Vandalised before Settlement

[Gentle_Chief]

Hiya guys,

Three weeks back went to an auction and bid for a DoH (Dept of Housing) House 3x1x1 Fibro in Western Sydney and purchased it for 184,000. At that price, it was a good deal. We paid the 10% deposit required and signed the Contract of Sale.

On that day of sale, there were 14 properties of DoH stock that was cleared out and many investors walked away with a bargain or two. Our settlement date is 14.03.2011 which is the coming Monday.

Day before yesterday, as we drove past the house we noticed fresh Grafitti on the external walls. On closer inspection we saw the widows broken. Having seen quite a few properties vandalised in this area (especially during vacancies, when there is a 'For Sale/Lease' sign outside) I know my newly purchased property has been Vandalised. Just kids doing this to prove that they are tough. I do not know the full extent of the internal damage as I have not been able to organise a inspection with the REA. But I am planning to get in there today, latest by tomorrow.

My question is:

With the settlement next week, what are my options?

- Will the DoH reduce the settlement price (highly unlikely)
- Will the DoH's Insurance company compensate us for the damages (possible)
- Will the DoH say bugger off, not our problem (highly likely)

Any suggestions/opinions will be much appreciated....

Thanks,

 

[The Y-man]

My understainding is that a house needs to be in the same condition at settlement as when you signed the contract.... you should be able to demand restoration, costs, or a cancelling of contract.

The Y-man

 

[Propertunity]

My understanding is that a house needs to be in the same condition at settlement as when you signed the contract.... you should be able to demand restoration, costs

What he said ^ although I don't think you'd be able to cancel the contract for a bit of graffiti or a broken window/s.

Also, you'd have taken out an insurance policy on the property when you exchanged contracts....yes?

 

[Gentle_Chief]

Also, you'd have taken out an insurance policy on the property when you exchanged contracts....yes?

Hi Propertunity,

No I have not taken out an Insurance policy.
Have always thought any damages would be covered by the Vendor's policy until the settlement date.....is it not so?

 

[Propertunity]

Hi Propertunity,

No I have not taken out an Insurance policy.
Have always thought any damages would be covered by the Vendor's policy until the settlement date.....is it not so?

....and if the vendor does not have a policy? or let it lapse?

Ooooooh not this old debate again

Every time we do this one, I don't think we've ever had a resolution or gotten a straight Y/N answer.

 

[VYBerlinaV8]

I always take insurance on exchange. My understanding is that is when the 'new' owner becomes responsible for the property, even though the settlement is when the ownership formally changes.

 

[Jacque]

Hi Gentle Chief

Sorry to hear of your situation. Luckily, your insurable risk commences as soon as settlement is effected so the responsibility still lies with the vendor. Contact the DOH via your solicitor/conveyancer and let them know. They should be liable to repair/restore the property to the same state as it was in when you exchanged contracts.

From the AICNSW (Australian Institute of Conveyancers NSW) site:

The seller is liable to take care of the property up until completion and the property should be handed over at completion in the same condition, subject to fair wear and tear, as it was at the date of exchange.

If the property is substantially damaged before completion the purchaser has a right to rescind and have the deposit refunded provided they do so with 28 days of becoming aware of the damage. If the damage is not substantial then the purchaser may chose to proceed with the purchase subject to an adjustment of the sale price to account for the cost of repairing the damage done.

 

[Gentle_Chief]

Hi Gentle Chief

Sorry to hear of your situation. Luckily, your insurable risk commences as soon as settlement is effected so the responsibility still lies with the vendor. Contact the DOH via your solicitor/conveyancer and let them know. They should be liable to repair/restore the property to the same state as it was in when you exchanged contracts.

From the AICNSW (Australian Institute of Conveyancers NSW) site:

The seller is liable to take care of the property up until completion and the property should be handed over at completion in the same condition, subject to fair wear and tear, as it was at the date of exchange.

If the property is substantially damaged before completion the purchaser has a right to rescind and have the deposit refunded provided they do so with 28 days of becoming aware of the damage. If the damage is not substantial then the purchaser may chose to proceed with the purchase subject to an adjustment of the sale price to account for the cost of repairing the damage done.

Hi Jacque,

What you have just said above is absolute GOLD. And Music to my ears.
Thanks a TON for investigating this on the AICNSW website. I shall be working on the angle to 'adjust the sale price' to reflect the true cost of damages.

Kind regards,
GC.

 

[VYBerlinaV8]

Hi Jacque - thanks for the info.

 

[Jacque]

No worries GC. Best of luck with it all- keep us posted as I'd be interested to see how the DOH handles it.

 

[Propertunity]

Hi Gentle Chief,
Sorry to hear of your situation. Luckily, your insurable risk commences as soon as settlement is effected so the responsibility still lies with the vendor.

Yep, Jacque is right
However, when I asked a solicitor about this same thing this week, I got the following response:

Before you draw down on funds is fine. If you are occupying then earlier. I do prefer my clients to have it after exchange though purely in case the vendor doesn’t and we are required to complete.

 

[sash]

Gentle_Chief

I regularly buy DoH houses. I have not had any vandalism yet....but I do take out insurance on purchase.

My understanding is that the DoH will usually bring the property to the original condition prior to settlement. I would call their solicitor directly....I believe it is Dana Lowe.

