Vendor not providing vacant possession at settlement

Discussion in 'The Buying/Selling Process' started by keroppi_gims, 13th Jun, 2015.

  1. keroppi_gims

    keroppi_gims Member

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    I purchased a house in Brisbane in March and I am due to settle on it next Thursday. I signed a standard REIQ Contract for Houses and Residential Land (10th edition). The vendor currently lives in the house and sub-lets three rooms.

    I notified the real estate agent two times over the past three months to tell the vendor to provide vendor possession at settlement, which she said she did. Additionally, in Clause 5.5 of the contract it states that the seller must give the buyer vacant possession of the land at settlement. Also in Clause 9.1 it states that the seller is in default if they do not comply with Clause 5.5.

    The vendor called me on Wednesday saying that he was only just notified about vacant possession and as such cannot provide it until at least one month later. I said that one month is the maximum length of time that they can live there and that during this time the vendor will need to pay me market rent. The vendor said that he will provide a letter to my conveyancer confirming that they wish to stay on in the house.

    I just heard from the agent that the vendor is disputing the market rental appraisal that she issued. The vendor has also not provided any letter to my conveyancer as yet.

    1. What should I do? I am not sure whether we can come to an agreement over the rental appraisal figure and I am not sure whether the vendor will even provide a letter to my conveyancer as he has been difficult to deal with since the start.

    2. I am considering delaying settlement until vacant possession is provided. If I delay settlement, can the vendor refuse to sell the house to me? Will there be any negative consequences, such as my finance approval being declined?

    Please respond if you are confident you know the answers to this. I don't want to make any mistakes. Thanks.
     
  2. Rolf Latham

    Rolf Latham Member

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    what does your solicitor say ?

    ta
    rolf
     
  3. Scott No Mates

    Scott No Mates ...and people wonder why?

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    +1 take it up with your solicitor
     
  4. Perp

    Perp Member

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    Nonsense. The vendor signed the contract.
    Did you speak to your solicitor prior to agreeing to this? Have you investigated possible CGT and other implications?
    Your options are to:
    1) Settle and accept the vendor as a tenant. I would absolutely not agree to this for all sorts of reasons, and I'd be very surprised if your solicitor gave you any other advice.
    2) Terminate the contract when settlement arrives and the vendor is unable to comply with the terms of the contract and provide vacant possession.
    3) Negotiate an alternative settlement date.
    You wouldn't technically be delaying it; under option 3, you would mutually agreeing to settle on a different date, as an alternative to option 2, which is you terminating the contract.

    The vendor may decide they'd rather have you terminate, and if that's the case, you're unlikely to be compensated. But why would the vendor have changed their mind about selling in such a short time period, absent external factors?

    With regards to finance, it would usually be as simple as advising your lender or mortgage broker of the revised settlement date. As long as that doesn't take you beyond the validity of your approval - typically 90 days I think - then it shouldn't be an issue, but you should check with your lender or broker.
     
  5. NPB

    NPB Member

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    Don't settle with them still in the house, opens a massive can of worms.

    They are in breach of the contract so there shouldn't be any ramifications for you but of course your solicitor will advise the way to go.
     
  6. RPI

    RPI Member

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    Contract says vacant possession, in default otherwise. That is the letter of the law but it depends on how much you want the property. Could try and push them out quickly through various legal notices etc. When it comes down to it though would try and avoid litigation over this sort of thing, it is just too expensive.

    General steps your lawyer would follow if they can't get confirmation of vacant possession earlier.

    1. Book settlement a couple of hours before 4 or 5pm.
    2. Confirm that there is no vacant possession just prior to settlement.
    3. Refuse to settle at the booked time.
    4. Fax notice to seller's solicitor saying that their client will be in breach if not vacant by 5pm (or 4pm if using new 11th edition of the contract), telling them that you are ready, willing and able to settle. Go to agreed place of settlement and tender for settlement on the basis that vacant possession has been provided (if not confirmed then lawyer will still turn up and show the other side that you are ready willing and able to settle but for the lack of vacant possession.
    5. At 1m past 4 or 5pm fax the seller's solicitor stating that their client is in breach and that they reserve all of your rights in relation to this breach. Despite the breach you will agree to settlement with vacant possession the following day and if they don't you will be terminating the contract.
    6. If they don't provide vacant possession the next day terminate and walk away. It is not worth the legal costs you would incur to fight over this.
     
