Urgent...help needed, agent did not take deposit.

[Mrs Bird]

Hi Everyone,

I need advise urgently for a friend of mine who is absolutely beside herself and feels 'financially' vulunerable to these people.

Facts...

Contract for the sale of her house was signed and settlement date was for early May. During this time before settlement, the agent acting on her behalf was showing potential 'renters' through her property without her permission acting now for the buyer. A for rent sign was put up by the agent but he was asked to take it down.

Settlement date came and went but the purchaser asked for an extension. I then realised what the purchaser was up to. I asked my friend what was on the sign and she said something about vendor finance and I told her it was a Wrapper who had bought her property and was trying to find a buyer before he settled. That was still fine as long as he settled ASAP.

Well the next settlement date came and went and the next and the next! All the excuses under the sun by both agent and buyer.

Today she told me that he has not even paid a deposit. I thought this was totally illegal so this guy with the agents help can get out of the deal scott free. How can an agent not get a deposit after the contract was signed. This has been going on for 6-8 weeks after settlement date. Settlement has been put off again till next week.

My friend contacted the REIV today but the advise is 'to hire a GOOD lawyer'

What steps can be taken now and advise?

Property is in the Western suburbs Melbourne.
She has been on the phone to the agent/s but is given the run around. I suppose she is seen as a soft target.

Mrs Bird

 

[Puppeteer]

Disclaimer: I ain't a lawyer and this ain't advice.

I don't know if things are the same in Victoria, but in WA if the purchaser delays settlement then they can become liable for interest after the settlement date.

There are two issues here. The first is the purchaser, who should be liable for the interest, unless your friend has waived this.

The second is the agent. I'm not sure what the requirements are for an agent legally regarding a deposit, but the contract I signed required a deposit to be paid within 7 days. Admittedly the deposit can be very small, but one was required.

If it were me in this scenario, I would be finding a good lawyer to start asking some hard questions and to outline to the purchaser what an interest penalty is.

 

[asy]

Hiya Mrs Bird,

I am assuming here that the contract is unconditional.

It is not necessary for a deposit to be paid with respect of a real estate deal, a signature is considered 'valuable consideration' in this respect.

With respect to penalties which may apply, IF the purchaser eventually pulls out, the purchaser will be liable for 10% of the purchase price, as a penalty, and also they will be liable for the differrence between their purchase price and any subsequent purchase price (so long as it is reasonable market value, so no, she can't sell it to you for 5k!!), and also any legal or other costs incurred by the vendor due to the non-settlement.

If your friend wants to put an end to the vascillating, she needs to refuse to grant any extensions and order a rescision notice be served, then she will effectively be giving them 14 days to get their buts into gear, and settle.

Your friend should also ring the agent and ask them what in hell is going on, don't forget SHE is the client in this deal.

Let us know what's happenning.

asy

*Usual disclaimers apply, I'm not a solicitor!!!

 

[Mrs Bird]

Thank you for your replies Puppeteer and Asy.

Asy, does that mean legally you are not required to put down a deposit after signing the contract? Very interesting....does that apply for auctions as well?

Puppeter, he is suppose to be paying penalty rates as well.
But with no money down in this deal, it is very hard to work out what is happening. I have told my friend to get a lawyer to act on her behalf.

Thanks Mrs Bird

 

[Kristine..]

Mrs Bird

The Terms and Conditions of the Auction are read aloud before the commencement of proceedings, so if the Auctioneer says 'Payment of 10% Deposit and the Balance whenever', then the bidders tender their bids in agreement to the Terms and Conditions as read.

If you approach the Auctioneer beforehand and say eg 'I can only put $1,000 down today with the balance of the 10% in 7 days' and they agree to accept bids from you on that basis, then that is what has been agreed to (I did this when buying the medical centre).

In a Private Sale the usual safeguard is still to go for 10%, mainly because that is the limit of default which the vendor can claim against the purchaser until and unless the property is resold.

