Judge tears up $1m property contract
Catharine Munro
February 24, 2009
TWO property speculators have been given permission to walk away from a contract to buy a $1.07 million terrace off-the-plan, in a Supreme Court judgment that is being reviewed by the real estate industry.
Although neither the plaintiffs nor the defendants were reliable witnesses, Justice Richard White said two Chinese immigrants could rescind their contract and get their deposit back because a real estate agent's advertising had misled them into entering the deal.
It was unclear whether the decision would set a legal precedent for property buyers wanting to walk away from their decision to invest.
"The Real Estate Institute of NSW is reviewing the judgment and its implications," said its spokesman, Julian Brophy.
Justice White has ordered that the couple were entitled to recover damages, which amounted to their deposit of $107,000, from Sydney Advance Realty in Chinatown.
The agency's advertisements promised that Green Square, a planned business centre next to Victoria Park, would become the "next city centre in Sydney"; they forecast a seminar which would advise how to buy "the hottest investment location in Sydney" and they promised a "one-year 5 per cent rental guarantee".
"There was no reasonable basis for a prediction that the value of property in the Victoria Park development, or the Form complex, would double in five years," Justice White said.
Mr Zhang, a cook who spoke no English, and Ms Liu, a waitress who spoke only a little, had agreed to buy the property in 2003, knowing that they would not have to pay for it until 2005.
Mr Zhang owned a flat in Campsie while his partner had never purchased property before. He had planned to refinance his mortgage to raise the funds after the property's value increased.
The couple settled on the purchase at the height of the market, the judge said. Despite placing "naive faith" in the real estate agency, they were aware that property prices in Sydney could fall.
Justice White rejected an allegation that they had been harassed by real estate agent Lisa Huo, even though they told her they had put a deposit on a property in Hornsby instead.
"According to Mr Zhang, he and Ms Liu were reluctantly persuaded to buy the Victoria Park terrace by being assured that the property market was continually rising; that the market doubled in value every seven years; and that in two years the terrace would definitely have increased in value," Justice White said.
He said he did not accept that they were harassed, but he was "satisfied that the advertisements materially contributed to both of them holding the belief".
Catharine Munro
February 24, 2009
TWO property speculators have been given permission to walk away from a contract to buy a $1.07 million terrace off-the-plan, in a Supreme Court judgment that is being reviewed by the real estate industry.
Although neither the plaintiffs nor the defendants were reliable witnesses, Justice Richard White said two Chinese immigrants could rescind their contract and get their deposit back because a real estate agent's advertising had misled them into entering the deal.
It was unclear whether the decision would set a legal precedent for property buyers wanting to walk away from their decision to invest.
"The Real Estate Institute of NSW is reviewing the judgment and its implications," said its spokesman, Julian Brophy.
Justice White has ordered that the couple were entitled to recover damages, which amounted to their deposit of $107,000, from Sydney Advance Realty in Chinatown.
The agency's advertisements promised that Green Square, a planned business centre next to Victoria Park, would become the "next city centre in Sydney"; they forecast a seminar which would advise how to buy "the hottest investment location in Sydney" and they promised a "one-year 5 per cent rental guarantee".
"There was no reasonable basis for a prediction that the value of property in the Victoria Park development, or the Form complex, would double in five years," Justice White said.
Mr Zhang, a cook who spoke no English, and Ms Liu, a waitress who spoke only a little, had agreed to buy the property in 2003, knowing that they would not have to pay for it until 2005.
Mr Zhang owned a flat in Campsie while his partner had never purchased property before. He had planned to refinance his mortgage to raise the funds after the property's value increased.
The couple settled on the purchase at the height of the market, the judge said. Despite placing "naive faith" in the real estate agency, they were aware that property prices in Sydney could fall.
Justice White rejected an allegation that they had been harassed by real estate agent Lisa Huo, even though they told her they had put a deposit on a property in Hornsby instead.
"According to Mr Zhang, he and Ms Liu were reluctantly persuaded to buy the Victoria Park terrace by being assured that the property market was continually rising; that the market doubled in value every seven years; and that in two years the terrace would definitely have increased in value," Justice White said.
He said he did not accept that they were harassed, but he was "satisfied that the advertisements materially contributed to both of them holding the belief".
