Cooling off on Property Sale - Private Offer VIC

varunynr on 22/08/2020 - 11:24

Hi All,

Recently made a private offer for a property in VIC, offer was accepted without any deposit asked (By real estate agent). We decided to cool off on 2nd day (within the mandated 3 day cooling off period), per details here: https://www.consumer.vic.gov.au/housing/buying-and-selling-p…

Real estate agent called to remind us of the contractual obligations (You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater), something he didnt mention about when we were signing (no surprises here).

I think there next options could look like:

  1. We pay up (comes around $1000);
  2. RE agent sends letter of demand (and we pay up, $1000 + legal costs????);
  3. RE agent goes to court ???? (Not sure how often that happens???)

Keen to know advice from ozbargainers who have been in similar situation ?

Thanks

Financial

Comments

  • ozhunter on 22/08/2020 - 11:34
    +4

    But you didn't pay any deposit…so you don't need a refund…

    • varunynr on 22/08/2020 - 11:37

      Yes, Wasnt asked to pay any deposit (By RE agent) before submitting the offer. This was our first time submitting a private offer in VIC. We had earlier submitted a private offer in TAS (when we used to live there) where there was no requirement for a deposit. New state new learnings.

  • stratbargain on 22/08/2020 - 11:38

    You signed the contract right? (Not just a verbal offer?). Then pay up.
    EDIT: hmmm on second thoughts no deposit, walk away…

    Bah I dunno. Good luck. Talk to your conveyancer.

    Section 31 says:

    Where a contract for the sale of land has been terminated in accordance with the provisions of this section the purchaser shall be entitled to the return of all moneys paid by him under that contract except for the sum of $100 or 0·2 per centum of the purchase price (whichever is the greater) which may be retained by the vendor.

    So if the REA didn't ask for any money there is nothing to return. But I'd still get advice. Sounds like it might be a lesson for the REA…

  • CheapSticks on 22/08/2020 - 11:42

    Just pay up if u signed contract ! No contract no certainty of you getting the property !

  • Flowerbomb on 22/08/2020 - 11:42
    +1

    Tell the realtor to bugger off.

    • varunynr on 22/08/2020 - 11:46

      Like the idea : ) and interesting you say that. I wish I could do that.

      • oscargamer on 22/08/2020 - 12:10
        +1

        You can and should.

        Unlikely they will do anything more than send a few emails.

  • varunynr on 22/08/2020 - 11:43
    +2

    Thanks there. Yes conveyancer/solicitor gave a clinical advice : ) , wait for letter of demand (if they dont send, then dont bother).

  • Hithere on 22/08/2020 - 11:45
    +1

    You made an offer as an expression of interest, but unless it’s on an actual contract you can walk away without any penalty.

    RE stuffed up by not getting you to sign on dotted line.

    • varunynr on 22/08/2020 - 11:48

      No we signed (or docusigned in C19 days) the contract, so it wasnt just EOI but an actual contract. RE could have been more upfront in letting us know that we will loose 0.2% of contarct price if we cool off, but I think it wasnt in their benefit and they only talk what works in their/vendor's favour.

      • Ughhh on 22/08/2020 - 11:50
        +17

        You didn't read the contract before signing????
        Oh dear.

        • whooah1979 on 22/08/2020 - 11:56
          +1

          Why read anything when one can get legal suggestions from ozbargain. We’re here to serve the people, by the people.

      • ozhunter on 22/08/2020 - 12:11
        +6

        No we signed (or docusigned in C19 days) the contract, so it wasnt just EOI but an actual contract.

        You could have mentioned that in your post.

      • Donaldhump on 22/08/2020 - 12:23
        +2

        Is the penalty in the contract?

      • Hithere on 22/08/2020 - 12:50
        +3

        No we signed (or docusigned in C19 days) the contract

        @ varunynr Mentioning that fact in your original post would have been a good idea don't you think?

  • Quantumcat on 22/08/2020 - 12:43

    Why did you sign a contract without talking to your conveyancer?

  • bohn on 22/08/2020 - 12:48
    +1

    OP: you signed a contract, they can come at you for money (doesn't matter that you didn't pay a deposit).
    However, I think that property disputes are handled by the Magistrate court and not VCAT - if this is so (I could be wrong) - then it wouldn't be worth their time chasing you for it.
    Food for thought. But legally, you owe them the money.

