Seller breached the Contract - Failed to settle

[smy7484]

Hello

I have signed a contract to buy an established house in Queensland on end of Feb 13, settlement due on 2nd April 13.

I have requested to extend the settlement 3 times (total of 2 weeks), due to B&P and finance. The seller agreed all the extension requests.

When the time comes to settlement around mid-April, the seller requested to extend for one week due to the transfer document cannot be signed. A day before the settlement, the seller requested for another week and still could not settle, and by end of April the seller has requested for one month extension. The main and the only reason is:

'The director of the seller company has done bankrupt so he cannot sign the transfer. Their solicitors is approaching the bankruptcy trustee to see if they will allow him to sign.'
they are working with ASIC to obtain the liquidators signature for the Transfer documents. They need to apply to ASIC to have this completed.

Today is the settlement date, unfortunately my solicitor has advised that they have sent through a fax breaching the contract, they basically gave up.

This is a first time I am experiencing such a lengthy settlement period and deal with such issue.

My intension is:
1) I would like this purchase to go through. Good deal.
2) I have spent money on B&P, legal etc. as well as time on the finance etc.

What are my options on it?

Thanks everyone.

 

[MRO]

Speak to a lawyer ASAP. 'It is too hard' isnt a way for them to get out of this.

Do you know who the liquidator is? They will want to sell assets anyway so an asset the company has already contract to sell (i assume at market value) should be an easy one to sign off on. A quick call may help the situation and if necessary maybe you could lodge a caveat on the property to protect your position.

 

[RPI]

Need loads more info and to see the contract.

Suggest you discuss with your lawyer they should sort for you.

 

[Rolf Latham]

This is a first time I am experiencing such a lengthy settlement period and deal with such issue.
.

Just another risk, small but can happen

Usually not due to Financial issues of the seller per se, but where the sale price doesnt cover the mortgage......

ta
rolf

 

[Shahin_Afarin]

Are you dealing with a solicitor or a conveyancer?

 

[smy7484]

Speak to a lawyer ASAP. 'It is too hard' isnt a way for them to get out of this.

Do you know who the liquidator is? They will want to sell assets anyway so an asset the company has already contract to sell (i assume at market value) should be an easy one to sign off on. A quick call may help the situation and if necessary maybe you could lodge a caveat on the property to protect your position.

Great Info. I may have to find out the liquidator and deal with it directly as the last recourse. My solicitor said he will have a look into it and see if there is a way to get it over the line. I doubt it will be an easy way.

Need loads more info and to see the contract.

Suggest you discuss with your lawyer they should sort for you.

I have signed the standard REIQ contract incl PAMD form 27C & 30C. No amendment only subject to finance and B&P. I think the bank has taken control, however I am wondering is the bank has the right not to fulfill the contract?

Just another risk, small but can happen

Usually not due to Financial issues of the seller per se, but where the sale price doesnt cover the mortgage......

ta
rolf

Hi Rolf, I am suspecting this is the case too. However I am not prepare to pay higher price than the agreed price. I am simply want them to take action as per the contract, nothing more than that. Sound simple, but...

Are you dealing with a solicitor or a conveyancer?

Ya, I am with Andrew Wheldon Solicitor. He will have a look again on Monday.
I think I can only sit tight and wait, however thing is not looking good i believe.

Thanks

 

[Terry_w]

You could normally sue the seller for an order to settle, but since the company is in liquidation you cannot commence proceedings without leave of the court. It may not be a good idea to sue a company in liquidation anyway.

Did you place a caveat on title to register your interest after exchange? If not you probably should have as it would have given you some priority over the property.

 

[Tigerboy]

Did you buy from a company or the individual? If you bought from a company, who is insolvent? The director personally bankrupt or the company in liquidation? Makes a difference.

If you bought from a company and it's in liquidation then you must deal with the liquidator - they can reject the agreement. If the directors gone bankrupt then the shareholders must appoint a new director. A bit easier.

If you bought from an individual who has gone bankrupt then you need to deal with their trustee..
Good luck.

 

[smy7484]

You could normally sue the seller for an order to settle, but since the company is in liquidation you cannot commence proceedings without leave of the court. It may not be a good idea to sue a company in liquidation anyway.

Did you place a caveat on title to register your interest after exchange? If not you probably should have as it would have given you some priority over the property.

Did you buy from a company or the individual? If you bought from a company, who is insolvent? The director personally bankrupt or the company in liquidation? Makes a difference.

If you bought from a company and it's in liquidation then you must deal with the liquidator - they can reject the agreement. If the directors gone bankrupt then the shareholders must appoint a new director. A bit easier.

If you bought from an individual who has gone bankrupt then you need to deal with their trustee..
Good luck.

From the seller solicitor: The issue comes in that to enforce the Contract a considerable amount of costs will be involved and will not be recovered from the Seller due to their financial position.
I believe this means the selling price is well under the mortgage due to the current market well below from the peak.

The property is under a company name, which gone bankrupt.
After discussion with my solicitor, the decision is to lodge a caveat, as well as approaching the mortgagee.

Any idea how long will this takes to complete the whole deal usually?
Also my initial deposit is still under the seller agent trust account, should I request it back?