Contract law does not require a partial payment of the 'Consideration', as the Consideration is not always money. Remember my story of the fencing contractor (where the Promise is to build the fence) and the Consideration being the payment of a cow (and how hard it is to pay with a partial cow?).

Once signed, the contract is enforceable, in other words the vendor can sue for 'feasance' that is, completion of the contract, or damages if the contract is breached.

In most cases, the vendor finds it less trouble to get what they can from the recalcitrant purchaser and simply put the property back on the market. In this case, with a different agent!

With your friend, they should keep in mind that the agent may well claim their commission and advertising expense as they have 'found a party willing and able to enter into a contract', so the vendor needs to safeguard their interests by pressing hard for that deposit.

Cheers

Kristine

etc

 

[bundy1964]

Originally posted by Mrs Bird
Asy, does that mean legally you are not required to put down a deposit after signing the contract? Very interesting....does that apply for auctions as well?

Hi Mrs Bird

You can use a deposit bond, I would hope as a seller that the contract does have a deposit mentioned........as a buyer I have found 5K has worked out ok so far and that has been under 10%

Standard auction contract is 10% in SA unless agreed before the sale starts. I would try to argue my way down to 5K on that as well If it passes in and you have not bid you can then go for the standard subject to clauses.

No 2 states seem to have the same set of rules and given the way they get on it's noy likely to change in the near future.

bundy

 

[asy]

Hiya Mrs Bird,

Yep, that's what it means, in a general sale, but with Auctions, it's usually a condition of the auction, rather than of the sale of land act, that a deposit is paid immediately, but it certainly doesn't have to be, you can have this waived by prior negotiation.

Let us know what happens...

asy

 

[michaelg]

Hi,

Just curious, but I would be interested to know whether this buyer is a registered member of the Vendor Finance Association or not.

Regards
Michael Gruber

 

[Mrs Bird]

Hi All,

Update,

Michaelg, he is a known wrapper in the area and my friend who does wraps is finding out for me if he is a member.

Now next bit of news, he has still not paid deposit, will not hand back the keys but a rescision notice has been given.
However he has now changed the name of the buyer to another persons name. What are the consquences? Is he still liable for all penalities etc.

I thought buying a house was pretty straight forward but this situation was allowed to happen because the agent was acting on behalf of both vendor and buyer. I didnt realise untill now how important it is to get a reasonable deposit when contracts are signed.

Mrs Bird

 

[hwd007]

Isn't she dealing through her own solicitor ? For god sake charge the buyer intrest immediately. Surely he has breached the contract ?

 

[brains]

Complaining to the REIV about an agent is like complaining to your mother in law about your wife

Does she have a solicitor doing her conveyancing? If so, use them to get this matter sorted out, its crazy!

You should print out this thread and give it to her and advise her to instruct a solicitor in writing to sort this matter out ASAP!

 

[Mrs Bird]

Hi Guys, Update...

Brians I did print this out for my friend to read and amazingly within a week of this thread the whole deal was closed, my friend happy but still very angry that she was put through this ordeal.

I have also learnt a valuable lesson that receiving a substantial deposit is crucial when selling your house.

Mrs Bird

 

[brains]

Good news! How was it resolved?

Originally posted by Mrs Bird
Hi Guys, Update...

Brians I did print this out for my friend to read and amazingly within a week of this thread the whole deal was closed, my friend happy but still very angry that she was put through this ordeal.

I have also learnt a valuable lesson that receiving a substantial deposit is crucial when selling your house.

Mrs Bird

 

[Mrs Bird]

Hi Brains and everybody else who replied to this thread.

Update of this unusual situation.

Brains in answer to your question, the recalicatrant notice was served, 3 days later a deposit was given and settlement within a week.

Curiously this all happened when this thread first started. You never know who is reading these posts. Anyway, all well ends well.

Mrs Bird

 

[brains]

Good News, glad it worked out ok.