  • [Deactivated] on 22/08/2020 - 12:51
    +2

    You signed a contract. Honour the contract.

    What's the world coming to. Posting on the internet to find ways to dishonour a contract.

  • dasher86 on 22/08/2020 - 13:14
    +1

    Not legal expert, but if you haven't given any money the contract doesn't exist.

    I think it's call consideration. And you didn't give any

    • ihbh on 22/08/2020 - 13:16
      -1

      Rubbish. The OP signed the contract.

      • dasher86 on 22/08/2020 - 13:19
        -1

        If there is no consideration, there is no contact even if signed.

        https://www.ozbargain.com.au/node/560225#comment-9177769

        Explains it better than me.

        • ihbh on 22/08/2020 - 13:49

          If you win an auction, and have not paid any consideration, do you think you can get out of it?

          • BOGOF on 22/08/2020 - 14:13

            @ihbh: Possibly, but different laws/rules.

            Schedules to the Sale of Land (Public Auctions) Regulations 2014

            The auctioneer must not accept any bid or offer for a property that is made after the property has been knocked down to the successful bidder, unless the vendor or successful bidder at the auction refuses to sign the contract of sale following the auction.

          • backpaqer on 23/08/2020 - 10:03

            @ihbh: There is no cooling off period in auctions (or 3 days either side)

          • Zachary on 23/08/2020 - 10:21
            +1

            @ihbh: Yes, you can actually….ebay auction is fact of that.. Had a seller bid for some items, won them all and then not pay and told me he wanted out. I said ok, no worries and he was out.

            • whooah1979 on 23/08/2020 - 10:42

              @Zachary: You as the vendor agreed to cancel the transaction. You could've legally enforced the contract if you didn't want to cancel.

              • Zachary on 23/08/2020 - 11:27

                @whooah1979: Wait, I could….? How would that even work? I grab them up by the shirt and threaten them that if they dont pay and take these auctioned items off me, they will be in big trouble?

                • whooah1979 on 23/08/2020 - 12:54

                  @Zachary: There is no need to resort to violence. Reasonable people use legal means to enforce contracts.

                  http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2007/844.ht…

                  Conclusion

                  77 It follows that in my view a binding contract was formed between the plaintiff and the defendant and that it should be specifically enforced.

                  78 It was agreed by counsel for both parties that should I come to the view that the contract be specifically performed it would be appropriate to permit the parties time to endeavour to reach agreement on the precise form of orders including dealing with the $15,000 paid into Court by the plaintiff, and to list the matter before the duty judge next week to enable agreed short minutes to be then handed up, or failing that, any argument on the form of the orders to be ventilated.

                  • Zachary on 26/08/2020 - 14:14

                    @whooah1979: So I should quote them this the next time a bidder pulls out after winning it?

    • Keplaffintech on 22/08/2020 - 14:12
      +4

      The consideration in this contract is the house and the full value of the house being traded. It does not need to happen at the exact point of signing, a contract is just an agreement to exchange the value as described in it.

    • miarn on 22/08/2020 - 14:59
      +7

      Actual lawyer here, this is incorrect.

      Consideration must be part of the contract but doesn't have to be exchanged for a contract to be effective. You can have a perfectly valid contract to do something in future.

      Even paying a deposit isn't giving consideration - the deposit is held on trust until settlement (or it's released under s27), it's not purely for the vendor's benefit.

      • dasher86 on 22/08/2020 - 18:42

        I learn something everyday. Thanks.

  • ihbh on 22/08/2020 - 13:15

    we signed (or docusigned in C19 days) the contract

    You didn't put this in your OP.

    When you signed the contract, you exchanged contracts.

    This is the cost off cooling-off or rescinding the contract:

    If you decide you no longer want to buy the property, you can cool-off by giving written notice to the seller or the seller’s agent. You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.

  • BOGOF on 22/08/2020 - 13:18
    -1

    For a valid contract there has to be a contract signed by both parties and 'consideration'. The consideration in this case is a deposit. No deposit, then no consideration and therefore no valid contract in the first place. OP also gave notice within the 3 days cooling off period anyway.
    No deposit was paid, no contract and therefore you don't owe anyone anything. There is no deposit to return and therefore no sum to retain.

    OP…..You have nothing to worry about. No one is going to take this any further.

