Purchased a brand new vacant property but the builder/owner let his friend stay

[lolipss]

Hi

I have this situation where I just purchased a brand new property build and the status of the property is vacant when I purchased.

But i just found out that the builder/owner of the property letting someone living there at the moment during my settlement period which is due in 1month

My concern is, the property was suppose to be vacant and brand new when I purchased, is it legal for the owner to let someone living there at the moment until my settlement?

I just expected it to be brand new when I settle later and no one should living there yet.

Is there something I can do about this?

Thank you

 

[marg4000]

I've never thought of this possibility, it's an interesting question.
Get in touch with the solicitor handling your purchase.
Marg

 

[tess85]

Interesting, what does it say in the contract?

I suspect it says "vacant possession" which is what you would get when the guy moves out. I'm not sure whether it would say "vacant possession and brand new" - while it's what you would expect, it's not normally spelt out in contracts like that!

What does your solicitor say?

 

[lolipss]

Here's the reply from my solicitor

Property needs to be found in the same condition as per first sighting – Please wait till you complete you final inspection then if there is any problem I will help sort them out at that point. Please note that If property is new the Vendor is therefore legally bound to attend to repair items (within reason of course) up to settlement and also for a 3 month period thereafter.

I guess she wanted me only to wait until the final inspection and see the condition of the property later....

Maybe next time for my next purchase property should I add in the contract it should be vacant and brand new??

I am just really suprised when I heard the owner/builder did this...

 

[RumpledElf]

He sounds very strapped for cash. I wouldn't pull something like that if I was selling a new house.

 

[lolipss]

to tell the truth,

i dont know whether he's getting a rent for it or not.. or he just let his friend/someone stay there for free??

 

[chilliblue]

Refer back to how the property was advertised.

If there is anything documented that it was brand new, then you will have a case.

Under Section 52 of the Trade Practises Act, you may have some negotiating power if you were led to believe that it was new.

 

[lolipss]

Hi,

It is stated in the advertisement that said is new

new 4 bedroom town residence.

What do you think?

Should I just wait and see until the final inspection later or I need to do something by now?

Just confused.... Didn't really expecting this would be happening..

 

[bene313]

Don't worry about it too much and just go with the advice of your solicitor.

 

[nww]

If the builder is desperate for money to a point he needs to rent it out to his
friend, you would think may be desperate for a sale so you might have some
bargaining power for a price reduction when final inspection comes up.
Might work in you favour.

 

[Perp]

I just expected it to be brand new when I settle later and no one should living there yet.

Your expectations aren't really irrelevant; your contract is.

Here's the reply from my solicitor

Property needs to be found in the same condition as per first sighting

Your solicitor has advised you to wait for the final inspection because your contract says nothing about the property having to be vacant prior to your possession. Provided the builder hands over the property in "as new" condition, there's been no violation of that contract.

Maybe next time for my next purchase property should I add in the contract it should be vacant and brand new??

If it's really that important to you, but you usually buy a property, not its history. Provided everything is in brand new condition, why do you care whether somebody has been in occupation before?

It is stated in the advertisement that said is new

new 4 bedroom town residence.

It's still new; it's just not "never been occupied".

may be desperate for a sale so you might have some
bargaining power for a price reduction

The builder already has a sale and a binding contract to purchase which it doesn't appear he has violated. He has zero incentive to reduce the price.

Edit: PS Friends of my parents had a slightly different situation recently, but with some similarities. They purchased a "brand new" home from a builder, with the builder leasing it back as a display home for a year. Their plan was to sell the home as "brand new" after the display home period expired, as the display home lease specifically forbade anybody from living in the property. The builder got into financial trouble and moved his family in. They still had to "suck it up" and got no redress. Unlike you, they'd already settled, though, so they were admittedly in a weaker negotiating position and thus weren't able to get the builder to come back and touch up paint etc to restore the property to "as new" condition. But your absolute best outcome, IMHO, is that the builder will ensure it's handed over in tip-top condition, and you have the pre-settlement inspection to ensure that's the case, but you won't get a price reduction.

 

[lolipss]

thanks for the reply people.

finger crossed the property still in the same condition as before.

 

[Perp]

finger crossed the property still in the same condition as before.

I wouldn't be too concerned about that; the pre-settlement inspection is pretty powerful tool for achieving that. Just don't - repeat DO NOT - settle with either the tenant still living there, or with any repairs still outstanding (on the promise of the builder that he'll do it within a week, or whatever). Only settle once everything is to your satisfaction, because you lose all power once you've settled and your avenues of recourse are pretty limited.

If there's no time for all repairs to be completed and both parties want to settle, you may consider withholding some of purchase price, instead (obviously the builder would have to agree to this contract amendment, but if the alternative is that you won't settle, then they'll be inclined to agree ). How it works is that you settle as scheduled, except $2K (or an amount sufficient to cover outstanding repairs) of the purchase price is retained by your solicitor in their trust account for 2 weeks (or however long you agree is required) whilst the repairs are completed. Once the repairs are complete, if within the 2 weeks allowed, then the builder gets the last $2K. If the repairs aren't completed in this timeframe, the $2K comes back to you and you can engage somebody else to do it. Just make sure the clause is worded well (ie get your solicitor to do it), and make sure the amount you allow is generous, ie more than covers the repairs, so that the builder's motivated to complete them.

