Late Settlement, Early Deposit Release (VIC Property Sale)

babiguling on 16/10/2017 - 10:34

Hi OZbargainers mates,

Just wanting to ask for your advice here

I've sold my property back in July 2017 in VIC, buyer already paid 5% deposit back in July, I requested for early release for the 5% paid deposit so that the money could help reducing my home loan interest. I have signed & submitted the form to my solicitor for the early release request, however my solicitor said that the buyer has not signed it which means I can't get a hold of the 5% deposit.

settlement was scheduled to happen on 13/10/17, but it's been delayed until further notice due to buyer's bank slowness.. :(

My solicitor said that the buyer will have to pay 12% interest of whatever amount owing (the purchase price less the 5% deposit he has paid which currently is sitting on the agent's trust account)

I was thinking that since the settlement is delayed (caused by the buyer's side), the 5% should have been released and deposited into my account automatically first?
or if the 5% is not released early to me, the bank interest should be calculated from the FULL purchase price x 12%?

Any thoughts or similar experience?

Thank you so much in advance

Financial

Comments

  • djkelly69 on 16/10/2017 - 11:15
    +3

    The amount on which the interest you can charge depends entirely on what is written in the contract, so I would accept what your solicitor has told you. You could also check the contract yourself if you have a copy. It will usually be on the 'price' or the 'balance of the price', and would appear to be the latter in your case.

    Unless you have a condition in the contract which specifically allows the release of the deposit to you or the buyer agrees to release it (very unlikely), then it will sit in the agent's trust account until settlement occurs or the contract is ended in another way (rescission/termination).

    • babiguling on 16/10/2017 - 11:51

      Thanks djkelly69, very useful info, I guess I'll have to wait and see. I've just instructed my solicitor to issue the rescission notice =)

      • CLoSeR on 16/10/2017 - 11:59

        You don't want to proceed with the sale, why are you issuing a recession notice? Late settlement is better than never.

      • djkelly69 on 16/10/2017 - 12:22
        +4

        I assume you mean termination notice? Rescission is essentially where the contract is torn up and parties go back to the start (ie. get their deposit back). Termination is where you terminate the contract because they failed to perform, and you get to keep the deposit, claim for damages, etc.

        Agree with above as well - it is probably just a minor hiccough with the buyer's bank, and they will be ready to settle shortly. I would be happy to wait for a pretty long time as long as I am getting 12%pa interest!

        • josh676 on 16/10/2017 - 12:29
          +1

          Pretty clear he wants that sweet sweet 5 percent deposit.

        • babiguling on 16/10/2017 - 12:31

          It'a complicated story, the buyer has asked for 3x extension from me, and I was patiently enough to give him that, at the end of the 3rd week extension, they did not get back to me, so it automatically became unconditional according to my solicitor. and for multiple times I have asked from the buyer to give me some sort of pre-loan approval, so that I can present it to my bank and get a loan myself, to get ready to buy my next property but he did not want to give that, only saying will do will do with no real action/result.
          Because when he signed the contract he did put subject to finance, so my bank/mortgage broker wanted to make sure that subject to finance clause no longer apply by asking the buyer the pre loan approval.

          So basically this sale was not a smooth one, still not sure if he will settle or he will be able to get a loan, that's why I need to give him a 14 days deadline, otherwise it's wasting my time. no guarantee if he will be able to pay the 12% interest as well

        • CLoSeR on 16/10/2017 - 13:13
          +1

          @saveAhok: It was a mistake accepting a subject to finance clause, the cooling off period is enough time for the buyer to get finances sorted.

          Did your solicitor warn you regarding this clause?

        • babiguling on 16/10/2017 - 13:16

          @CLoSeR: yeah I know the risk of accepting "subject to finance" clause, but in my case, my property is in the category of "hard to sell" due to its size and layout.

  • CLoSeR on 16/10/2017 - 11:34
    +4

    Not sure about VIC but in NSW early release of deposit is not a right but a privilege; most buyers solictors will advise against allowing it.

    It's good that you're getting some compensation for late settlement.

  • tsunamisurfer on 16/10/2017 - 12:40
    +1

    The deposit is supposed to be held in trust until such time as the settlement goes through.

    If I were the buyer and you told me you wanted my 5% so you can save on some interest, I would tell you to _ _ _ _ off.

    A few days delay does not automatically mean the money is yours nor that you can tear up the contract, there are provisions in place to prvent this where the delay is reasonable.

    • babiguling on 16/10/2017 - 13:13

      But the sale has automatically became unconditional in my case, buyer asked for 3x extension to organise his loan, at the last day of the granted extension, he/his solicitor did not get back to me, passed the "subject to finance" clause. so it's to proceed as normal, means whether or not he can get the loan, the 5% will still be mine at the end of the day.
      Well,..anyway,..

  • chumlee on 16/10/2017 - 12:49
    +2

    Next time put an expiry date on subject to finance clause so you don't end up in this situation again

Login or Join to leave a comment
Login Join