    • varunynr on 22/08/2020 - 14:38

      Thanks BOGOF. I think the chances of taking this further are low (thats what the solicitor tell me), but good to know the next steps. I still think the contract was in place, just with $0 deposit. I was more trying to see if any ozbargainers had similar experiences cooling off on private offers in Victoria.

    • miarn on 22/08/2020 - 15:01
      +5

      This is wrong. You don't need to have given consideration for there to be a contract; there only needs to be the promise of consideration (i.e. the contractual requirement to pay the purchase price).

      Paying a deposit isn't giving consideration, it's just providing some security. The deposit is held by the agent or solicitor on trust for both parties, until it's released (either at settlement or under various State legislation).

  • [Deactivated] on 22/08/2020 - 13:30
    +3

    Anyone giving you advice to tell the REA to bugger off isn’t really looking at the big picture. Assuming you are still in the market to buy a property you might find yourself dealing with this REA again very soon if you find a property you love that they happen to be selling (or even another branch of the same brand).

    For this reason I would avoid causing a disagreement with them if you don’t have to. Try and talk to them and explain your situation and that you think this should have been pointed out to you during the offer. You could come to and agreement or they might decide it is easier to keep you as a future potential buyer if you make it clear your still in the market for a new property.

    It sounds like you signed a contract which means you probably owe them the money, hence talking to them and coming to a resolution is a far more grown up solution than ignoring it and hoping it goes away which other have advised you to do.

    • varunynr on 22/08/2020 - 14:34

      Thanks for advice. I agree with your approach, actually we made another offer on alternate property and were accepted (another REA agency). The REA did a better job this time by making us pay deposit before presenting it to vendor. She was quite surprised when I mentioned I didnt pay deposit for other property for which we were cooling off. Some REAs just do a better job and follow governance and vendor/buyer expectations better.

      • [Deactivated] on 22/08/2020 - 16:46
        +1

        That’s great you have found another property and shouldn’t have to deal with this REA again In the short term. I would still look to explain the situation, pointing out that another REA was upfront about this and look to get them to agree in writing that no money is owed. That way you can move on without worrying about it.

        If they are stubborn then you might have to call their bluff and hope they decide it is not worth the effort.

        • ihbh on 23/08/2020 - 09:55

          The OP doesn't owe money to the real estate agent; they owe it to the vendor - the cost/inconvenience/opportunity cost of taking it off the market during the cooling off period.

  • bohn on 22/08/2020 - 13:31
    +5

    Whatever the outcome, the agent should start doing his job and get people to pay a deposit! :)

    • varunynr on 22/08/2020 - 14:27

      Thanks Bohn. You are probably right, a hint to pay deposit initiates discussions around prospect of probable return if the contract was to cool off. I think thats a better way for REA to engage vendor/buyer contractual discussions. It wasn't done in this case and may catch people like myself in odd cases. Anyways it isnt a big price to pay if you consider the price of property post cool off.

  • pjetson on 22/08/2020 - 13:52
    +4

    You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent …

    There was no money paid.

    • varunynr on 22/08/2020 - 14:38

      Correct! No deposit paid.

      • ihbh on 22/08/2020 - 14:44

        The NSW site expresses it better:

        https://www.fairtrading.nsw.gov.au/housing-and-property/buyi…

        If you use your cooling-off rights and withdraw from the contract during the five business-day period, you will have to pay the vendor 0.25 percent of the purchase price. This works out to be $250 for every $100,000.

        [ignore % difference]

        • miarn on 22/08/2020 - 15:04
          +7

          The NSW legislation is probably different, but I practise in Vic so I'm not too familiar with the law in NSW. The Victorian legislation (Sale of Land Act s 31) says:

          (4) Where a contract for the sale of land has been terminated in accordance with the provisions of this section the purchaser shall be entitled to the return of all moneys paid by him under that contract except for the sum of $100 or 0·2 per centum of the purchase price (whichever is the greater) which may be retained by the vendor.

          So, where no money has been paid, the vendor has no right to recover anything.

          • whooah1979 on 22/08/2020 - 15:46

            @miarn: Ozbargain should have you on speed dial.

          • varunynr on 22/08/2020 - 17:45

            @miarn: Love this. Will cross check this against now voided contract.

            Edit: contract says, you are entitled to a refund of all money you paid except for$100 or 0.2% off purchase price whichever is more of you end contract in this way. Looks like what you mention is correct.

