Vendor won't settle on land sale!

We are in a rare situation. We have an unconditional contract for a vacant block of land that was due to settle on Jan 16. The Vendor's bank hold the title and weren't ready to settle on Jan 16. This was the beginning of an extended settlement which still hasn't happened.
Since then we have heard that the vendor owes more to the bank than the agreed contract amount (about 30k more) so the bank is not happy to settle for obvious reasons.
So 6 weeks later we still haven't settled and now the vendor is not returning calls from his lawyer.

Has anyone come across this situation before? Apparantly the only way to force a settlement is to go to the Supreme Court!:eek:
I have already spent about 6k preparing a DA for 3 units on the site.

The upside is that holding costs are being postponed but it would be nice to move on with the DA now that it has been prepared.
 
The Bank can't be forced to settle for less than they are owed. Does the Vendor have anything else he can either sell to allow settlement or give to the bank as security.

Is there an agent? Can he find out what is happening? Can your solicitor write to the other side and say that you will be taking action for the contract to be specifically performed.
 
Do you happen to know the difference in the amount you paid and the amount owed to the bank?

More out of interest than anything else. If it was a small amount possibly you could come to an arrangement with the bank or the vendor to cover it. Not an ideal situation but if the project is still profitable it may be worth considering.
 
Has your solicitor issued the notice to complete after the 14 day waiting period expired? What is your solicitor recommending that you do? (sit on your hands and wait)? The contract price is agreed, if it was short before nothing has changed.
 
I just finalised a similar matter, this is for a contract signed in 2005. each side incurred well over $200k in legal fees and countless days of time. The amount at stake was $150k.
 
If your lawyer contacts the bank they may sell it as mortgagee for the agreed price. It may be their best offer and only offer. Arguably if it was advertised as a mortgagee sale they will get less.

Negotiation may win yet
 
The Bank can't be forced to settle for less than they are owed. Does the Vendor have anything else he can either sell to allow settlement or give to the bank as security.

Is there an agent? Can he find out what is happening? Can your solicitor write to the other side and say that you will be taking action for the contract to be specifically performed.

I know very little about the vendor apart from what the agent tells me. Apparrantly he "disappears" sometimes and is very hard to contact. I have been told he works overseas at times.

Do you happen to know the difference in the amount you paid and the amount owed to the bank?

More out of interest than anything else. If it was a small amount possibly you could come to an arrangement with the bank or the vendor to cover it. Not an ideal situation but if the project is still profitable it may be worth considering.

I have been told it's around 30k. He has obviously borrowed against the land a few years ago which would have been valued at a much higher price. He paid under 100k for it many yrs back and our contract price is 210k. When he first listed it the asking price was 350k since it was a medium density site. He gained a DA approval for a 3 unit complex which had just lapsed when I became interested in the property around 2 yrs ago. I would say he had the site valued after the DA approval was given and was able to borrow against the elevated valuation. The proposed building was a major structure which would have cost a fortune to build. This alone would turn people off. Not only that, the site has a heritage listed tree on it which makes development of the site quite tricky. I carried out my DD and felt it was worth pursuing for the 200 - 210k mark but it took 2 yrs to secure the site. There was another offer during this time but the contract fell over due to the purchaser pulling out prior to contract going unconditional.

Has your solicitor issued the notice to complete after the 14 day waiting period expired? What is your solicitor recommending that you do? (sit on your hands and wait)? The contract price is agreed, if it was short before nothing has changed.

No. He is recommending we wait and maintain our contact with vendor's lawyer and continue requesting settlement.

Bank would have priority as their interest is higher than yours. Not much use going to the SC I would think.

My lawyer's view as well.

have you lodged a caveat over the property?

No, how would this help?

If your lawyer contacts the bank they may sell it as mortgagee for the agreed price. It may be their best offer and only offer. Arguably if it was advertised as a mortgagee sale they will get less.

Negotiation may win yet

Yes, we hope so. My offer is the strongest that the vendor has achieved in 2 yrs so the bank should see common sense, release the title and settle. Otherwise they may get less for an auction.

Thanks for all of your comments.
 
No. He is recommending we wait and maintain our contact with vendor's lawyer and continue requesting settlement.

Nope, definitely serve the notice. It may jolt the vendor and/or bank. Give the impression that you will walk as hanging around and "waiting" adds no benefit to your position. I would tell your solicitor that you are serious and make sure he/she relays this to the vendors solicitor.

I had a similar scenario earlier this year. Waiting, waiting and there was no urgency to settle. While paying no interest for a while was nice I still needed to settle. I served the notice and settlement occurred on the 14th day.
 
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What was your vendor's hold up oc1? Most vendors want their money sooner rather than later.

Divorced/separated couple. Not sure of the full story but it seemed like they were trying to determine you got what. I sensed one was trying to make it difficult for the other. Until that notice was served though there was no urgency to settle. Settlement was 70 days which is more than enough to sort things out.
 
I spoke with the agent today and it seems that the vendors lawyer is embarrassed because he won't return messages. Vendor's lawyer wants to settle but it seems the issue is between vendor and his bank and the apparent breakdown in communication. Not sure if notice is given whether it will help if he is not communicating with anyone and continues his "disappearing act"
 
I spoke with the agent today and it seems that the vendors lawyer is embarrassed because he won't return messages. Vendor's lawyer wants to settle but it seems the issue is between vendor and his bank and the apparent breakdown in communication. Not sure if notice is given whether it will help if he is not communicating with anyone and continues his "disappearing act"

It won't cost you anything to issue the notice. You won't know until you try. At the moment one thing is for sure and that is you haven't a settlement date.
 
Perhaps it could be due to the vendor having the property cross collateralised with other properties. this may require valuations etc and they may not have reaslised this until they put their discharge of mortgage request in. I have seen this happen before.
 
Settlement date has been booked again for next Tuesday but my lawyer told me not to get my hopes up yet. We'll see what happens. At least there is some attempt being made from the other solicitor to finalise the sale.
 
All settled yesterday after all the uncertainty even up until the 11th hour.
On now to DA lodgement of the 3 unit project which we plan to have built by Xmas.
Thanks for the comments. :)
 
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