property disaster off-the-plan.

Hi guys,

Over two years ago I naively signed a contract as an over-excited 21 year old for an off the plan property purchase of 1 of 44 townhouses in Emerald Qld. With zero vacancy rates and a rental appraisal of $750 a week it was the perfect investment. Until I learned about developers cycles and their increased activity during price growth periods, causing market hysteria which will inevitably lead to an oversupply when the boom ends.

The point is I put down $30k deposit which was held in a solicitors trust account. This was 2 years and 2 months ago, and the completion is not even on the horizon, as the developer still can't even get finance for the project.

An Annexure of the contract states that "when the contract has been signed for 24 months and the registrar of titles has not registered the community titles scheme the buyer is entitled to refund of the deposit."

Under the grounds of this clause I instructed my solicitor to terminate the contract so I can take back my $30k.

On reply to this particular proposal was, "sorry, we've spent the money on project costs."

You can imagine how happy this has made me feel, and assume a result I have turned to this forum to ask two questions.

1. Can anybody offer any advice on this or has been involved in this situation?

2. With a strategy of buy and hold for long term CG, I need to break into the market, would like to buy in Brisbane as I think there will be some imminent price growth with better population/employment growth then back home in Adelaide.

It would be nice to get the money back, but I now have to face the reality that I may not see it again, and just put it down to my first real life learning experience.

I would appreciate any advice on offer, thanks in advance.
 
Spending money that's supposed to be in a solicitors trust account is a fairly serious offense. Get a solicitor of your own involved to read the contract and follow up. It's possible they may simply be trying to make you go away and keep your money.
 
As per PT - the money is supposed to be protected whilst in the solicitor's trust fund ie. the money cannot be accessed until the sale is settled. :eek::eek::eek:

Call your solicitor asap and seek termination (depending upon what the termination provisions happen to be).
 
At a guess, the money was probably paid to the solicitor's trust account but the contract probably allowed for it to be released to the developer at some stage.

I doubt a solicitor would be so non-chalant about it otherwise.
 
I originally sent a copy of the contract to a solicitor, I then changed solicitors because I didn't like their services. So my new solicitor came halfway through the deal.

The problem with OTP contracts is they are usually written in favour of the developer. Aparantly the terms of this contract are to use the deposits to fund the project. I was under the impression that the money gets pooled together as proof of sales/funds so they can get finance from the bank.
 
Wow, Nasty stuff.
Parents in law are looking at OTP for their new home, Thanks for this post, definitely something to watch out for.
 
Not much. I did some review work for one bank then it seems they went to at least one more bank/QS after that.


All that was some time ago and I notice that it looks like nothing has started on site.


Given that area went under in both floods, I was surprised to see something happening so soon on that site. The development was designed above flood level so does/did comply.


Like you say, a couple of years ago the demand was there. It's gone quiet since but signs are there that things are looking better for Emerald. Some units and houses still being built and some more ready to kick off.


Best of luck with it.
 
Not much. I did some review work for one bank then it seems they went to at least one more bank/QS after that.


All that was some time ago and I notice that it looks like nothing has started on site.


Given that area went under in both floods, I was surprised to see something happening so soon on that site. The development was designed above flood level so does/did comply.


Like you say, a couple of years ago the demand was there. It's gone quiet since but signs are there that things are looking better for Emerald. Some units and houses still being built and some more ready to kick off.


Best of luck with it.


Yes I was aware that they were rejected first by commonwealth bank and then again by another bank due to poor valuations from Herron Todd White. This was much to do with the previous floods.

I'm also aware they then went on to seek finance from private lenders. This automatically spells trouble for me.
 
Is this a gee up???

Off the plan sales where the development doesn't even have finance to proceed?
Deposit released to the developer before they have even started construction?
Deposit released to the developer at all??
2 years and not even started?

What country did this happen in? Mexico? Spain?

And the papers print crap about me......(?)
 
Off the plan sales where the development doesn't even have finance to proceed?
Deposit released to the developer before they have even started construction?
Deposit released to the developer at all??
2 years and not even started?

What country did this happen in? Mexico? Spain?

And the papers print crap about me......(?)

What can I say, there are great whites out there, and clearly fish asking to be eaten also. Currently in the process of filling out an application to take them to court. I'm advised that if this happens then ill 100% win, and regain the deposit but I just don't know who is playing who any more.
 
What can I say, there are great whites out there, and clearly fish asking to be eaten also. Currently in the process of filling out an application to take them to court. I'm advised that if this happens then ill 100% win, and regain the deposit but I just don't know who is playing who any more.

If the money has already been put into the development, and the development is stalled, where are they going to get the money to pay you back?
 
If the money has already been put into the development, and the development is stalled, where are they going to get the money to pay you back?

The money has been used to fund expenses such as administration costs, development approval extensions, valuations etc.

We are still talking about a vacant block of land with a fence around it. Not a cubic centimetre of concrete has been poured.

44 people have put in $30 000 to fund this development.

I should hope that there is some money left.
 
The money has been used to fund expenses such as administration costs, development approval extensions, valuations etc.

We are still talking about a vacant block of land with a fence around it. Not a cubic centimetre of concrete has been poured.

44 people have put in $30 000 to fund this development.

I should hope that there is some money left.

I'd imagine they also used the money to purchase the land, probably with borrowed money, so interest would be payable as well. 1.3m isn't going to go very far.
 
project

It is important that before you sign a contract you get a qualified solicitor and by that I mean someone who does a lot of off the plan contracts to go through and advise you of the good the bad and the ugly.

Also if this is a town house development it could have done on individual contracts a bit like a house and land package. Therefore you would have saved money on the stamp duty but paid along the way which would have made it easier from the developer to obtain funding.

Due diligence is always important. If the developer is not experienced it may still be hard for them to obtain funding.
 
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