            Regards

            • ihbh on 22/08/2020 - 18:34

              @varunynr: Not how I interpret it, but let's see how it plays out. I read it like specified here:

              In the event of a buyer deciding to “cool off”, there is a financial penalty payable by the buyer to the vendor. The cost is $100 or 0.2% of the property purchase price, whichever is the highest amount. This amount will be deducted from the initial deposit paid by the buyer. If the initial deposit is not enough to cover the cooling off fee, the agent will seek the balance from the buyer.

              https://www.obrienrealestate.com.au/real-estate-cooling-off-…

              • terrys on 23/08/2020 - 10:03

                @ihbh: Good as far as it goes - the agent will seek the balance. What it doesn't say is that the agent has a lawful claim to such a balance. As magicmoose referenced, the penalty is allowed to be deducted from the initial deposit "which may be retained by the vendor".

                I may seek the costs of removing ten years of garbage shoved past my " post office mail only" sticker into my mailbox by the local land-shark parasites but wouldn't expect to suceed.

          • ihbh on 22/08/2020 - 18:34

            @miarn: Not how I interpret it, but let's see how it plays out. I read it like specified here:

            In the event of a buyer deciding to “cool off”, there is a financial penalty payable by the buyer to the vendor. The cost is $100 or 0.2% of the property purchase price, whichever is the highest amount. This amount will be deducted from the initial deposit paid by the buyer. If the initial deposit is not enough to cover the cooling off fee, the agent will seek the balance from the buyer.

            https://www.obrienrealestate.com.au/real-estate-cooling-off-…

      • Zachary on 23/08/2020 - 10:23
        +2

        …then tell them to bugger off….?

  • jimbobaus on 22/08/2020 - 15:43
    +1

    Real Estate agent has your signature
    under the law in Vic they are entitled to the fees being paid etc
    It will 100% be in the contract you signed (did you read it first)

    Can assure you they will take you to court if they have too and they will win.
    You literally signed the contract, you are allowed to cool off but still have to pay the fees, this is standard in the industry.
    They are not obligated to advise you, you are obligated to read the contract you signed.

    If you refuse to pay it is going to end up costing you a far lot more.

    And… if you did not pay a deposit then this does not remove your obligations under the contract.
    if you paid money they would deduct fees from refund
    if you did not you are obligated to pay them.
    Also regardless of the deposit being paid or not your signature on the contact makes it binding.

    As someone who has bought and sold many a home in the past… pay the fees and move on.
    you will come out worse for wear in the long run if you do not

  • varunynr on 22/08/2020 - 16:15
    +1

    Thanks Noted. Never contended I dont have to pay : )

  • theguru1 on 23/08/2020 - 07:59

    It's clearly stated on the Contract regarding cooling off. Did you not read the Contract before signing?
    Surprised an Agent wouldn't get a deposit. Sounds like a rookie mistake.

    • varunynr on 23/08/2020 - 10:26

      Considering this was an agent past his retirement age (in his own words). 40 years plus in industry. Anyways doesnt relieve me or a buyer of responsibly reading the contract.

      • theguru1 on 24/08/2020 - 08:25
        +1

        He would have got an almighty kick up the arse if he worked at my agency.

  • ginahfb on 23/08/2020 - 08:16
    +1

    They may not take you to court, but they would most likely have a Collections Agency on hand, so it would be placed with them. Is it worth your credit rating being sullied for this amount of money? There are costs involved by the vendor and the agent to prepare a contract, and other interested parties would have been told there's a contract been signed, so would move on to other properties. Think how you would feel if you were the vendor or the agent. Do under others ……..

  • backpaqer on 23/08/2020 - 09:58
    +1

    No. Don't pay anything, the cooling period is there for you not them. That's why properties are listed as "under contract" as it isn't a done deal.

    • varunynr on 23/08/2020 - 10:27

      Funnily enough the RE agent put the sold sign on property the day we signed the contract. I thought they could have waited for 3 days post cool off. I see now they have removed the SOLD sign (rightly) : )

      • ihbh on 23/08/2020 - 10:54

        By doing that they are taking the property off the market during the cooling-off period.

        They could have also removed the sign but probably want to get some promo for their agency until settlement etc.

    • ihbh on 23/08/2020 - 10:59
      +1

      The OP is new to this. They didn't just make an offer. They exchanged contracts - read their comment - and didn't appreciate the difference.

      the cooling period is there for you not them

      Absolutely. And there is a cost for the buyer to exercise it.

Login or Join to leave a comment
Login Join