Shrinking land after offer and aceptance

Discussion in 'Legal Issues' started by kenny-d, 19th Jun, 2009.

  1. kenny-d

    kenny-d Member

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    Interesting case- Sale of a rear block as part of a subdivision in Perth. The O+A is due to settle subject to the issue of titles and the deposit is paid and finance approval given. However due to the Vendor and the Surveyor not being able to communicate properly, the block was marketed as 280sqm, but now as part of getting titles issued has shrank to 273sqm as the mighty Crown has taken a cut of land unexpectantly. The buyer will have use of the lost land but it effects set-backs etc. The rear laneway access has eaten up a strip to widen the lane, but previous sub-divisions on both nieghbouring properties have not had the same loss (so the lane can never be widened!!!!).

    Legally are both parties bond to the contract even though the size has changed?

    I would appreciate a few comments on what people think should occur morally too. Should the price drop? by how much? Should/can the vendor be forced to move the new internal fences and cut down trees to give the correct amount of land?

    Most importanty - Who sould we blame :D. The purchaser for not protecting himself with clauses, The Agent just because, The Surveyor for managing to gift the Cown land in the middle of a laneway where no-one else has, and not mentioning it until Settlement is due, or the vendor for not overseeing the whole process effectively (or for hiring numnuts) :) I lean towards blaming the Vendor.

    All thoughts welcome. What a mess.
     
  2. Bill.L

    Bill.L Member

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    Hi Kenny,

    I would blame the purchaser for stupidity. Who on earth would sign a binding contract on a block of land without knowing EXACTLY what size it is?

    If the contract stated a particular size, then the vendor is at fault and the purchaser would not have to go through to settlement, purchasers choice.

    Does the 7 sqm make a material difference to what can be built on the block?
    Does the purchaser still want to go ahead??

    bye
     
  3. kenny-d

    kenny-d Member

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    The purchaser is playing his cards close to his chest and is receiving legal advice. Nobody knows whether he still wants to proceed. The deposit is not large - and could probably be forfitted but preferably not. And possibly doe not have to be if the Vendor is at fault.

    There is no conditions of sale relating to the size but I would not of thought a regular contract for the sale of land (even land that is not yet on its own title) would mention size. But I may be wrong.

    Thanks for your feedback.
     
  4. twobobsworth

    twobobsworth Member

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  5. Bill.L

    Bill.L Member

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    Hi Kenny,

    Over here when buying property, a normal block is on a title registered at the titles office, it has all the dimensions. I have always seen a copy of the title before signing a contract, in fact I think it is one of the requirements of the vendors statement.

    bye
     
  6. csc

    csc Banned

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    i blame the purchaser...for poor due dilligence.......the option is always there to have the block verified that the size is correct by surveying........ive seen this before many times...............in qld its not uncommon especially for older established blocks..unsure what the laws are in other states.
     
  7. silversands

    silversands Member

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    Hmmm, interesting predicament.

    When we purchased a block several years ago, contract stated the size. ( as you'd expect ) Long before settlement (around 3 months, as blocks were to be developed)we actually received notification that the block size was increasing by 13m! ( hard to explain but it was new development and it was extra frontage being tacked on to the block as it was not required by council for the width in the road to be constructed.) Council didn't want to bituminize it, so the developer tacked it on to our block.

    Sounds good at first, but it meant that our block, which was a very irregular triangular shape to begin with, on an inside elbow bend in the road, was to be narrowed substantially at the front.

    Long story short, the angle it created, meant it tapered sharper and we could no longer have a double garage. (council said angle was too extreme. We had already paid the builder a deposit so decided to proceed -with the change to extra wide single garage)

    We were told we COULD pull out of block contract and our DEPOSIT would be RETURNED IN FULL. It was acknowledged the change would adversely affect us.

    Since this would have left us out of pocket big time, due to builders deposit which wasn't refundable, we chose to go ahead.

    Even though your situation = less land than contract states, I wonder if it is a similar situation?

