In NSW, exhange contract without settlement ?
- Thread starter scha9799
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An expert will drop by soon to clarify..in the mean time..
I don't know about criminal charges, but I believe the vendor is within their rights to seek (reasonable) damages too.
I don't know about criminal charges, but I believe the vendor is within their rights to seek (reasonable) damages too.
sorry about the confusion.
In NSW auction, the contract exchange is when the bid won and settlement date is 42 days later.
A client of mine was bidding in the auction, he won the bid. He put down the deposit. However, when the time comes to settlement, his finance is not ready yet. He can't settle on time. and possibility can't even settle the property.
In this case, Is the vendor able to sue for the buyer false bidding at the auction? or will the vendor have the right to pursue for a legal action such as putting the buyer behind the bar apart from forfeiting the 10% deposit ?
In NSW auction, the contract exchange is when the bid won and settlement date is 42 days later.
A client of mine was bidding in the auction, he won the bid. He put down the deposit. However, when the time comes to settlement, his finance is not ready yet. He can't settle on time. and possibility can't even settle the property.
In this case, Is the vendor able to sue for the buyer false bidding at the auction? or will the vendor have the right to pursue for a legal action such as putting the buyer behind the bar apart from forfeiting the 10% deposit ?
this is a civil matter and not criminal so there could be no criminal charges resulting from it.
It is just a breach of contract which could result in 1 of 3 things happening:
1. Vendor allows the purchaser to terminate the contract with a refund of deposit
2. Vendor issues a notice to complete given the purchaser 14 days after this to settle. If no settlement then:
a) vendor keeps the deposit and terminates the contract, or
b) vendor keeps the deposits tries to sell and then sues the purchaser for the extra costs incurred - agent commissions, adertisings, reduced sale price etc
If it goes to court and a judgement awarded then the vendor could bankrupt the purchaser if they do not pay in X days - 30 days I think.
I think in most cases 2a is what happens.
Doesn't the recent NSW case of the well known actress take the position that 2b applies to some rather than 2a ??? She was sued for the vendors losses attributable to finding another buyer and its sale at a different price. She attempted to argue that her liability was limited to the contract penalty of 10% and the vendors sale to another buyer for a lower price wasnt her issue
She tried to argue that 2a was her limited liability but court didnt agree.
I might argue that 2a may be the norm but it depends on the financial position of the two parties. If one can afford to sue the other and the other has known assets then 2b would be the better outcome. Dont think her infamy and apparent income / lifestyle assisted her case.
She tried to argue that 2a was her limited liability but court didnt agree.
I might argue that 2a may be the norm but it depends on the financial position of the two parties. If one can afford to sue the other and the other has known assets then 2b would be the better outcome. Dont think her infamy and apparent income / lifestyle assisted her case.
And its CGT event H1...The proceeds are taxable with no CGT discount. Deposit forfeiture.
The capital gain "can" be reduced by the selling costs incurred (eg legals) BUT>>>>> It means those same legals dont add to the CGT base for the eventual sale later if already claimed on this CGT event. And you cant get a CGT loss from event H1.
Tip : Get lawyers to load their costs for the forfeited deposit costs and minmise their fees for eventual resale. That way the CGT costs of legals are effectively doubled
The capital gain "can" be reduced by the selling costs incurred (eg legals) BUT>>>>> It means those same legals dont add to the CGT base for the eventual sale later if already claimed on this CGT event. And you cant get a CGT loss from event H1.
Tip : Get lawyers to load their costs for the forfeited deposit costs and minmise their fees for eventual resale. That way the CGT costs of legals are effectively doubled
I met a guy who defaulted on a $22m purchase, lost his $2m deposit. The vendor then resold it for $16m so he was being sued for the $6m loss. GG
Wasn't a famous Sydney actress recently involved in a failed sale/purchase?
Terry is right in NSW if you do not settle on time a Notice to Complete is issued giving the purchaser another 14 days to do so before the process begins of enforcing the contract. However a penalty applies - measured by daily interest on the balance of the purchase money. .
The result of default by a purchaser is a termination by the vendor who then is entitled to keep the deposit and sue for the shortfall, if any, between the price at which the property was sold and the price achieved in a subsequent sale.
Not to mentions costs. Fortunately it is an infrequent occurrence and everyone puts in 100% to avoid it.
The result of default by a purchaser is a termination by the vendor who then is entitled to keep the deposit and sue for the shortfall, if any, between the price at which the property was sold and the price achieved in a subsequent sale.
Not to mentions costs. Fortunately it is an infrequent occurrence and everyone puts in 100% to avoid it.