Thanks

 

[Terry_w]

From the seller solicitor: The issue comes in that to enforce the Contract a considerable amount of costs will be involved and will not be recovered from the Seller due to their financial position.
I believe this means the selling price is well under the mortgage due to the current market well below from the peak.

The property is under a company name, which gone bankrupt.
After discussion with my solicitor, the decision is to lodge a caveat, as well as approaching the mortgagee.

Any idea how long will this takes to complete the whole deal usually?
Also my initial deposit is still under the seller agent trust account, should I request it back?

Thanks

BAll park 3 to 6 months.

 

[smy7484]

BAll park 3 to 6 months.

OMG... I think it's better to request all my deposit back, while waiting for the final answer.
I am preparing to end up with nothing after spent so much time and some money for legal and inspection.

 

[Ausprop]

I think 3 to 6 months is somewhat optomistic. I have been pursuing one for 6 years.

 

[Scott No Mates]

What are the provisions of the contract of sale with regards to bankruptcy of the vendor?

This will guide you as to whether or not the sale can be completed or not.

How much after signing the contract did the bank foreclose on the property?

 

[smy7484]

I think 3 to 6 months is somewhat optomistic. I have been pursuing one for 6 years.

Hi Ausprop,
I have requested my solicitor to lodge a caveat and approach the mortgagee, I will leave it as it is. I have moved on... another good deal is always around the corner.

What are the provisions of the contract of sale with regards to bankruptcy of the vendor?

This will guide you as to whether or not the sale can be completed or not.

How much after signing the contract did the bank foreclose on the property?

I don't believe the bank has started on the sell campaign. Its just happened within weeks.
The contract is standard contract in QLD with no amendment. I don't see any clause talks about the bankruptcy. I will double check it.

Thanks

 

[Peterw]

The property is under a company name, which gone bankrupt.
After discussion with my solicitor, the decision is to lodge a caveat, as well as approaching the mortgagee.

We had a similiar situation, with a company being bankrupted, by all people the ATO, and we were in contact with the financier. They had the property valued, and we attended the valuation, and from information we provided, the valuer formed the opinion that it would be cheaper for the bank as well as the ATO, to proceed with the sale that was on the table, rather than allow delays to build interest, as well as new marketing costs, to find a buyer at perhaps a lower price. Were you dealing direct, or through an agent. I would if nothing else, make contact with the financier or their agent.

 

[smy7484]

We had a similiar situation, with a company being bankrupted, by all people the ATO, and we were in contact with the financier. They had the property valued, and we attended the valuation, and from information we provided, the valuer formed the opinion that it would be cheaper for the bank as well as the ATO, to proceed with the sale that was on the table, rather than allow delays to build interest, as well as new marketing costs, to find a buyer at perhaps a lower price. Were you dealing direct, or through an agent. I would if nothing else, make contact with the financier or their agent.

That's right. I was dealing with their selling agent.
right now, I have only have my solicitor to approach the martgagee, the lender.

How did you approach it and did you success on your purchase?

 

[Peterw]

We were the sellers agent, ie working for the company. I believe that the seller gave his financier our contact details, and thats how we kept the deal alive, and yes it did eventually settle. I would see if the agent could assist, as it would also be in their interests for the deal to proceed.

 

[Tony3008]

This one is buyer fails to settle - expensive!

Toni Collette and her musician husband have lost a high-profile legal stoush over the failed purchase of an eastern suburbs terrace house, and have to pay more than $800,000 in damages.

In the NSW Supreme Court on Friday, Acting Justice William Windeyer found in favour of Industrie clothing label founder, Susan Kelly, and ordered Collette and her husband, David Galafassi, pay $814,907, plus legal costs.

The court heard Collette and her husband agreed to buy Susan and Nick Kelly's terrace on Stewart Street, Paddington, for $6.35 million in September 2011, and the deal was due to close on December 30.

But the couple's lawyers wrote to the Kellys' legal team to say they could not proceed with the purchase, and had been unable to sell their house on Bronte Road. ...

http://smh.domain.com.au/real-estate-news/toni-collette-loses-legal-stoush-over-paddington-home-20130531-2nfru.html

 

[smy7484]

UPDATE:

I have got my solicitor to approach the lender. the feedback is the mortgagee said they are not in a position to as yet. I assume they have not issued notices yet.

I have also tried to contact the mortgagee general enquiry number, but the customer service said they have no idea. I tried second time and they advised get to your solicitor, they are not authorise to disclose any.

Some of my question are:
1. How can I get notify when the mortgagee is ready to sell or ready to talk to us? I would like the first to approach them when it’s ready. I don't think is easy to get my solicitor to call the mortgagee every now and then, can I talk to them directly?

2. The total expenses is around $3k incl. B&P, legal etc. Should I write to the seller and the mortgagee for reimbursement? and the chance of success...?

3. If no luck for reimbursement, is this expense tax deductible?

How common are you out there experienced this, spent thousands and end up nothing?
What to do in the future can this be avoided?

Thanks

 

[Peterw]

With the mortgagee not being ready yet, could be a few things, ie not having a valuation back.

Is the property vacant? What is the agent doing? He has a possible commission at stake, so should also be trying to get the sale through? If the mortgagee knows about your offer, and the valuation comes through and supports your offer, they should be happy to come back to you. If the valuation is higher, they may choose to take the property to the market, to ensure that they are not setting themselves up for an "underselling" claim.