    Jodie
     
  8. kenny-d

    kenny-d Member

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    Thanks for everyones input. It is quite interesting. After a bit more looking around I think it looks like a good old case of let the buyer beware. This boils down to the fact that the land is being bought off the plan, and the buyer has responcibility to check the size. It has emerged that the Surveyor pegged the block to the smaller size (accounting for the shrinkage) but never sent out the new drawings showing the land being cut. (He claims it was emailed to the vendors wife, and they claim never to have received etc)

    So the Agent advertised using the original draft survey, but with fencing and pegging in place, and given a title has not been issued a purchaser should re-survey to make sure he is getting what he is paying for. A useful lesson for anyone buying a block where titles have not been issued (sub-division).

    However both the vendor and purchaser are going to try to deal civily on the matter. Which is good as they may be neighbours (if he moves in) Much to the agents delight (who is hanging out for his fee givn the tough economic times in Perth.)

    So the buyer has taken all the new info on board and is thinking through options. Given the land that is cut could still be fenced in - He is talking to local council to see about set-backs and whether the smaller block effects him much. The vendor will move his fence and resurvey, rather that reducing price on a per square meter basis. But would prefer sell for a couple of grand less.

    So basically the vendor has agreed he would be pissed off given the same and will allow the buyer to ask for the fence to be moved, or if he prefers to buy the smaller block for a slightly reduced price if a couple of grand is worth more than the 7sqm.

    I hope it all works out.

    The agent was quick to blame the surveyor and advise to sue.

    The buyer will inevitably end up on top, as he may be able to get the land back later (it is uselss to the Crown), or use it regardless.
     

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  9. kenny-d

    kenny-d Member

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    crikeys there is some bad spelling in my post above.
     
  10. Ausprop

    Ausprop Member

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    is it a strata block? if so what does the strata plan show?

    if it is a proposed green title, what did the proposed plans show?

    I think this is becoming harder than it should be. If the contract is correct then it's a deal. If it's not then it's back to the negotiating table from scratch.

    Of course some contracts make provision for variation in final surveyed size, so once again it comes back to the contract
     
  11. Ausprop

    Ausprop Member

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    where do you sit in this deal kenny-d?
     
  12. Ausprop

    Ausprop Member

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    a bleeding heart story from an agent... hard to believe. I made the mistake of going to harvey norman this morning. I can assure you there was no recession in osborne park this morning. the traffic and shoppers out there is painful
     
  13. Collector

    Collector Member

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    We sold a property a couple of years ago where the land size stated on the registered plan was close to 1000sqm

    Recently the new owner had the land surveyed as they were going to build a new house to live in (property has been rented since purchase)

    The Surveyed land size came in at just under 700sqm


    This was a Torrens title property (not old systems or qualified title where this sometime occurs)


    There was also a story on ACA or TT about 2 weeks ago where the actual land size was overstated on the contract and the owners were paying higher council rates due to this..

    As CSC stated it is up to the purchaser to conduct DD which also includes land survey.
     
  14. kenny-d

    kenny-d Member

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    Ausprop : is it a strata block? if so what does the strata plan show?

    if it is a proposed green title, what did the proposed plans show?​

    Ausprop it is a Survey Strata plan. The draft survey plan showed the higher land amount. The final Survey Strata plan has only emerged in the last week. Apparantly it shows the smaller amount but only the settlement agents have seen it. It was visibly pegged and fenced to the smaller amount months ago, but nobody involved noticed the pegs 50cm in from the laneway. (how stupid are we all?) The offer and acceptance referred to the block as "50A (Rear Block)" Because the titles were not issued, there were no lot/portfolio numbers etc. and no mention of size on the OandA and no relevant conditions of sale. The only mention of titles being issued is under the where it states "Settlement 30 days from finance or on issue of titles whichever is the latter" You wouldn't see many O+As with so little written on it.

    However it was marketed at the higher land amount and the draft survey plan was provided to prospective purchasers showing the incorrect size.



    Where do I sit?

    I am leaving that out so I don't bias anyone and given it is all ongoing. Interested observer will do for now. I am just keen to hear what people think should occur.
     
  15. Ausprop

    Ausprop Member

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    ok so the form 28 that was provided that showed the unit entitlements and the draft survey plan is different to what is being delivered?

    simple - contract void. Time to renegotiate the deal

    is that good or bad for you?​