Urgent help: Last minute nasty surprise

[divesky]

Hi all,

first time here and in property market. I feel like I'm getting stung already though.

Me and my sis put a deposit on this apartment being built and it's now up for settlement at the end of the month. But I'm still a student and I found out 3 days ago that the application for financing didn't go through (was being handled by the finance dept of a large investement property group that is building the apartment building). Last night I received a letter from the solicitor asking to declare that:

1) we can't go through with the settlement,
2) forfeit our entitlement to any interest earned on the investment deposti
3) pay a $1200 to the replacement buyer for costs incurred
4) if the settlement doesn't happen then still face the consequences of the contract.

Kind of furious that I didn't get told the financnes hadn't gone through yet until so late and to receive such email. What's a good work around? Would it be worth appylying for loan independentely? How quick are these quick mortagages? Can I ask for extension on settlement until I can think better? Any other tips?

Thanks in advance.

 

[divesky]

ps. I need to advise them by 3 PM today, so I feel like being bullied by people in the know.

 

[livewildcard]

Until you have something in writing saying yes, you have the funds, everything is ok you shouldn't be signing or buying anything.

 

[divesky]

Thanks for that.

But since I do not have bank approval for a loan yet and the settlement is due next week, I don't know what to do. The whole idea was to be able to get in early and sell before settlement so I could make savings for future investments.

 

[locko24]

Thanks for that.

But since I do not have bank approval for a loan yet and the settlement is due next week, I don't know what to do. The whole idea was to be able to get in early and sell before settlement so I could make savings for future investments.

...and you plan on doing the above on your first foray into the property market?

 

[NedKelly]

What does your solicitor say? Or do you not have one yet?

 

[Terryw]

Mate, you are in big trouble by the sound of it. You had better see a solicitor today!

 

[softmonkey]

Wait, the people building the apartments are the same people organising your finance? Uh oh.

When they launch the project they try to convince inexperienced investors to buy apartments, yeah yeah it'll be approved no worries. They use these "pre-sales" to secure the building finance from the banks.

Upon completion the apartments are worth more so it's in their interests to now botch up your finance, gouge you for a bunch of fees, and then re-sell the properties at higher prices.

You need to be talking to a lawyer and an independent mortgage broker to find out your options.

 

[Aaron_C]

You need to get onto this urgently. Brokers can settle properties within 7 days if they really have to.

 

[Lamingtons]

Thanks for that.

But since I do not have bank approval for a loan yet and the settlement is due next week, I don't know what to do. The whole idea was to be able to get in early and sell before settlement so I could make savings for future investments.

But you want to sell before settlement anyway right?
Have you tried to sell it?

 

[The Y-man]

.... the solicitor asking to declare that:
.

Hi Divesky

Sorry to hear of your situation - I think about as stressful as our first foray.

Whose solicitor are we tallking about here - yours or theirs?

If it is theirs - then as Tery suggested you need to get hold of a good solicitor to

1. look through your contract of sale

2. advise on options available based on the contract. Loans can take weeks to organise - but have a chat to a mortgage broker on this site. You may be able to get away with a short delay to settlement.

3. Find anything that can delay setllement based on the contract - regarding deliverables etc.


Also -

1. how much deposit have you put down
2. how much cash do you have available
3. Due you have a potential person you can onsell to (as was your original plan)?




Later for reflection:

1. Never go through the developer/builder for finance without checking other options.



The Y-man


ps. wow - 2 posts added while was tapping this reply out!

 

[josko]

Hmmm,

Where's divesky gone....

Pretty bad mess there, hope he/she sorted it.

Regards JO

 

[Ausprop]

Lawyer, now.
Valuer, now.
Independant real estate agent, now.

As Terry said... you have big problems here. At best you may make a few bucks, at worst you may be bankrupted. You have no time to waste

 

[tom32]

Upon completion the apartments are worth more so it's in their interests to now botch up your finance, gouge you for a bunch of fees, and then re-sell the properties at higher prices.

In the case of a default;

Your scenario is potentially the best outcome for diveski.

At worst they sell at a deficit to the contract with diveski and the deficit is then diveskis problem / debt due in addition to a whole lot of costs.

 

[divesky]

Thanks all for your quick responses. This has been really helpful. An excellent place for a novice to get some ideas.

I spoke to the solicitors and also a few independent real estate agent. Looks like the market is not doing very well where the property is, according to the independent real estate agent as well. So, the people I have been dealing with have not painted a wrong picture, at least, in terms of price.

As I'm not in a position to get into a mortgage, the option of on selling at my original cost price (to the one that the company has lined up for me)seems the best option at the mo. At least, I'll get my deposit back but lose the other bits I paid on administration cost etc. Bit of a hard lesson, but lesson learnt none the less.

Thanks heaps for your experienced suggestions.

 

[divesky]

@ softmonkey, it certainly felt like what you said when I got the info in this morning. But after understanding the market a bit better, it doesn't sound like what I'm offered is a bad idea.

@the Y-man. Thanks for your suggestions for future as well. Will def keep it in mind.

Others, can't believe how helpful you guys have been. Thanks heaps.

 

[Ausprop]

there are a lot of reasons why you need to see a lawyer. for one, your act of onselling could deem your waiver of any rights to termination you may have had. also if you are on selling and fulfilling the contract, why are you forfeiting yur interest on the deposit? When you bought this, were you of the understanding that you were going cash unconditional? if not the sales rep may have a case of false and misleading conduct to deal with.

seriosuly this has nightmare written all over it. and if it goes pear shaped are you in a position to stump up the $50-100k that it will take to defend yourself? this was bought in your personal name right?

 

[tom32]

4) if the settlement doesn't happen then still face the consequences of the contract.

As Ausprop said you should see a Soliciter.

This bit above is critical!

You are probably on the hook anyway but I would not be making it any easier for them...

 

[NedKelly]

(was being handled by the finance dept of a large investement property group that is building the apartment building)

What is the name of the company?