Buyer pulling out !

B

BenQld

Hello

My parents have had a contract on their house, and it has just passed the unconditional status a few days ago. It is due to settle on the 18th Jan 08.

I was speaking to mym mum, and she said that there is actually a clause in there that the seller can pull out up until the 15th Jan if the sale of her house falls though (her house is due to be sold on the 15th I think)

I think my parents werent fully aware of this, but they are going to move into a rental property while their new house is being built, and if this lady pulls out at the last minute if her house falls though, then they would have most likely signed a 6 month lease, and will end up with a house thats not sold and also having to pay a 6 month lease they dont need.

I havent seen the exact contract yet, but how have people dealt with things like this. Is there any kind of penalty that they can impose on the buyer if they do pull out. as I am sure my parents can pull out of the lease for the house, and only have to pay the re-let fees plus any time until a new tennant is found.

The house is located in QLd, and I wasnt sure if there was anything written into a standard REIQ contract for suitations like this ?

I think my parents were a bit unaware of how this could turn out, until me the natural pesimist explained it to them.

Ben
 
Look at the exact wording of the contract. Your parents should speak to their solicitor if they are concerned. Is their buyer's sale unconditional
 
In addition always keep in mind that a contract is an agreement to do something in exchange , as in this instance , for cash.
I suspect that unless you have a written penalty clause then its stiff bikkies.

Just read the contract. Its not difficult and there is only a paragraph or two you need to locate.
I would be contacting the buyer to alleviate any unnecessary worry.
 
The contract has gone unconditional. And supposedly the buyers house that is being sold goes unconditional on the 24th Dec, so if something is going to go pear shaped, they should know about it with a bit of warning.

The reason they missed this was the day that they got the contract, their daughter (my sister) had to go to hospital from an infection (she had 18months of chemo for cancer which finished about 6 months ago) so they were quite stressed out and missed the clause.

Thanks for your help

Ben
 
well technically its unconditional for my parents, as from now on, its only the buyer that can alter the contract from how I see it

Ben
 
its not unconditional mate...

unconditional means that all conditions on the contract (building/pest/finance/subject to sale etc...) have been satisfied or weren't there in the first place.

unfortunately for your parents, if there is a subject to sale clause in the special conditions and the buyers house does not settle (or go u/c depending on the wording of the clause) then they are well within their rights to pull out of your parents contract.

the REA should have explained ALL this to them in great detail. Their solicitor should be able to give them the details of their exact situation...all depends on the exact wording.

but at the end of the day - it is not unconditional if there is a clause saying the contract is subject to sale and the sale has not yet been completed.

let me know if i can shed any more light on it for you...

cheers
UC
 
I understand what you mean about unconditional.

But what it does mean, is that my parents dont have any control of the suitation now, its all in the buyers hands, ie making sure her house gets sold

Ben
 
yep...understand where you are coming from, but in reality - they never did have control of the sale. All contracts in Qld are subject to a number of things...

first is the 5 day cooling off period - a buyer can pull out in that period without a reason (albeit subject to .25% penalty if enforced).

second is the "standards" building/pest/finance - can pull out under any of the three by simply stating that it's unacceptable or refused etc etc.

then there is the solicitor - a good solicitor will get you out of most contracts given that there are many stupid agents out there who don't know how to fill them out properly.

then there is the pre-settlement inspection - a buyer can pull out if the property is not exactly as per the contract etc. and that is after it is unconditional (this gets messy - but it does happen)


a sale is not a sale until settled - i have seen buyers pull out of the sale an hour prior to settlement etc.


you are correct though - your parents must sweat on the sale of the buyers house unless the wording of the clause is dodgy etc - your solicitor should be able to tell you that - most agents write their own clauses and most aren't worth the paper they are written on.

cheers
UC
 
twobobsworth said:
I'm a little confused. Doesn't the vendors solicitor draw up the contract (this is what happens in NSW)
Click to expand...

no.

in qld the basic contract document is a pre-formatted form prescribed by the state govt. there are different companies/solicitors/REIQ etc that have taken the base document and added to it to make it user friendly etc, but in general it is largely the same.

agents then fill in the blanks and add any special conditions (subject to sale etc.) as required by the purchaser (if they are smart, they get the clause from a solicitor - if not, they right it themselves).

The document is then signed by the buyer and becomes an "offer". The to and fro then commences until parties agree on terms, conditions and price. Once that happens and both parties have signed, the agent dates it and it becomes a "contract"..

the same form is used throughout the whole proceedings...it changes legality and name as the process progresses.

does that make sense???

cheers
UC:D
 
Don't sweat it Ben. Chances are the buyer will sell his house as intended, and your parents will settle.

However, your parents need to learn a big fat lesson from this.

It never ceases to amaze me how people can pay more attention to choosing their cat's food than they do to carefully considering a significant move like this.

And I'd never rely on a REA (sorry UC), solicitor, mortgage broker, or bank officer to think these things out for me.
 
I have heard the UK shows sometimes quote a figure of about 30% of buyers never getting to settlement. The UK system sounds very different to ours and it seems that until "exchange" a purchaser or seller can change their mind, whereas here we go unconditional much earlier in the process.

These shows talk about people being "in a chain" or in a good position to buy because they are not in a chain. Often the house continues to be marketed even though it has gone to contract, but it seems until "exchange" there is no certainty. At least with our system, there is some certainty once contracts go unconditional.

Even more frustrating must be the Scottish system of "bids over" which seems to be very like our tender system, which I also dislike. I would much rather bid at auction than bid by tender. At least with auctions you can see what is going on. With one UK show a couple fell in love with a house and put in their best offer in a "sealed bid" process. They later found out their bid was 85 thousand pounds higher than the one below them. They didn't go ahead, can't remember if they negotiated the price down or pulled out entirely.

Anyway, BenQld, hope your parents get good news tomorrow so they can make firm decisions.

Wylie
 
It is very common in Canada as well. Many homes are conditional on the sale of another.
When selling to other investors, you presumably wouldn't have that problem as often.
 
Years ago it was not uncommon for purchasers to sign a contract conditional on the completion of the sale of their own home, but it would not be a condition that most people would agree to these days with the market running hot.'

Let's face it, with the market running hot, who would effectively take their house off the market with such a condition hanging over their sale?

When things slow down again, I am sure it will again be more common.


Wylie
 
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