Cancelling a contract of sale

[Lissy]

Hi All
This has probably been answered before, but I'm obviously using the wrong search code words!
I want to know what happens if you decide you can't settle a property when you've already gone unconditional on the contract of sale.
what penalties are involved? etc etc
This is for Victoria.

 

[geoffw]

Have you just agreed, or have you exchanged contracts?

I've been in the situation where the vendor withdrew after accepting an offer, but before exchange. I'd paid for inspections, but lost that.

But if exchange has taken place, I think 10% of the price is the penalty.

(I'm assuming Vic is more like NSW than Qld)

 

[asy]

Hiya Lissy,

Sorry to be the bearer of bad news, but, one of four things could happen:

1: They are entitled to retain 10% of the purchase price as a default penalty, PLUS the differrence between your contract price and the subsequent sale price, PLUS their costs (legal etc). Which means, for example, if you contracted at 120k and they later sell for 100k, you will have to pay them 12k (10% deposit) plus 20k (differrence in prices) plus costs, or $32k+.

2: They have the ability to sue you for specific performance and FORCE you to settle.

3: You can go to them (via either agent or solicitor or personally) and ask them to release you from the contract, offer them (say)5k and take a letter with you outlining the release, and get them to sign it on the spot.

4: they let you out of the contract (um, not really likely, especially in this market).

I'd personally try #3, it's not going to hurt you if they say no, but they might say yes!!!

hope this helps,

Give me a call if you need to 07 3390 1699.

asy

 

[Lissy]

I am looking at after contracts have exchanged (to use the NSW term!).
Thanks for the feedback, I was just trying to get an idea in my head of what might be involved. I certainly don't want to have to pursue that option!!
Plus hubby asks lots of questions and gets grumbly when I don't know the answers....