Cancelling a contract

A

Anonymous

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From: Anonymous


Hi All,

Sorry for the Anon post but would like to stay arms length at present and would like to get some input from anyone who has been in this position before...

1/ When cancelling a "subject to finance" contract due to finance being declined by bank. Can the vendor force you to seek further finance.

2/ If above contract is also cancelled due to valuations not stacking up can vendor sue for the 10% deposit.

3/ What generally happens when vendors marketer gets said letter from bank.

Thanks in advance.
 
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"Cancelling a contract (sorry, really long ans)"

Reply: 1
From: Asy .


Hi Anon.

Well, I am breaking my own rule about answering anonymous posts... Please choose a pseudonym so that you will not be confused with the other anonymice... :eek:)

1/ When cancelling a "subject to finance" contract due to finance being declined by bank. Can the vendor force you to seek further finance.

1 a) Be really careful with this clause, your ability to rescind the contract will lie in the wording of the clause. For instance if your contract states: 'Subject to the purchaser obtaining finance' then they can force you to seek further finance (Although rarely do). If the contract states, ' Subject to the purchaser obtaining finance satisfactory to the purchaser', then they cannot. I hope you can see the distinction there...

The other thing you need to be really careful about in this type of case is whether or not you have paid the full deposit. If you have not fulfilled ALL your other obligations with respect to the contract, such as the payment of the full deposit, by the due date, the finance clause CAN BECOME VOID, because part of the finance clause says that the clause can only be excersised if the contract is not in default under any other clause (including payment of deposit).

Also be really careful to keep in contact with the agent, they can often help, or they, or your solicitor, can often extend the finance clause time, if that is what you want.



2/ If above contract is also cancelled due to valuations not stacking up can vendor sue for the 10% deposit.

Simple answer, Yes. If you have been offered finance, and the finance clause has lapsed (ie the time has run out) and the only thing that stops the finance is the valuation, then that is not the vendors fault. They sold you the house, and you bought above the true market value. Not only can they sue you for the 10% deposit, but ALSO the difference between your contract price and their subsequent sale price to a new purchaser. For example, if you bought the property for 100,000 and defaulted on the contract, they would be entitled to $10,000 deposit, and then if they subsequently sold the property for $90,000 you would have to make up the other $10,000 difference. This is why it is EXTREMELY important to do your due diligence, and know your market well.



3/ What generally happens when vendors marketer gets said letter from bank.

Sorry, what said letter? You didn't mention a letter...
Please post a description of the letter and I will answer in another post.


I hope this has helped, I cannot stress enough that you need to seek legal advice, IMMEDIATELY, as a good solicitor will often be able to put out fires before they get out of hand. I MUST also remind you that I am not a solicitor, only an Estate agent, and therefore all the usual disclaimers apply, and my knowledge of contract law is mainly Victorian, so if you are in another state, it may be a little different.
(Also, may I PLEASE ask that if people put up legal or real estate type Questions, let us know what state you are in.)

asy


There are no problems, only solutions which have not yet been discovered.
 
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W

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Reply: 2
From: Anonymous


Hi Anon,
I am not licensed to give legal advise
so contact your solicitor. Having said
that I believe that unless the contract stated "suitable finance" you may be in
for some litigation. I am sure that the letter from the bank declining finance
will slant things, but you should get
legal advice. I have heard of a similar
case where agreement was reached that
did involve the purchaser coming to a
financial deal with the vendor for
opting out of a contract.
 
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