    Perp likes this.
  7. marg4000

    marg4000 Member

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    As said, do not settle.

    It may take months dragging through courts to evict.
    Marg
     
  8. keroppi_gims

    keroppi_gims Member

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    The solicitor told me on Thursday that he wanted to wait until the weekend to see if the vendor will send us correspondence stating their intentions first. As we have not received anything, he said that he will call the vendor's solicitor on Monday morning.

    The solicitor has not provided any advice to me and I get the impression that he is just going by what I tell him.

    I want to own this house so terminating the contract is out for me.
     
  9. Big Will

    Big Will Member

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    As others have written, do not settle until vacant and speak with your solicitor.

    Reason people are saying not to settle before vacant, the vendor (now tentant) could say the damage in the wall happened AFTER you settled. Whereas if you haven't settled if there was damage done before you settled that wasn't there when inspected then it is the vendors responsibility.
     
  10. TMNT

    TMNT Member

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    Hmmmm so in qld. If you are even a minute late for settlement you are deemed to not fulfilling the contract and you can lose your entire deposit

    But if the selller doesnt vacate the property as per the contract you still have to treat them like a paying tenant?!?!?!


    Such double standards
     
  11. Ausprop

    Ausprop Member

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    really stressful hey? couldn't believe it when I first learnt of it
     
  12. keroppi_gims

    keroppi_gims Member

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    The latest is that the vendor issued a letter via their solicitor yesterday saying that they are would like to pay us below market rent for the month after settlement and we responded saying that we do not accept this position and that we would like to change the settlement date.

    Settlement is meant to be this Thursday and their responses are very slow.

    1. If I proceed with settlement this Thursday as per the contract, can I keep any property that is remaining in the house upon settlement date and change the locks?
    2. If I ask to change the settlement date to mid July and the seller refuses, is there any way for the seller to terminate the contract? If the seller accepts the changes settlement date, is there any way for the seller to terminate the contract?
     
  13. Perp

    Perp Member

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    Why aren't you asking your solicitor these questions? :confused:
     
  14. Terry_w

    Terry_w Member

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    1. No you cannot, unless this was in the contract. Once you settle you could change the locks
    2. Yes they can terminate the contract if you fail to settle on the agreed date. In QLD I don't think they need to serve notice prior. If they agree to vary the settlement date then the contract is amended and they cannot terminate for this reason (but there may be other reasons)
     
  15. Perp

    Perp Member

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    But if they fail to settle due to the seller's failure to provide vacant possession, it would be keroppi_gims terminating for the seller's breach, wouldn't it?
     
  16. Terry_w

    Terry_w Member

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    Yes possibly. But vendor could terminate too. Then it would be a **** fight over who is correct
     
  17. keroppi_gims

    keroppi_gims Member

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    Thanks for clarifying Terry.

    What would happen if I have asked the seller to extend the settlement date and I am ready and willing to settle this Thursday if there is vacant possession but no vacant possession is provided and the seller refuses to extend the settlement date? Under this scenario, is there any way for the seller to terminate the contract?
     
    Last edited: 16th Jun, 2015
  18. Perp

    Perp Member

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    keroppi_gims, it sounds like your question is: "what recourse do I have if this vendor no longer wants to sell me the property?"

    The short answer is, for all practical purposes, none, unless it's a multi-$M deal on which you'd secured an incredible bargain, and it's worth spending $100K+ on pursuing via the courts for an order of specific performance.
     
  19. Terry_w

    Terry_w Member

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    The vendor could terminate if you fail to settle upon the agreed date. If the contract provided for vacant possession but it was still tenanted then this termination may be invalid. But as Perp says how are you going to enforce it? You could send a few letters and hope they settle, but if they don't then what?
     
  20. TMNT

    TMNT Member

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    if thye are getting difficult, cant you settle with them in it, and kick them physically? ie change the locks, since they are technically in breach of contract,

    I guess they could sue you for kicking them out according to rent laws, but will they go to the effort?