Help!! The seller of our new property is refusing to settle!!

[sally123]

Hi. I really hope someone on here can help with some advice. We have purchased a property which was accepted and is now unconditional. The settlement date for both the property we have sold and the property we have purchased is on 12th May. We recieved a call yesterday from the real estate, stating that the vendor is refusing to complete settlement. He will not give a reason and will not communicate or pick up the phone to anyone now. Our settlement agent contacted his and they stated that they were instructed not to settle and not to talk about it.
To make the situation worse, the settlement will still go ahead on our property and so as from next Thursday my family and I will be effectively homeless.
We can't find a rental on such short notice and have no family or friends here.
We sought legal advice who basically advised that it may not be worth pursuing this as it could take some time and he may never agree. He stated that the property may not be worth the hassle.
How can a legal biding contract mean nothing? Has anyone experienced this or can advise where to go from here.
We are desperate and have no idea where to go from here. Seems that we are getting little help and support from anywhere.
Thanks
Sally

 

[BV]

Sally

I would have thought that the vendor is responsible to compensate you for any losses you incur from his inability to complete the transaction.

If it was this easy to get out of a contract everyone would be doing it.

 

[geoffw]

Doesn't a contract include penalties for late transfer? And why would pursuing a half million (guessing) unconditional settlement be worth it?

It would be worth getting further advice IMO.

 

[murph14]

It really depends on his contract of sale, especially any clauses regarding what happens on x days after settlement. And what is the story in that situation on your contract? In the end team 6 aren't gonna rock up in black hawks demanding he settle or compensate, so you have to look after yourself first and foremost.

Would you really go homeless for the sake of conveniencing your buyers? You might have to become diesel no. two on this train.

 

[Ocean Architect]

All depends on teh wording of your contract, but if it is a standard real estate contract and is legitimate as in all criteria of a legal contract being fulfilled (money changing hands deposits etc) then you should be able to hold them to it. Sounds to me like they got a better offer and want to wriggle out of the original contract with you

 

[Mr. Fabulous]

Have you read the contract? I suggest you read the contract. Then you will have a better idea of where you stand.

 

[Sheryn]

How can a legal biding contract mean nothing? Has anyone experienced this or can advise where to go from here.

Yes have experienced this - talk to your solicitor.

We are desperate and have no idea where to go from here. Seems that we are getting little help and support from anywhere.
Thanks
Sally

After you have spoken to your solicitor you can make some short term plans.

Question
Why was it your REA that rang and said vendor does not want to settle ring the other side's solicitor and speak to them to see if you can obtain further verbal information.


Regards
Sheryn

 

[Macca]

I would be seeking further legal advice on my purchase, I would also be getting my solicitor to advise the purchasers of my property of the problem.

I would then ask/tell the purchasers that I would not be moving for a week or two while I furiously raced around and found somewhere to rent.

After sorting out somewhere to live I would then decide what to do about my sale. It would seem that you should have some right to compensation under law, best have a read of the contract and ask another lawyer for a second opinion.

Maybe the government has a department that could give some advice.

Difficult situation to be in, time to be just a little bit selfish and look after your self first.

 

[Perp]

I feel very badly for you, sally123; you're in an unenviable position. I'm not a lawyer (not that I like to brag - boom boom), but this is my amateur understanding.

The two possible legal remedies available to you for such a breach are:

1) specific performance - ie the judge will force the vendors to perform specifically what they promised via their contract, and will force transfer of the title to you,

and

2) compensation - ie the contract won't be performed, but the vendors would have to compensate you for the cost to you of their breach.

If you really want to buy this particular property, and can demonstrate that committing to this purchase cost you something (eg you sold a home that you loved), then you may be able to force specific performance, but be aware that it will still take many months to several years to enforce, and cost you heaps in legal fees in the meanwhile. And if the vendors have compassionate reasons for wanting to withdraw from the sale, and they take the property off the market, you may throw heaps of $ at it and still not be successful in forcing specific performance. If, however, the vendors just want to pull out because somebody else is offering more (which might be demonstrated by the property remaining on the market after their breach), then you may be able to get an injunction preventing them from selling to anybody else while your legal action is pending, and your action for specific performance is more likely to be successful. The courts don't like people withdrawing just because they want a better deal, but if they withdraw because they've discovered they only have months to live or something, the courts will likely take a kinder view and are more likely to order compensation than specific performance.