But use the pre-settlement inspection properly and it should be handed to you in "as new" condition.

If I sounded harsh earlier, it was because I don't want you getting your hopes up that you're going to be able to buy for $10K less because there's been somebody in it for a short while, and thus is no longer "new" - I don't think that'll fly.

I doubt you have any legal remedy with regards to the emotional issue of whether you're the very first person to sleep there or not, but I do think you're on solid legal footing with regards to the property's condition.

Good luck! Do let us know how it all goes.

 

[lolipss]

I wouldn't be too concerned about that; the pre-settlement inspection is pretty powerful tool for achieving that. Just don't - repeat DO NOT - settle with either the tenant still living there, or with any repairs still outstanding (on the promise of the builder that he'll do it within a week, or whatever). Only settle once everything is to your satisfaction, because you lose all power once you've settled and your avenues of recourse are pretty limited.

If there's no time for all repairs to be completed and both parties want to settle, you may consider withholding some of purchase price, instead (obviously the builder would have to agree to this contract amendment, but if the alternative is that you won't settle, then they'll be inclined to agree ). How it works is that you settle as scheduled, except $2K (or an amount sufficient to cover outstanding repairs) of the purchase price is retained by your solicitor in their trust account for 2 weeks (or however long you agree is required) whilst the repairs are completed. Once the repairs are complete, if within the 2 weeks allowed, then the builder gets the last $2K. If the repairs aren't completed in this timeframe, the $2K comes back to you and you can engage somebody else to do it. Just make sure the clause is worded well (ie get your solicitor to do it), and make sure the amount you allow is generous, ie more than covers the repairs, so that the builder's motivated to complete them.

But use the pre-settlement inspection properly and it should be handed to you in "as new" condition.

If I sounded harsh earlier, it was because I don't want you getting your hopes up that you're going to be able to buy for $10K less because there's been somebody in it for a short while, and thus is no longer "new" - I don't think that'll fly.

I doubt you have any legal remedy with regards to the emotional issue of whether you're the very first person to sleep there or not, but I do think you're on solid legal footing with regards to the property's condition.

Good luck! Do let us know how it all goes.

Hi Perp,

Thank you for your suggestion. Really appreciate it.

I wasn't thinking of getting a discount or something for it. I just expected it the property should be in the same condition as I purchased before which is brand new and no one living there yet.


One question though, does conveyencer be able to do the above things that you suggested for me or I will need a solicitor?

Because I am only using Conveyencer at the moment.

 

[Perp]

I just expected it the property should be in the same condition as I purchased before which is brand new and no one living there yet.

They're two different things. As it was sold as a new home, you are entitled to have it in "as new" condition. But you're not entitled to any remedy on the basis that it's been occupied.

One question though, does conveyencer be able to do the above things that you suggested for me or I will need a solicitor?

I would never use a conveyancer, but we don't have them in Queensland. You'd best ask a local's opinion on whether conveyancers are qualified to draft contract conditions.

 

[Perp]

I just expected it the property should be in the same condition as I purchased before which is brand new and no one living there yet.

They're two different things. As it was sold as a new home, you are entitled to have it in "as new" condition. But you're not entitled to any remedy on the basis that it's been occupied.

One question though, does conveyencer be able to do the above things that you suggested for me or I will need a solicitor?

I would never use a conveyancer, but we don't have them in Queensland. You'd best ask a local's opinion on whether conveyancers are qualified to draft contract conditions.

 

[Kristine..]

But i just found out that the builder/owner of the property letting someone living there at the moment during my settlement period which is due in 1month

Hello loli

There have been a few posts recently about unguarded, brand new properties, and the appliances have gone missing

So I don't see this as the builder being strapped for cash, but rather that there is a caretaker on site

HOWEVER, if your are a First Home Buyer,and are buying a NEW home 'which has never been lived in' - and now, someone is living in it, I would make sure that this does not compromise your FHOG Construction Bonus

So if there is a 'tenant' that may be a problem for the FHOG

But

If the occupant is there at the behest of the Builder, and all services are still connected for the Builder, and the property is simply being guarded, there would probably be no compromise

As always, the answer is 'it depends' and without knowing your situation (FHOG) or the Builder's intent (paying tenant or unpaid caretaker) it is not possible to suggest what you may need to do to protect your interests

Hope this helps
Kristine

 

[BPB]

There is some good advice given here.
Do not settle unless tenants are out - do not.
Arrange Final inspection 3 or 4 days before settlement and on the day of settlement make sure they are gone. I would strongly suggest you tell the conveyancer of the problem but spend some money on a solicitor and get armed with your rights. Know what you can and cannot do.
Good Luck.

 

[lolipss]

thanks for all the advice people.

I'll keep you guys updated later

 

[lolipss]

Okay,

Here what I found out from the agent i bought the property from, he said its only for insurance purposes. The people that living there not actually living there.
they only have a bed there because property can't go vacant for a long time for insurance purposes and security purposes.


Is it true about the insurance part?


I am happy if thats the reason though