Confused Re On-Selling

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From: Michael McDonald


I bought a unit off the plan. I am about to re-sell it for a higher price, well before settlement.

When I signed the contract, I paid a 10% cash deposit. When I re-sell it, the purchaser will pay a 10% cash deposit.

I thought I could get my deposit back from the vendor, and simply replace it with the deposit received from the new purchaser. My solicitor is telling me this can't happen, and that both deposits have to be held. I am in Victoria, and Victorian law applies. I am told that deposits can't be released until the Plan of Subdivision has been registered.

I was wanting my deposit back so I could take advantage of other opportunities, but it appears I can't. Any suggestions from anyone who has done this?

MicMac
 
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Reply: 1
From: Asy .


Hi MicMac,

You said:
"I thought I could get my deposit back from the vendor, and simply replace it with the deposit received from the new purchaser."

This wouldn't work, even in "usual" circumstances (i.e. NOT an OTP), because the vendor would be left for a time with no deposit, the best you could do is do a Section 27 Release of your deposit, but your purchaser's solicitor is unlikely to agree to this, as there is no absolute guarantee that you will hold title by settlement, and this deposit is their surety.


You also said:
"My solicitor is telling me this can't happen, and that both deposits have to be held. I am told that deposits can't be released until the Plan of Subdivision has been registered."

Your solicitor is correct, under section 27 (11) of the Sale of Land act. this section states that:
Section 27 (Early release of deposit) shall not operate to authorise the release of deposit moneys held ... under section 9AA.

Section 9AA refers to the Sale of Land prior to approval of the plan.

So, sorry, your solicitor is correct, the deposit cannot legally be released.

Hope this has helped.

asy


"Don't forget what happened to the guy who suddenly got everything he ever wanted...
He lived happily ever after.
(Willy Wonka).
 
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Reply: 1.1
From: Michael McDonald


Asy,

Thanks for your comments. Doesn't give me great heart though. How can I make a living "trading" properties (I realise I should be flipping, not on-selling) when I keep having to tie up a deposit everytime I purchase, even though I've sold and received a replacement deposit?

Surely some seasoned property traders out there have come up with a solution. If not, I guess I'm limited to one at a time.

Thanks again for your advice.
 
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Reply: 1.2
From: Paul Zagoridis


I understand that this is Victoria, But surely Michael's buyer can make the deposit unconditional and release it to Michael?

No way do I expect the developer to release Michael, the builder doesn't have a contract with the end buyer. But Michael should be able to take a deposit to do with as he pleases.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.2.1
From: Asy .


Micmac,

Not at all!!!

Section 9AA states that the developer cannot take MORE than a 10% deposit. It doesn't say that there is any minimum deposit.

Use your negotiating skills, and negotiate a small deposit. Even a $1000 deposit is fine. Go in there and ask!!! :eek:)

And Paul, They can't release the deposit (EITHER of them) because the plan is not registered yet and it is illegal to release a deposit under these circumstances. (Pain in the arse, I know, but there it is...)

asy


"Don't forget what happened to the guy who suddenly got everything he ever wanted...
He lived happily ever after.
(Willy Wonka).
 
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