I'll bet you bought a couple of Mt Druitt houses didn't you??

Hiya guys,

Three weeks back went to an auction and bid for a DoH (Dept of Housing) House 3x1x1 Fibro in Western Sydney and purchased it for 184,000. At that price, it was a good deal. We paid the 10% deposit required and signed the Contract of Sale.

On that day of sale, there were 14 properties of DoH stock that was cleared out and many investors walked away with a bargain or two. Our settlement date is 14.03.2011 which is the coming Monday.

Day before yesterday, as we drove past the house we noticed fresh Grafitti on the external walls. On closer inspection we saw the widows broken. Having seen quite a few properties vandalised in this area (especially during vacancies, when there is a 'For Sale/Lease' sign outside) I know my newly purchased property has been Vandalised. Just kids doing this to prove that they are tough. I do not know the full extent of the internal damage as I have not been able to organise a inspection with the REA. But I am planning to get in there today, latest by tomorrow.

My question is:

With the settlement next week, what are my options?

- Will the DoH reduce the settlement price (highly unlikely)
- Will the DoH's Insurance company compensate us for the damages (possible)
- Will the DoH say bugger off, not our problem (highly likely)

Any suggestions/opinions will be much appreciated....

Thanks,

 

[Gentle_Chief]

An update:

DoH is not interested in any discussions on this matter of vandalisation. Our solicitors have given up. And so have we at this stage after a good number of phone calls and emails.

The DoH have a special condition inserted as a standard clause in all their contracts stating that a Buyer does not have a right to rescind nor renegotiate the sale price nor seek for compensation nor delay the settlement if vandalised prior to settlement.

Not happy.

Anyways its binding, having signed it on exchange.
To those of you interested, I will try and attach a few pics here of the vandals handiwork.

P.S: My 11 year old son says that the Tag on the grafitti is cool & awesome!

 

[Jacque]

Hi GC

Sorry to hear that- obviously they've covered themselves with this clause so you have to wear the cleanup costs. Perhaps get your 11 yr old to help and then he won't think graffiti is so cool

 

[skater]

An update:

DoH is not interested in any discussions on this matter of vandalisation. Our solicitors have given up. And so have we at this stage after a good number of phone calls and emails.

The DoH have a special condition inserted as a standard clause in all their contracts stating that a Buyer does not have a right to rescind nor renegotiate the sale price nor seek for compensation nor delay the settlement if vandalised prior to settlement.

Not happy.

Anyways its binding, having signed it on exchange.
To those of you interested, I will try and attach a few pics here of the vandals handiwork.

P.S: My 11 year old son says that the Tag on the grafitti is cool & awesome!

Sorry to hear that. I've bought a few from the DOH and haven't encountered that, although many have that level of vandalism or worse. They do state at the auctions that the water heater and piping is excluded, so I'm not surprised that they would include that clause, although it is poor form not to mention this too.

Anyway, think big picture. The home needs painting anyway. The addition of the graffiti won't be too much of a problem, and if you are handy, those holes in the wall will only be a minor inconvenience.

 

[Propertunity]

.... those holes in the wall will only be a minor inconvenience.

Actually, they will make the house go faster......they're speed holes

 

[travelbug]

The ones I've bought have had that clause in. I was going to write that then saw your reply today. It is a worry with DOH purchases. I remember my first one, I rang the solicitor about it as it caused me concern.

Hence the reason I always get insurance at exchange.

Good luck with it.

 

[RPI]

Hi Gentle Chief

Sorry to hear of your situation. Luckily, your insurable risk commences as soon as settlement is effected so the responsibility still lies with the vendor. Contact the DOH via your solicitor/conveyancer and let them know. They should be liable to repair/restore the property to the same state as it was in when you exchanged contracts.

From the AICNSW (Australian Institute of Conveyancers NSW) site:

The seller is liable to take care of the property up until completion and the property should be handed over at completion in the same condition, subject to fair wear and tear, as it was at the date of exchange.

If the property is substantially damaged before completion the purchaser has a right to rescind and have the deposit refunded provided they do so with 28 days of becoming aware of the damage. If the damage is not substantial then the purchaser may chose to proceed with the purchase subject to an adjustment of the sale price to account for the cost of repairing the damage done.

I hope the society has an explanation of this because reading at a glance and understanding what it actually means is totally different. The damage that happened to the property is not even close to substantial.

For the damage to be considered substantial it must render the land materially different from that which the purchaser contracted to buy
Conveyancing Act 1919 s 66J

At common law the risk passes to the buyer on the sigining the signing of the contract. However s66k Conveyancing Act 1919 postpones this passing of risk

Section 66m deals with abatement of purchase price where land damaged and allows for the purchase price to be reduced by an amount which is fair and equitable. Or for the vendor to be liable for a debt for said amount recoverable by purchaser.

Insurance should always be purchased at signing anyway as, becaue of the common law passing of risk, it can be insured and insurances is way cheaper than litigation.

 

[jeffb5ltr]

On a side note,

Give a copy of the graffit tags to the local cops, They usually have a file started and record where and when these tags appear.

Then if they ever catch them tagging they charge them with multiple offences as a tagger keeps the same profile/tag as its their way of showing off to mates and other groups/gangs where they have been.

I would even bet the police would have a idea on who the vandals are.

Might help step up patrols of you area if they have some evidence and a police report.