re; Paying extra deposit to extend contract

[hwd007]

In Victoria, if in purchasing property I wish to extend settlement date, by offering to pay the seller more of the deposit / down payment and the seller wishes the extra money to be paid directly into their own private bank account instead of their solicitors trust account, is this a legal way for the process be managed ? I hear this could be in breach of the sale of property act or something.

There is no mention in the extended contract as to what accounts the money has to be paid. This directive of payment and to what account has been handled outside of the contractual agreement. The contract just mentions that the money is to be paid to the vendor.

This concerns me as it seems to offer less formal protection embodied within a contract and this aspect is not signed off on unlike the extended contract itself and thus may not come under the same rigid protection of a contract. The other thing that concerns me is verification of receipt of extra monies that pertain to such a contract.

There does not seem any binding agreement as to how the money is to be paid and to where it must be paid as this aspect has not been put inside the extended contract, but almost deliberately left outside of it. Its almost like even if you meet the conditions specified outside of the extended contract, you could still be in breach of the contract. It seems like a very risky way to go about this sort of thing.

Primarily though I'm wondering if this approach is in fact legal.

 

[TheCamel]

Did you come up with the idea of extending settlement with further down payments, or did the vendor ?

How much more are you paying, is it going to be over and above the price you agreed on ?

Why not just pay the late fees or whatever (bad terminology I know, sorrY)

 

[Twitch]

Easy answer: ask the advice of your solicitor. Anything else is MM.

Good luck

 

[davea]

cant you request for the money to be paid into the solicitors trust account and then with written approval from both sides, release the deposit to the vendor??

atleast this way there is the paper trail..

 

[hwd007]

Hmm it was the vendors insistence that the money be paid directly to their private bank account. The purpose of this extra down payment money was to avoid a rescission notice, as settlement date had been missed. It's not extra money, just an extra down payment on the property. I still have to pay penalty interest until settlement.

I wanted it to go into the solicitors trust account but they would not accept that. Thus I felt I had little option, if I was to avoid the collapse of the contract and loss of deposit money. It has been documented that this is where the money has gone and for what purpose. I felt I had little option but to oblige to keep the deal alive.

 

[Twitch]

Hmm it was the vendors insistence that the money be paid directly to their private bank account. The purpose of this extra down payment money was to avoid a rescission notice, as settlement date had been missed. It's not extra money, just an extra down payment on the property. I still have to pay penalty interest until settlement.

I wanted it to go into the solicitors trust account but they would not accept that. Thus I felt I had little option, if I was to avoid the collapse of the contract and loss of deposit money. It has been documented that this is where the money has gone and for what purpose. I felt I had little option but to oblige to keep the deal alive.

What did your solicitor have to say?

 

[hwd007]

My solicitor basically said that the seller is now calling the shots as the settlement date has past and thus I could either risk been issued a rescission of contract notice and risk loosing the deposit or risk paying him the cash into his account to buy time, but did indicate that there is a clear agreement that this money forms part of the down payment so it should be fairly safe to do.

 

[kph]

Have done this twice but in Qld so maybe its no relevant to Vic.

First time was to secure some land and the vendor was threatening to cancel the contract.
We offered an additional 20% to be released to the vendor along with the initial 10 % deposit, to show we were serious about settling.
This bought us an extra 30 days.

Our solicitor said that since they has accepted additional payments, that technically the contract was now an 'installment contract' and that we could continue to make monthly payments instead of settling outright as previously required. ( ???)
Seemed like a strange notion to me.

Latest one was when a buyer put down 20% deposit, and the same solicitor recommended we reduce it to 10% for the same reason.

Not sure if this is universal, or just applicable to Qld.

kp

 

[hwd007]

If I pay money into a vendors solicitors trust account that forms part of an additional deposit on a property purchase, is that money secure if I fail to pay the money on time as specified in the contract ? i.e. Can the solicitor distrubute the deposit to the buyer if there is a breach of contract on my part ?