Con­veyanc­ing trap watch out

Home­buyer leaves ven­dor out of pocket

The Coffs Coast Advocate - - NEWS - HY­PO­THET­I­CAL MANNY WOOD

AN­DREW is keen to pur­chase Kay’s prop­erty and af­ter ob­tain­ing pest and build­ing re­ports, he wishes to pro­ceed.

An­drew’s so­lic­i­tor ob­tains and re­views the con­tract.

An­drew in­forms his so­lic­i­tor that he does not have the usual 10% de­posit avail­able and en­quires as to whether he can pay a 5% de­posit.

The ven­dor wishes to se­cure the sale as soon as pos­si­ble and re­luc­tantly agrees to ac­cept a 5% de­posit.

The con­tract in­cludes a “spe­cial con­di­tion” to the ef­fect that if An­drew de­faults un­der the con­tract, the ven­dor can claim the full 10% de­posit.

An­drew pays 5% of the pur­chase price, be­ing $30,000, to the Real Es­tate Agent, as de­posit holder and con­tracts are ex­changed.

On the sched­uled day of set­tle­ment, An­drew does not have the bal­ance of the pur­chase price avail­able. An­drew ad­vises the ven­dor on a num­ber of oc­ca­sions dur­ing the course of the fol­low­ing month that he will have the funds avail­able “any day now”.

The ven­dor’s con­veyancer serves a “no­tice to com­plete” on An­drew, giv­ing him a fi­nal 14 days to raise the funds.

The 14 days ex­pire and when An­drew is still un­able to come-up with the funds, Kay ter­mi­nates the con­tract and makes a claim on the de­posit.

Af­ter re­ceiv­ing le­gal ad­vice, An­drew au­tho­rises the re­lease of the 5% de­posit, but re­sists Kay’s de­mand for the fur­ther 5%, claim­ing that the clause is in­valid be­cause it is a “penalty”.

Kay re­tains a so­lic­i­tor and is in­formed that given the word­ing of the “spe­cial con­di­tion” there is a sig­nif­i­cant risk that if she were to com­mence lit­i­ga­tion to re­cover the ad­di­tional $30,000, she may not be suc­cess­ful.

If Kay had only ac­cepted a 10% de­posit or had asked An­drew to ob­tain a 10% “de­posit bond”, she could have re­tained an ad­di­tional $30,000.

If you would like Manny to ad­dress a par­tic­u­lar le­gal is­sue, send your re­quest to manny.wood@ticli­blax­land. com.au or call him on (02) 6648 7487.

Ven­dors be­ware of ac­cept­ing de­posits of less than 10%.

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