Legally binding expression of interest?

[AVD]

Hi

This is the first time I have ever posted a question, but thought the infinite wisdom on this forum might help me out, too!

Question is, partner and I have recently bought a house. Sort of... as some of you may know, when buying a house and land on an existing block that is being subdivided and other units built you have to wait for cert of occupancy, or something like that.

Basically I know the owner of the block and they are subdividing and keeping the house and land and building units on the subdivided blocks. His solicitor says he cant do a Section 32 until all of the units are built and properly subdivided, so we cant do a formal purchase contract.

Instead we have put forth an 'expression of interest' which the vendor accepted, we both signed and I have paid the nominated deposit to the RE. Guys says he is definitely honest and trustworthy and will uphold the sale as if it were a purchase contract.

Would this have any merit in court if he decided to back out? I thought it would under the verbal and written agreement and that money had changed hands, but not sure...

Anyone have any idea???

Alysha

 

[JamesGG]

we both signed

How well-documented was the expression of interest? I daresay that the devil will be in the detail and this should provide the appropriate course of action in the event of a disagreement, change of circumstance, or unreasonable delay.

In the meantime though, the deposit is (or should be!) held in the agent's trust account. That does give you some level of protection, at least, as the funds cannot usually be released to the vendor except under an s27 or completion of sale.

 

[Terryw]

I have seen many contracts for off the plan purchases in Vic - not sure why they can't produce one.

I don't think the expression of interest has much meaning either. You had better get legal advice as you don't want the vendor suddenly deciding to sell it to someone else when finding the values have increased.

 

[Ms Jade]

Does the 'expression of interest' stipulate that the vendor intends to sell the property to you on x terms for x price as soon as there is a s.32?
It may not be a contract of sale but that doesn't mean that you don't have an enforceable contract. If there was obvious intent to create legal obligations and consideration given - i.e. the deposit - you have an enforceable contract. It will depend what the wording says to some extent but on its face it certainly sounds like a valid contract to me.

 

[tom32]

If there was obvious intent to create legal obligations and consideration given - i.e. the deposit - you have an enforceable contract. It will depend what the wording says to some extent but on its face it certainly sounds like a valid contract to me.

I have been surprised in the past in building contracts with "consumers" there is a lot of laws around the protection of consumers.

As a business you can shake hands with someone and have a binding agreement to do work even without agreement on what the job is worth etc but so far as consumers are concerned it would appear to me it is much harder to find a contract is in place.

Is their be potential consumer protection laws in place that could actually disadvantage a consumer in this case?

The building laws change in every state and normally the upshot is the consumer is worse off for the missing contract formation. The builder does the work the savvy consumer says eh gotcha now we have no signed contract in this form as per the regulation and then the builder gets fair costs plus margin usually higher than the agreed price.

 

[AVD]

Hey, thanks for all of your replies.

The EOI was written up almost identical to a purchase contract, with settlement terms and terms for us to rent at $x prior to settlement and with a deposit amount etc.. The deposit has been paid and the vendor signed.

I am hoping it has some merit, I agree with the previous posted in that a verbal or handshake agreement can have legs, so why not a written agreement between two mature parties?

And yes the deposit was paid to the real estate and I would refuse any attempts for a Section 27 based on the risk factor although it may strengthen the case that the contract should be enforceable.

Thanks again.

Alysha

Alysha

 

[tom32]

I am hoping it has some merit, I agree with the previous posted in that a verbal or handshake agreement can have legs, so why not a written agreement between two mature parties?

Except around consumers this is sometimes not the case.

To protect consumers for instance if someone rocks up at your door to sell you something and you agree to it you are not bound to go through with the sale and you have a cooling off period you would not get in say a shop.

I know this is not going to be an issue relevant for your case but I am not certain you will be right as you are a consumer (I assume you are not buying as a company etc) and so there are protections around you, making it generally more difficult than a company to form contractual arrangements.

Much easier if it just comes back to common law ingredients of a contract in my opinion but noooo they have to write a whole bunch of regulation in every facet of life so you cannot just read the relevant contract overlay common law and get on with things. You have to take into account reams of state based regulations around buying real estate.

I am not a lawyer and all my knowledge is around company to company commercial transactions so I am not even close to a position to tell you what the answer is definitively apart from to say be careful because a protection in the regulation that might be there to protect you from an "unfair" contract may in this case leave you missing out should the property see capital gains.