very ancient episode of Neighbours: There was this auction and the home owner miraculously disappeared, leaving all his stuff behind while a bunch of randoms picked over his place with no supervision other than from a random auctioneer, who paid no attention whatsoever; he was outside trying to whip up a buying frenzy.

Perhaps they don't have thieves in Australia and all Australians can afford to just go and stay in a hotel indefinitely while their house sells. Doesn't seem likely, does it?

I guess all house buyers must have to pay their vendors' rent or am I losing the plot? It's much harder to follow than Neighbours.

Skiddaw1

I think- though I'm no expert- that once an offer is accepted it becomes a contract and buyer fronts up a deposit that is lost if they pull out. Completion has to take place within an agreed time period or there are financial penalties. This is based on accounts from several friends who emigrated and bought houses in Oz.

Smodlet

Skiddaw1 wrote: »

I think- though I'm no expert- that once an offer is accepted it becomes a contract and buyer fronts up a deposit that is lost if they pull out. Completion has to take place within an agreed time period or there are financial penalties. This is based on accounts from several friends who emigrated and bought houses in Oz.

Sounds a great deal more reliable a source than an ancient ep of Neighbours! :o:o Also more like the Scottish system from what I read on here.

Thanks, Skiddaw and I hope the OP takes my post in the spirit it was meant. Different countries and cultures have different laws and ways of doing things but the law of whichever country one chooses to live in is what matters; not the way they do things back home, however much more sensible it may be.

Simby

princeofpounds wrote: »

Yes - this. I am also curious.


Chains can be silly but they exist for a reason, which is to prevent people being temporarily homeless between selling their house and buying the next one.


How does the Australian system overcome this issue?

In Australia or at least NSW in order to market your property you employ a solicitor or conveyancer to prepare a contract and this contract also contains all the relevant search information, together with what is included in the sale e.g blinds etc.. and estate agent cannot legally market your,property without this.

The contract is available for prospective purchasers to view As a buyer you view the property make an offer to the estate agent and pay a very small deposit about 1000 dollars, at that point you sign the contract and the seller also signs the contract.

The first page of the contract also has a blank which gets filled in or tick boxs for completion time ( my contract had tick boxes) which is normally 30, 45 days etc.. at this stage when making the offer you can request an extended or reduced completion time I sold a house in Sydney and accepted a lower price for completion in 15

Beyond 45 days is considered an extended completion time and would be negotiated at this time but MUST be agreed at this time.

You also check your bank ( having your mortgage in place for a value before looking )..will lend on that property and get your valuation done which takes a few days for the valuer to come out

You then have a cooling off period where you get your survey and your solicitor makes full checks of the contract this is normally 5 -10 working days. It is set down in the contract

The full deposit is then paid to the estate agent who holds it until completion.

The sale is now binding and the purchaser has to complete in that amount of days. E.g 42 days .. There are penalties if the purchaser does not complete.

Example contact https://images.domain.com.au/img/pdf/20180622/21759/0fbcedc8-4ea5-4173-b4f3-250366428743.pdf

Then completion is different... the seller goes online and complete a form for their bank or downloads a pdf and emails it to the bank giving convenycer completion date etc.. must be done normally at least 2 weeks before the sale , you also give a copy to your conveyancer or the reference number ( at least for st. George and Nab), your conveyancer nearer completion agrees to time on the prescriber completion with the bank and tells you e.g 2.15 pm. By about 2.30 the money is in your bank account ( net of mortgage disbursements etc.. ) once the conveyancer confirms to the real estate agent completion has taken place by phone call they release the keys to the buyer and the buyers deposit to the seller .

For the buyer they supply details of their bank or broker to their conveyancer and sign the mortgage contact, which also includes the banks charge over your new house etc.. the conveyancer draws down the funds at the agreed completion time ( which is known to all parties at least days before ).. once completion takes place you will see your mortgage account online... the rest of your deposit etc is taken at completion time by the bank and the bank remits The funds as instructed.

Regarding the chain that is not something I have experienced as I bought 2 houses but both were new builds ... and then sold both to move back home so I never bought and sold at the same time. My buyers were first time buyers and an investor so neither were selling property.

Linton

Thanks for the description of the Australian system. I cannot see how it avoids a chain. What if A wants Bs house. B wants Cs house and C is buying a new house from a builder. Surely C cannot commit to buying from the builder until he knows that someone certainly will buy his house. Similarly for B. But A perhaps cannot commit to buying Bs house until he,A, knows for certain that he has a guaranteed mortgage. And C cannot agree to move until the builder has guaranteed when the house will be completed, which he won’t do until close to the time.

So everything needs to be sorted before anyone can make a legal commitment to anything. That is the chain.

Simby

I checked with some friends .. you either get bridging finance, sell your house first stay with friends or rent ( lots of short term monthly served rentals) or buy first then sell owning two properties.

It was also mentioned that if you want to attempt simultaneous settlement in AU you would probably have to sell under market value ( as you would need a longer settlement time ) or pay more if you want a longer completion time on the house you buy.

From a website

What do I need to achieve simultaneous settlement?

If you want to make a simultaneous settlement work, you must have excellent negotiation skills and be willing to sell your home a little below value, or buy a little above value.

This will provide the other person with an incentive to agree to the delayed settlement.

This option often works best when the sale is between friends or family members

Everyone I spoke to said they were strongly advised in AU against simultaneous completion as it never works due to the strict completion dates , the day you make your offer you need to also include a completion date which is binding and after the 5 day cooling off period and the risk of losing your deposit is high in addition to penalty interest. If you need to change that completion date there is no obligation on the seller to accept that and you will be penalised with interest, and all your sellers costs...


Link on how people do it.. notice when they talk about chains they advise in AU it is a big risk and very very difficult

https://www.homeloanexperts.com.au/home-loan-articles/selling-buying-a-new-home/

AnotherJoe

If short term rentals were available here , without the 6 month minimum we have whatever the contract says, a lot of chain problems could be mitigated

Smodlet

AnotherJoe wrote: »

If short term rentals were available here , without the 6 month minimum we have whatever the contract says, a lot of chain problems could be mitigated

... And if rents were not so obscenely high and so many LLs were not such swine. Demand outweighs supply by such a great extent here that monthly rentals are the stuff of pipe dreams, I suspect, unless you are already filthy rich.

Crashy_Time

februarybug wrote: »

righto!
I've just moved from Aus and chains do not exist, so the concept is entirely foreign to me. It sucks for the renter to commit, and then have to wait potentially many months for everything to line up.
I guess we can always pull out before exchange of contracts, but we do like the place.
Thanks for sharing your sentiments. "get stuffed" sums it up quite well!

How does it work in Aus, you guys had a massive property bubble as well over there didn`t you? Been there once but didn`t have much interest in the property market at the time.