An action for compensation would almost certainly be a waste of time, as it will be difficult to quantify your damages. You will incur rent, but that will probably be demonstrably less than what it would have cost you to have a mortgage in place, so you'll get nothing on that basis. And you're unlikely to be compensated for the inconvenience or disappointment. So you'll get little or nothing.

So basically, if you really, really want this particular property, you need to try and find out why the vendor wants to pull out, and if it's due to $, then it may be worth pursuing specific performance. Just putting a caveat on the title, which I should think you're perfectly able to do already on the basis of your unconditional contract, may be sufficient to make the vendor realise that they're not going to be able to sell for more to somebody else, and force their hand.

But if they have real and personal reasons for changing their mind, and you're unlikely to get specific performance, you probably have to write it off as a bad experience and move on to finding another property.

If you just want compensation, forget it and move on now.

Once again, that's my amateur take and not a substitute for advice from somebody who knows what they're talking about. Get legal advice, pronto! In particular, ask about lodging a caveat first thing tomorrow.

 

[sally123]

Hi all, thanks so much for your advice. Specific Performance has been mentioned by our lawyer and he has checked over the contracts and feels that we can pursue this. The settlement agent has put the vendor on notice and he has 14 days after date of settlement before we can recind our contract and get deposit back if we so wish. The lawyer also stated that he will write to the vendor asking that he either settle OR offer us some kind of compensation for the expenses incurred in buying the property. He will also need to pay us approx $150 for every day we don't settle after the settlement date. Whether we actually get this is another matter.
We have decided to notify our settlement agent on Monday that we cannot find anywhere else to go in 3 days and that we will not leave this house until we can find suitable alternative accom. or settlement goes ahead. Obviously we will be placing the buyers of our house in the same position as us, but with 2 young children, we really do need to be selfish. We can't have nowhere to live. If the vendor can refuse to settle and very little can be done, then we can. I'm hoping this might push all involved (REA, settlemt agents, lawyers etc) to help us and move the settlement forward. I think we are beginning to realise the house is slipping from our fingers and we need to move on. makes me feel nervous for future purchases though as feel worried that this can happen again. Thanks again and anymore advice or personal experiences of this and the outcomes would be very welcome. Sally

 

[Bird Dog]

Hi Sally.
You certainly are in a most unfortunate position and one I do not envy. My heart goes out to you and your family.
I am however going to disagree with what others have stated about you staying put and simply "passing on the problem" to the purchases of your own property.
Although I can appreciate the position you are in (I also have a young family) and I understand the fear you are going through right now, I don't believe it gives you the right to pass those problems onto the next person.

I think a genuine and open conversation with the purchases of your current property could most likely reveal compassion and the opportunity to "rent" your old house for at least a week or so whilst you find alternative accommodation.
I've known a few instances of owners stalling for whatever reason and instead of legal action, both parties come to a workable arrangement without involving the people that will profit the most from this exercise (the solicitors).
On that note, I am astounded that some people think it's totally acceptable to completely ignore a perfectly sound and just contract (for whatever reason) and believe that it will all blow over.

Finally, if either of your agents have been around for any length of time, they (or their colleagues) would have had a similar incident and will know the best work through.
Whilst not common, it's definitely not the first (or last time) this has happened.

I wish you all the very best and i hope it's is sorted quickly.

cheers

B.D

 

[Perp]

I am however going to disagree with what others have stated about you staying put and simply "passing on the problem" to the purchases of your own your own property.

I don't think that's the right thing to do, either, BD - I'm with you.

If you want to use the legal system to try and enforce specific performance, it will be essential to come to court with "clean hands". Doing exactly the same to your purchasers, as your vendors have done to you, is not only unethical, but also violates this legal principle and reduces the chances that your own legal action will be successful.

 

[Bird Dog]

If you want to use the legal system to try and enforce specific performance, it will be essential to come to court with "clean hands". .

I'd never heard of the expression Perp.. v interesting..

 

[NedKelly]

You might also want to lodge a caveat on the house to prevent them selling to someone else. I am also with BD on passing the problem down to your purchasers and I don't think you should do it. Surely you can move into a cheap hotel for a week and look for a rental in the meantime. I cannot see a court in the land denying you these expenses when you sue the vendors for compensation.

 

[pennyk]

I think there's no harm in asking the purchaser if they can delay settlement for a few days. If they say no, then you go ahead. But perhaps they are not time pressured to move in.
You never know until you ask.

 

[The Chaser]

Hi Sally

My husband and I went through the same experience in NSW about 5 years ago, so I can totally sympathise with your situation. We ended up negotiating with the seller to end the contract by agreement, subject to them paying us some compensation.

The seller advised us 2 days prior to settlement that they would not be settling and had no intention of ever settling under the current contract conditions. We discovered enough to know that there was a certain easement or right of way to do with water access that the seller wanted to extinguish (it was in a regional area). We could not agree to this request as it would leave our property with a lack of water supply, so we were at an impasse. The seller also lived next door to the property we were buying so they would have been our neighbours.

In our case the seller was open to us claiming compensation in return for our agreement to mutually end the contract.

The compensation was primarily calculated based on the fact that we had sold our own home and would thus need to move twice due to the seller's actions. So one set of moving costs were included, as was reimbursement for all our costs associated with the purchase. i.e. conveyancing/legal costs, pest & building report fees, loan fees, loss of interest on our deposit monies etc..

Our solicitor thus provided a full breakdown of our estimated out of pocket expenses that would be a direct result of the seller's refusal to settle. The seller was given a specific deadline in which to reply and if agreed, payment had to be virtually immediate. The seller agreed and the matter was settled on this basis.

In my personal opionion it doesn't sound like your seller will ultimately agree to settle. Just as we had to very quickly do, you may need to firstly accept that you won't be buying the property and shift your focus to ensuring that you are no worse off financially if the contract is able to be ended by mutual agreement.

I also agree that you definitely don't want to pass the problem onto the purchaser's of your property. Once you default on your own contract you open yourself up to the possibility that your purchaser's could end up pursuing you for greater compensation than you may (or may not) recover from your own failed purchase.

Also keep in mind that if you need to move into a hotel briefly and perhaps put your belongings into storage via your removalist company, that you can then include these costs in your estimated claim for compensation. I also agree that enquiring firstly if you can rent your home back for a while or delay settlement could be great options for the short term until you can find a suitable rental property.

The key to our situation was having a very well qualified solicitor who had dealt with similiar matters in the past. If you want to know any more details feel free to send me a PM and we can get in touch.

I hope that helps.

Angela

 

[Ausprop]

throw the caveat on and take it from there. if you can't call his bluff it probably isn't worth $100k legals and 3 years in court. leave the caveat there tho because if property happened to double in value it may be worth litigating

 

[Terryw]

I would like to add this. Just because you are entitled to sue, and may even win a court case, doesn't mean you will necessarly get any money out of the otherside. Before any litigation check that they have enough assets to cover the judgment and costs.

Good idea about the caveat too.

 

[sally123]

Hi all, Thanks for the advice. After a very depressing weekend and thinking over your mixed advice, we have decided to do the 'right thing' for everyone else and not to delay settlement on our property. As suggested, if we chose to sue for damages, we need to appear to have been compliant with our end of bargain. Instead, we were advised by our settlement to exercise our 3 day grace period after date of settlement. The buyers are fine with this and we will be out of the house by Monday. This has given us a little longer and have applied for a rental. Fingers crossed.
For anyone else in this position, the lawyer has now sent the vendor a letter putting him on a default notice, this gives him 10 days to settle. After this, we can issue a termination notice plus sue him for damages. If successful, we will recoup all costs and be out of contract. The other alternative if we desperately want the house is to pursue specific performance. The specific performance option will be heard in Supreme Court and we will need to be represented by barrister. Could take a long time. We have some time to think about our options.
This has been a truly awful experience for our entire family and the frightening thing is there is nothing we could have done differently or nothing we can do to stop this. We lost our dream home because the vendor changed his mind. His house went on the market in December and in May he apparently was informed by his bank that he could not sell. Something doesn't add up but little we can do to change it. On the positive, we are still alive and healthy......just homeless. ha ha. Thanks again for all your advice. This site has been invaluable for support and information. Sally.

 

[ozk]

Best Wishes Sally

Hi Sally,
I sympathise as well. To look forward to moving into a new home and then have your dreams dashed by another person's change of mind.
Good on you for doing the right thing by the buyer of your property, I'm sure they are understanding of your situation.
Make sure you place a caveat on the property which you proposed to purchase ASAP.
Good luck.
OzK